Power Play Abroad: Never mind the oil bust. Canada’s international airline market is red hot

The Alberta oil boom is history. Canada’s economy as a whole is barely growing. And the last time a Canadian hockey team won the Stanley Cup was more than two decades ago. But cheer up Canada: Your international airline market is booming.

This summer, according to Diio Mi, the number of international available seat kilometers departing Canadian airports is up y/y by double digits—15% in the third quarter, to be precise. That’s far greater than the 6% international capacity growth from both U.S. and Mexican airports, making Canada the international star of the NAFTA region. In the upcoming offpeak fourth quarter too, Canadian airports expect double-digit ASK expansion to points abroad.

To be clear, the actual number of international flights from Canada this summer isn’t growing much at all—just 1%—which implies a shift toward larger planes and planes configured with denser seating. American and United, most notably, are actually cutting their flight frequencies to Canada—American, for example, ended four routes to Alberta. But this is a mere sideshow to what’s indeed a dynamic market at the crossroads of new strategies and new trends.

Air Canada, naturally, is the chief driver of Canada’s increasingly internationalized airline market. Internationalization, in fact, is the centerpiece of its business strategy, with ASKs abroad up an eye-popping 27% y/y this quarter. That includes a bullish 19% expansion into the U.S. market, which it’s treating as a reservoir of feeder traffic for all the other international flights it’s adding. Toronto-San José, Montréal-Philadelphia, Vancouver Chicago, Calgary-San Francis co… its list of new U.S. routes is long and getting longer. Importantly, many of the new routes are flown by regional partners under contracts more favorable to Air Canada following restructuring efforts. A weaker Canadian dollar, moreover, enhances Air Canada’s position in the U.S., enabling it to attract overseas bound Americans with cheaper fares through its Canadian hubs.

This U.S. expansion is only the supporting act. At center stage are intercontinental routes like Toronto to Dubai, Delhi, Seoul, Amsterdam, Budapest, Prague, Warsaw, Glasgow and London Gatwick, all new since the start of last summer. From Montréal, Air Canada has added Casablanca, Lyon, Venice and Mexico City. And from Vancouver: Brisbane, Osaka and Dublin, with Delhi starting this fall.
A number of these routes, par…

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