EDITORIAL: Competition is key to lower flight costs

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Canada should open up its skies to competition from foreign airlines to improve service and reduce fares, says the Fraser Institute.  

Quoting from a report by the federal Competition Bureau, the report’s authors, Jake Fuss and Alex Whalen, say government policies are to blame for the lack of competition among airlines.  

The federal government prohibits foreign airlines from operating domestic routes in Canada: “A German airline, such as Lufthansa, is permitted to fly from Frankfurt to Toronto but is barred from flying passengers from Toronto to another Canadian city. The result? There’s little competitive pressure for Canadian airlines to lower their prices for domestic air travel.”   

Contrast that with the European Union (EU). After the EU removed restrictions, it allowed carriers from all EU countries to operate in all EU states.  

“Low-cost carriers such as Ryanair entered the market, flight frequencies increased and airfares dropped 34%,” said the report.  

An earlier Fraser Institute report suggested the federal government should negotiate reciprocal deals with other countries, to allow foreign airlines to operate within Canada, in exchange for allowing Canadian airlines to operate in those countries: “A win-win for Canadian consumers and Canadian airlines,” the report says.  

This may require airlines such as Air Canada to pull up their socks when it comes to service. Canada’s national airline was rated only 19th in the Skytrax World Airline Awards in 2025, up from 29th in 2024. While it was rated the best North American airline on that scale, it still has a long way to go to meet international standards.   

The Fraser Institute reports that high airport taxes and high rents are responsible for the add-on costs Canadians face when they fly. The government owns the land most large airports sit on and charges the not-for-profit airport authorities high rents — as much as 12% of airport revenues.  

“In 2023, the government received $487 million in rent charges from airports. In response, the airports levy fees on passengers to recoup these costs,” said the report.  

Prime Minister Mark Carney has promised to find ways to cut regulations and boost business between provinces. What better way than to cut the costs of airfares, so Canadians can visit their own country without going broke?