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O Canada: Smaller Canadian carriers see chance to seize US market share amid pandemic shake-up

July 21, 2021
5 min read
O Canada: Smaller Canadian carriers see chance to seize US market share amid pandemic shake-up
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The Canadian border will reopen to vaccinated American travelers on Aug. 9 for the first time since the start of the COVID-19 pandemic.

“With rising vaccination rates and fewer cases in Canada, we can begin to safely ease border measures,” Canada’s Minister of Health Patty Hajdu said in a statement.

The U.S. border, meanwhile, remains largely closed to visitors.

The partial reopening creates some of the first good news for Canada’s struggling airline industry in more than two years.

As the border closed last spring and Canadian air traffic plummeted — falling to as few as 2,768 daily passengers at the country's eight biggest airports in 2020, down from normal daily volumes of 160,000 to 180,000 in 2019 — the Canadian airline industry was thrown into disarray.

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Even with a recovery underway and vaccination increasing in Canada, air passenger numbers have remained low. Each day in July has seen passenger counts at the eight major airports between 36,000 and 56,000, while in 2019 between 170,000 and 190,000 passengers could be expected on a normal day.

But in the eyes of two Canadian airlines, the near-collapse of air travel has created a new opportunity to grab a share of the lucrative Canada-U.S. air market.

Porter Airlines, a Canadian boutique carrier, plans to restart travel on Sept. 8 after almost 18 months on the ground due to the pandemic. Nine days later, the airline will resume service to destinations in the U.S., including Boston, Chicago, New York and Washington, D.C.

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"While deciding to suspend our service was the most difficult business decision we’ve made, announcing a restart of flights is the first step in a recovery process that includes recalling hundreds of team members and welcoming back passengers," CEO Michael Deluce said in a statement.

The carrier sees a unique opportunity to expand beyond its pre-pandemic network, which it operated with a fleet of 29 DeHavilland Dash 8-400 turboprop aircraft.

Last week, Porter announced it had placed a firm order for 30 Embraer E195-E2 aircraft. Porter will be the North American launch customer for the E2, the new generation of the Brazilian planemaker's successful regional jet. The airline has an option for 50 more jets.

The order, which will double Porter's fleet, will allow the airline to expand throughout the U.S., and potentially even to Mexico and the Caribbean. The first delivery is scheduled for the second half of 2022.

"This is a defining moment in Porter's history," Deluce said in a statement announcing the order. "Today we lay the foundation for a new and further reaching service for our customers."

While Porter and Embraer did not reveal pricing, Deluce suggested that, like United Airlines with Boeing and Airbus, Porter was able to secure a favorable deal with Embraer as a result of the pandemic's effect on the new aircraft market.

"The pandemic created opportunities on acquisition that were not available before," Deluce told Reuters in an interview. "We were looking at various growth plans, but I think the specifics really emerged during the pandemic."

Another small Canadian carrier, meanwhile, also sees an opportunity to grow as Canadian air travel returns.

More: Business travel is surging back sooner than expected, but there’s still some bad news for airlines

Flair Airlines, an ultra low-cost carrier based in Edmonton, Alberta, announced plans earlier this month to launch its own cross-border service into the United States.

Flair plans to begin U.S. flights on Oct. 31 with service to six cities: Fort Lauderdale (FLL), Orlando Sanford (SFB), Phoenix-Mesa (AZA), Hollywood Burbank (BUR), Palm Springs, California (PSP), and Las Vegas (LAS).

Although the airline is primarily targeting Canadian passengers looking to escape to warm weather destinations during winter, the airline will also be able to capitalize on American travelers venturing north.

The airline believes now, with the market in a state of relative flux, is an ideal time to launch the U.S. expansion, CEO Stephen Jones told TPG in an interview.

"We do think that there is a great opportunity," Jones said. "As demand comes back, we expect that the price-sensitive leisure segment will be the strongest and earliest to return, and that's really our core target market."

Jones previously led European ultra low-cost carrier Wizz Air.

However, this won't be Flair's first effort to fly south of the border.

