Canadian airlines worry US trade war could dent 'shaky' transborder market
Airlines are watching closely for any sign of changing travel patterns between the U.S. and Canada after President Donald Trump’s threat of steep tariffs on Canadian goods prompted outrage among denizens of the Great White North.
“Now is also the time to choose Canada,” Canadian Prime Minister Justin Trudeau said in an address to the nation Feb. 2. “It might mean changing your summer vacation plans to stay here in Canada.”
While Trump’s tariffs were called off at the eleventh hour, they are only on hold for 30 days. That leaves the door open for further disruptions to U.S.-Canada travel.
That threat has sent shockwaves through the travel industry. The U.S. Travel Association warned that a 10% drop in Canadian visitors could result in as much as $2.1 billion in lost spending at American businesses.
“There’s definitely softness the last couple of weeks,” Frank Satusky, director of network strategy at Porter Airlines, said at the Routes Americas conference in Nassau, Bahamas, last week. “There’s a lot of frustration in Canada."
Air Canada’s vice president of planning and scheduling, Alexandre Lefèvre, described the transborder market as “shaky,” adding that the airline does not see any “immediate slowdown” in travel demand.
Neither Air Canada nor Porter has any immediate plans to pull back on its U.S. schedule. The former has already unveiled new service to Jacksonville International Airport (JAX) this year and the latter to New York's LaGuardia Airport (LGA).
Any extended travel demand weakness, however, could prove challenging for airlines.
Air Canada is the largest airline in the market — and the most exposed to fluctuations in travel demand — with a nearly 43% share of the 9.3 million seats between the U.S. and Canada in the first quarter, schedule data from aviation analytics firm Cirium shows. Air Canada’s share rises to 54% when including joint venture partner United Airlines; the two airlines coordinate schedules and fares on transborder routes.
WestJet is the second largest in the market with a 17% share of seats, and Porter is fourth with a 9% share.
A representative of WestJet at Routes declined to comment.
Complicating the situation is the weak Canadian dollar relative to the U.S. currency. The decline inflates the cost of a trip for anyone exchanging the Canadian currency.
“The weak Canadian dollar is impacting demand,” Lefèvre said. The airline has made some schedule “reductions on the margins” as a result of the currency situation.
To offset the foreign exchange challenge, airlines can sell more seats in the U.S. That’s easy for American carriers that already primarily carry U.S. travelers on flights to Canada. The proposition is more challenging for Canadian airlines that cater primarily to their local market.
Air Canada, however, has a leg up on boosting U.S. sales. First, its partner United handles sales in the country, which gives Air Canada access to a broad and deep pool of travelers, both leisure and corporate. Second, the airline carries a significant number of Americans on its flights across the border and on to Europe and Asia via connections in Montreal, Toronto and Vancouver, British Columbia.
Air travel that begins in one country, involves a flight connection or stopover in another country and ends in a third country is called a “sixth-freedom” trip.
Air Canada is already the largest foreign airline in the U.S. with flights to 50 airports and, as Lefèvre said at Routes, it plans to add as many as 15 more American cities to its map in the next few years. That expansion is fueled by the airline’s sixth-freedom strategy.
“We need to offer more connectivity," Lefèvre said. "We need to offer more dots on the map."
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- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.