Air Canada May Scale Back Flights to US

As Canadians debate heading to the U.S. for business and leisure travel, airlines are carefully monitoring if the grumblings translate into a change in demand. 

"It's still premature to discuss the potential impact, if any, of actual or potential regulatory tariffs or possible retaliations,"  said Mark Galardo, Air Canada's executive vice-president of revenue and network planning, on a conference call last week. He did allow for the possibility that flights would be redeployed to markets with more demand, within Canada and to other popular tourist destinations. 

"We are proactively looking at capacity to U.S. leisure destinations, and we feel that we've got enough opportunity elsewhere to redeploy that capacity,” he said. “If we do see some softness on the U.S. side, because we're not seeing it just yet, we can offset it with some technical changes."

While noting that Air Canada has not seen a notable slump in U.S. bookings yet, Galardo sees the possibility of Canadian travellers opting to stay in Canada rather than head across the border. If that’s the case, Air Canada would add more domestic flights even though he sees the market as being saturated right now.

 "We see some of our competitors adding capacity levels that might be beyond what the market can absorb short term," he said. "But as we go into later Q2 and into Q3, right now it looks like a pretty balanced market and there can be an opportunity in that market, especially if we move some capacity from U.S. leisure destinations. But in the near term... I find the supply and demand imbalance to be a little less optimal."

The U.S. travel industry is bracing for a downturn, resulting in an estimated multi-billion dollar drop in spending if Canadians decide to avoid the U.S.

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