Flair tried to launch a U.S. gambit before under different leadership, but was unable to make money on the flights. It suspended many of the routes with short notice in early 2019.

But Jones thinks that this time will be different.

"We certainly took some lessons from the previous efforts of the company," he said. "But this isn't rocket science. It's about flying people where they want to go. There's an incredible demand. It's all about execution."

More: Delta will add 36 aircraft to fleet as it takes a different tack from United

The airline plans to compete strictly on price, undercutting established Air Canada and U.S. carriers.

With the border announcement, meanwhile, the legacy carriers are eager to reclaim the market they've held in the past.

Both United Airlines and Air Canada — which are both Star Alliance members — announced increased U.S.-Canada flights coinciding with the reopening.

So while Porter and Flair see an opportunity, the market will not be an easy one. Or as Deluce told Reuters: "It certainly will be highly competitive."

Featured image by A Porter Airlines Q400 Turboprop; Toronto skyline in view. (Image via Porter Airlines)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Go to review

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5XEarn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year.
5XEarn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
  • Intro Offer
    Earn 80,000 Membership Rewards® Points after you spend $6,000 on purchases on the Card in your first 6 months of Card Membership.

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  • Annual Fee

    $695
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    670-850
    Excellent/Good

Why We Chose It

Sometimes it's worth a large investment to reap the benefits of a great credit card. That's exactly the case with the Amex Platinum card. In exchange for the annual fee, you'll unlock access to the Amex Membership Rewards program that let you access airline and hotel transfer partners, along with new lifestyle and travel credits. This card is also incredibly rewarding for travel purchases, helping you rack up a ton of Membership Rewards points for your next award trip.

Pros

  • The current welcome offer on this card is quite lucrative. TPG values it at $1,600.
  • This card comes with a long list of benefits, including access to Centurion Lounges, complimentary elite status with Hilton and Marriott, at least $500 in assorted annual statement credits and so much more. (Enrollment required for select benefits.)
  • The Amex Platinum comes with access to a premium concierge service that can help you with everything from booking hard-to-get reservations to finding destination guides to help you plan out your next getaway.

Cons

  • The high annual fee is only worth it if you’re taking full advantage of the card’s benefits. Seldom travelers may not get enough value to warrant the cost.
  • Outside of the current welcome bonus, you’re only earning higher rewards on specific airfare and hotel purchases, so it’s not a great card for other spending categories.
  • The annual airline fee statement credit can be complicated to take advantage of compared to the broader travel credits offered by competing premium cards.
  • Earn 80,000 Membership Rewards® Points after you spend $6,000 on purchases on the Card in your first 6 months of Card Membership.
  • Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year and earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
  • $200 Hotel Credit: Get $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings with American Express Travel when you pay with your Platinum Card®.
  • $240 Digital Entertainment Credit: Get up to $20 in statement credits each month when you pay for eligible purchases with the Platinum Card® at your choice of one or more of the following providers: Peacock, Audible, SiriusXM, The New York Times, and other participating providers. Enrollment required.
  • $155 Walmart+ Credit: Cover the cost of a $12.95 monthly Walmart+ membership with a statement credit after you pay for Walmart+ each month with your Platinum Card. Cost includes $12.95 plus applicable local sales tax.
  • American Express has expanded The Centurion® Network to include 40+ Centurion Lounge and Studio locations worldwide. Now there are even more places your Platinum Card® can get you complimentary entry and exclusive perks.
  • $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees are charged by the airline to your Card.
  • $200 Uber Cash: Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status is available to Basic Card Member only.
  • $300 Equinox Credit: Get up to $300 back each year on an Equinox+ subscription, or any Equinox club memberships when you pay with your Platinum Card. Enrollment required. Learn more.
  • $189 CLEAR® Credit: Breeze through security with CLEAR® Plus at 45+ airports nationwide and get up to $189 back per year on your membership (subject to auto-renewal) when you use your Card.
  • $695 annual fee.
  • Terms Apply.
  • See Rates & Fees