Okay.
Canada is a small market. We rank number two in size but 222 out of 232 in population, relative to the rest of the world. As well, 90% of our population lives in 10% of our land mass, roughly along the 49th parallel. The focus of my discussion is on the 10% who live in 90% of our land mass.
Our 2020 research showed that approximately 200 Canadian communities receive scheduled air service from about 20 different airlines. Only about a third of these communities are served by mainline carriers. About half have a population of less than 10,000, and almost 75% are served by just one airline. Of the approximately 300 scheduled domestic air routes in Canada, about 15% are competitive, with 5% served by competing mainline carriers, 9% served by competing mainline and regional carriers and 1% served by competing regional carriers.
All air routes in Canada were subject to economic regulation until 1987. Air Canada was government-owned until 1988. Economic protection in the north was relaxed in 1996. By 2005 Canada was fully deregulated. While deregulation has done great things for the majority of Canadian airline consumers, it's also led to a level of consolidation that may not have been anticipated.
Prior to deregulation, Canadian Pacific Air Lines operated from Vancouver, Pacific Western operated from Calgary, Transair operated from Winnipeg, Nordair and Quebecair operated from Montreal and Eastern Provincial operated from Halifax. All of these airlines provided regional services with modern large aircraft. They provided significant economic benefits to their regions.
In the post-deregulation environment, regional services have become consolidated and centralized, with many communities losing jet service in favour of turboprops and some communities losing service entirely.
This risk was acknowledged in the 2000 TRAN committee report dealing with the takeover of Canadian Airlines by Air Canada, with two of the 42 recommendations calling for mandatory interline and code-share agreements between all Canadian scheduled airlines. This would serve to level the playing field between small regional carriers and large network carriers by providing regional carriers with access to mainline networks and thus 100% of the market rather than just a portion of the market. This dynamic has been addressed through legislation in both the telecommunications industry and the railroad industry.
From a passenger standpoint, people who travel with two airlines that do not have an interline agreement travel on two different itineraries, resulting in a duplication of fees and taxes, an inability to check luggage to final destination and limited passenger protection or accommodation if flights are delayed or cancelled. These dynamics put regional community travellers at a distinct and needless disadvantage relative to other Canadians.
With respect to pricing, in the long run, airfares are more significantly determined by costs than by competition or greed. Competition is important, but it is only one factor in keeping airfares low. It can actually be counterproductive in a small market.
Our network is made up of regional turboprop routes and gateway jet routes. I'm sometimes asked why it costs almost twice as much to fly 500 miles from Whitehorse to Old Crow as it does to fly a thousand miles south from Whitehorse to Vancouver. We utilize 40-passenger, gravel-runway-capable turboprop aircraft on our north routes and jet aircraft with 120-plus seats on our gateway routes. The turboprops burn more fuel per seat to fly 500 miles than the jets burn per seat to fly a thousand miles. The price of fuel at our most northern turboprop stop is 47% higher than at our southernmost jet stop. Our total direct operating cost per seat for the north route to Old Crow is 137% higher than for the jet route to Vancouver.
Because our turboprop routes are multi-stop with diminishing payloads on each northern stop, and because cargo is unidirectional, our turboprop load factors are on average more than 10% lower than those on our jet routes. This, in combination with the direct operating cost differential, creates a per-passenger DOC differential of almost 200%. The sharing of overhead costs, which speaks to economist Erickson's observation in our paper, reduces the overhead burden and thus the airfares on our regional routes by almost 20%, leaving a net average fare differential of about 88%.
As a final note on pricing, our 2023 net percentage margin on our turboprop routes, where we have no competition, was less than on our jet routes, where we compete with both mainline carriers. Our overall margin for the year was less than 5%.
In closing, in order to improve service and air travel pricing for northern and other regional communities, we need funding to modernize regional routes and navigational infrastructure so that regional airlines can modernize their fleets and operate more efficiently. We also need regulation and/or policy that recognizes and protects the role of regional air carriers. As well, we need to better understand the cost and service challenges faced in regional air markets. We need to reconsider Canada's user-pay model, which does not reconcile with many, if not most, other countries.
Thank you.