9 AIR TRANSPORTATION

PASSENGER TRANSPORTATION

Traffic

The events of September 11, 2001, had an enormous impact on air traffic levels, which decreased from a peak of 60 million passengers in 2000 to an estimated 55 million passengers in 2002. Transborder traffic was the most severely affected, with a 13 per cent decrease between 2000 and 2002. The international and domestic sectors fared slightly better, each having losses of close to 5 per cent over the two years. The situation has stabilized since September 2002 with results no longer showing year-over-year decreases; however, there are no signs that traffic is recovering to pre-September 2001 levels. Table 9-3 shows the continued decline in traffic since September 11, 2001.

Notes: Data estimated for 2002.
Passenger traffic is based on enplaned and deplaned passengers, but results for the domestic sector have been divided by two to avoid the double-counting of passengers.

Source: Statistics Canada

For a summary of 2001 traffic for the 26 NAS airports, by sector and region, see Table A9-15 in the Addendum.

Services

Domestically, low-fare airlines continued to expand (see Table A9-16 in the Addendum for a list of new and discontinued domestic services). WestJet expanded into the east with the addition of services to London, Sault Ste. Marie and, most significantly, Toronto. Both Jetsgo and SkyService added regular service in transcontinental markets and to Atlantic Canada. Air Canada Tango began to serve several new destinations, including Fredericton, Quebec, Regina, Saint John, Saskatoon and Thunder Bay. Air North started jet service from Whitehorse to Calgary, Edmonton and Vancouver.

Air Canada's regional service commitments, made to the Minister of Transport when it acquired Canadian Airlines in December 1999, will expire on January 4, 2003. At that time, Air Canada will withdraw its service to St.-Leonard in New Brunswick, Stephenville in Newfoundland and Labrador and Yarmouth in Nova Scotia. It will also remove its code from flights serving High Level, Peace River and Rainbow Lake in Alberta, although service will continue to be provided by Central Mountain Air. Smaller carriers will be replacing services to both Yarmouth and Stephenville, although St.-Leonard will remain without a new carrier.

During 2002, service was withdrawn from points where Air Canada did not have regional service commitments: Campbell River, Comox, Dawson Creek and Lloydminster, as well as service linking Newfoundland and Labrador. All carriers are still required to provide 120 days notice of any discontinuance of service where there is no, or minimal, other service on the route in question. In such cases, they are also required to consult with the community in question.

In the transborder sector, there has been a tendency to add routes that cater more to leisure passengers than business passengers, as can be seen with the start-up of new services to sunspots such as Hawaii, Florida and the U.S. Southwest in the winter. Several airlines in Calgary, Montreal and Vancouver have also started summer-only services. For more details on both new and discontinued transborder services, see Table A9-17 in the Addendum.

As Table A9-18 in the Addendum shows, there have been fewer changes in the international markets. Air Canada has added new service to Amsterdam, Madrid, Dublin and Shannon. It also added Rome as a result of the revised Canada-Italy bilateral air services agreement. Air Canada discontinued its services to Argentina, Australia, Zurich, Taipei and Milan; however, it intends to re-enter the Zurich and Taipei markets in the summer of 2003. In terms of foreign carriers, Austrian Airlines, Alitalia and Mexicana each added flights to Canada, while services to Havana, San Salvador and San Jose by TACA/LACSA were discontinued.

Competition

Economic turbulence, high fuel prices and the effects of the September 11, 2001, terrorist attacks in the United States continued to be felt throughout the airline industry in 2002. Air carriers worldwide struggled to adjust to the changing market and to maintain their economic viability.

Domestically, there was considerable movement in capacity shares. Air Canada's domestic market share dropped from 78 per cent in December 2001 to 67 per cent in December 2002 despite the expansion of Tango flights and the introduction of Zip. WestJet continued to expand in the West, gaining close to a 50 per cent market share in that market and a 20 per cent market share on a national basis. It also introduced its first flights to Toronto, with service to Calgary, Edmonton and Vancouver. CanJet, which had previously been sold to Canada 3000 in 2001, resumed service in Atlantic and Central Canada in June 2002. Jetsgo Corporation, also entering the market in June 2002, made a competitive impact on routes across Canada. Carriers such as First Air and Air NorTerra grew in strength in the North, while SkyService expanded its domestic service, and Air Transat remained Canada's primary international charter carrier.

For more detailed information on domestic capacity share by airline and by region in December 2002, see tables A9-19 and A9-20 in the Addendum, and for the summarized results of the top 25 markets, see Table A9-21.

Major Events in 2002

Infrastructure

Industry Structure

Freight Transportation

Passenger Transportation