Air travel is Canada's most important form of public transport, due to the country's vast distances. However, the country's commercial aviation sector has a duopolistic structure, with Air Canada and WestJet dominating the market, resulting in relatively high fares, compared to those in the US. While there are low cost carriers too, they find it difficult to compete with price, to a great part due to high service fees charged by Canadian airports.
Consequently, several Canadian low cost airline companies have gone bankrupt in recent years, thus further strengthening the position and pricing power of Air Canada and WestJet. This has resulted in widespread consumer resentment. Furthermore, high transport costs are an impediment to economic growth and dynamism in the country.
The main way to address this issue would be to reduce airport fees in Canada. Canadian airport operators are all public sector bodies, and their fees are thus subject to political decision-making. However, any reduction in fees must be also matched with cost reductions.
In turn, this creates a pressure on airport operators to increase cost efficiency. One area where there is much space for improvement, in terms of quality as well, is baggage handling service. Major Canadian air hubs have a somewhat poor reputation for this. Robotized luggage handling systems, for instance, would both reduce costs and improve service reliability.
The focus airports for selling these new cost saving and quality improving systems would be Canada's main air hubs Toronto, Montreal, and Vancouver, with significant opportunities with the main provincial ones at Edmonton, Calgary, and Winnipeg as well. These provincial airports are in fact expecting the greatest traffic growth potential in the near future, as those provinces are currently the most attractive for immigration and are not very well served by direct international flights.
Author: Kari Mäkeläinen, Senior Consultant, Columdae, GMCC Approved Suppliers
Interested in exploring this opportunity?
Book a 1-2-1 complimentary session with Kari on this link!.
Comentarios