New surcharges. Higher airfares. Shrinking seat space. The “pro-consumer” Conservatives have several reasons why they could target Canada’s airlines next. And with an election looming, they just might, experts say.
Like cellphone providers, railroads and most recently the U.S.-Canada “price gap,” some experts now suggest Air Canada and WestJet may soon find themselves in Ottawa’s cross hairs.
“It has been hard enough for the average flier in Canada to stomach shrinking seat pitch, endless surcharges, and an overall decline in service levels, but by adding rising airfares to the mix, the industry would just be pouring jet fuel on the fire,” retail stock analysts at Raymond James said in a research commentary Monday.
The Vancouver-based analysts say airfares aren’t rising at the moment, based on their own survey of prices. But others, like RBC, have noted an uptick in how much consumers are paying, increases that have come on top of the introduction of new fees this year for currency swings and baggage.
Experts who follow the airlines expect that combined with plunging oil, carriers are set to report sharply higher profits next year. They’ll also face more scrutiny.
MORE: Air Canada, WestJet being tight-fisted this holiday season
Act review
The experts are taking the possibility that Ottawa may become more activist with airlines next year seriously.
“What we believe makes this issue particularly notable is that Transport Canada has recently launched a statutory Review of the Canada Transportation Act,” Ben Cherniavsky and associate analyst Edward Gudewill said.
The federal department has appointed six “eminent” Canadians to lead a review of transportation laws in this country. “The airlines are specifically included in the agenda,” the analysts say.
Foreign ownership rules restricting international airlines from entering the domestic market will be looked at closely.
“Whether or not this leads to any action remains to be seen,” Cherniavsky and Gudewill said. “Politics are wildly unpredictable.”
WATCH: Thu, Dec 11: When oil plummets, it’s not just gas that gets cheaper. The cost of jet fuel is down 30 per cent from what it cost six months ago. But passengers aren’t seeing a drop in ticket prices just yet. Jennifer Tryon reports.
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