Ensuring affordable air travel for Canadians

In today’s environment of elevated inflation, affordability is on the minds of all Canadians. As in many countries, costs seem to be rising in all parts of life: housing, groceries, gas, entertainment and more. Air travel is no exception and our own research and recent public discourse about the airline industry echoes this sentiment:

At WestJet, we take our responsibility for providing affordable air travel to Canadians very seriously, and our track record in doing so is unmatched. As the airline that democratized low-cost air travel in Canada, real ticket prices¹ have dropped by roughly half in the two decades following WestJet’s first flight, enabling twice as many Canadians to travel by air. There are few industries that can claim such a price reduction over three decades, and we take great pride in the role we have played in air travel affordability.

Other carrier-imposed charges (titled “air transportation charges” or “ATC”) are collected to partially offset certain volatile, unpredictable or fluctuating operating costs and fees, and certain fare premiums linked to peak travel periods. These carrier surcharges can be used to offset costs including, but not limited to fuel, navigational charges, insurance charges, or select peak travel dates.

Despite these accomplishments, air travel is more expensive in Canada than in other countries. It is critical for our guests to understand the factors impacting these costs. It’s equally important to understand how WestJet is evolving to address affordability, while continuing to meet the diverse needs of our guests. At the same time, we need government and industry partner support for a sustainable and affordable industry for decades to come.

Canada has a vast geography with low population density, and for much of the country, air travel is an essential service. Without an efficient national air transportation system, many Canadians would be unable to visit loved ones or commute to work, many businesses would be cut off from critical supply chains, and many communities would be unable to attract tourists and other visitors.  

Yet, despite the role air travel plays in connecting Canadians, our aviation sector is almost entirely user funded. The users, of course, are air travellers, who ultimately pay for not only the airline service they receive, but also for airport rent and infrastructure, aviation security screening, air navigation services, customs and border services, and more. This stands in stark contrast to other essential infrastructure such as road networks, schools, hospitals and even passenger rail services, which are largely funded by various levels of government. 

The result is that airline tickets in Canada are burdened by third-party fees and taxes, which can add 40 per cent or more to the cost of a flight. Consider the example below, for a WestJet flight from Toronto to Calgary on June 18, 2024:

Price summary

The total revenue collected and retained by WestJet for this 2,700 kilometre flight is $120, or about 4 cents per km (for comparison, the regulated taxi rate in our home city of Calgary is $1.91 per km). The $120 fare must cover our costs of aircraft ownership, fuel, flight crew, airport staff, information technology, corporate services, navigation services, airport landing fees and other expenses.  

After adding third-party fees and taxes of $66, which is more than 55 per cent of the base fare, the guest’s total price is $186. These fees do not include infrastructure costs included in the base fare, such as NAV Canada air traffic control fees, some of which have increased by 30 per cent in just a few years.  Total infrastructure costs can approach $90 on a one-way ticket.

When we break down the total cost of an airline ticket, we can see that airlines are not extracting windfall profits. In fact, in WestJet’s last year as a public company, our average profit per guest was less than the cost of a takeout coffee. Indeed, many airlines operate at a loss, and cannot absorb a reduction in ticket prices. Ensuring affordability therefore requires airlines to evolve their service and product offerings and requires governments to ease the infrastructure cost burden impacting all travellers.  

Our guests have highlighted that affordability is critical to future travel and that they value choice and flexibility. They have told us they want to choose products and services to match their travel experience to both their preferences and their budget.

WestJet is answering this call by allowing guests to opt in to the products and services they require (or desire) for their journey. This enables us to offer both ultra-low, no-frills options to our guests seeking the lowest price, as well as enhanced offerings for those who value added perks and flexibility.

This approach is common in many industries. At a fast-food restaurant, a customer may choose the convenience and value of a combo meal, but if they only feel like having a burger, they are not forced to bundle it with fries and a soft drink. Giving our guests more choice to select the extras they want – whether that be checking a bag, choosing a certain seat or enjoying the benefits of Extended Comfort - ensures that their air travel experience aligns with their needs and removes costs previously incorporated into all-in ticket prices. This way, no traveller is subsidizing another. 

While it is in WestJet’s very nature to improve air travel affordability for Canadians, we cannot do it alone. For this reason, we made the following recommendations to the federal government to safeguard affordability:

1. Implement an immediate freeze on mandatory imposed government fees, including increases to air navigation charges and air traveller security charges, in line with similar freezes in other transportation sectors. 
2. Defer any policy changes that would add further cost to the air transportation system, and that would ultimately decrease affordability for Canadians.
3. Cease the collection of airport rents by the federal government to improve overall affordability. 
4. Review the user pay model for aviation in Canada, to determine whether models in place in other countries may improve air travel affordability.

With the promise to help keep costs down for Canadians, in Budget 2024, the federal government announced a freeze on tolls for the Confederation Bridge and a freeze on fees for Marine Atlantic. We are seeking the same approach for mandatory government fees on air travellers.

In the face of inflation and the rising cost of living, we understand that preserving affordable air travel has never been more important. Balancing affordable air travel with the financial viability of the aviation sector is vital to the millions of Canadians who rely on WestJet to connect them to the people, places and moments that matter most to them. Through innovation, market research and 28 years of experience in reducing the cost of air travel, we are doing just that, by putting choice in the hands of our guests.