Sunday, June 22, 2025

Canada’s travel crisis is intensifying because domestic airfares are soaring, budget airlines are collapsing, political tensions with the US are deterring cross-border trips, and growing pressure is mounting to open the market to foreign airline competition. As Canadians avoid the United States in protest of hostile rhetoric and trade friction, they’re turning to local travel — only to face prohibitively high ticket prices and shrinking airline options at home. With low-cost carriers like Lynx Air shutting down and subsidiaries such as Swoop and Sunwing absorbed into WestJet, Canada’s airspace is now dominated by two major players, limiting choice and inflating costs. A new report from the Competition Bureau warns that unless bold reforms are introduced — including allowing 100% foreign-owned airlines to serve domestic routes — affordability and access will only worsen, especially for communities outside major cities.

For Canadians hoping to explore their own country this year, the cost of flying has become a major obstacle. With ticket prices often rivaling — or even exceeding — the cost of international trips to Mexico or Europe, domestic travel is beginning to feel out of reach for the average traveler.

A one-way flight from Toronto to Vancouver can cost just as much as a transatlantic journey. For many, this pricing makes no sense. And now, with cross-border travel to the United States declining sharply, more Canadians are trying to stay local — only to be hit with fares that make them think twice.

The problem? A lack of competition.

The current pressure on travelers didn’t happen overnight. It intensified after a series of low-cost airline failures that shrank the market and handed more power to the country’s top two players: and .

, a budget carrier that launched in 2022, abruptly shut down in , citing financial strain and unsustainable market conditions. Soon after, and — both operated by WestJet — were also folded into their parent brand, removing yet another layer of low-cost competition from the skies.

These collapses reduced fare pressure and gave travelers fewer alternatives. Today, most Canadians are left with two main options, and little hope that prices will fall without outside intervention.

At the same time, a chilling shift in Canada–U.S. relations has pushed many Canadians to rethink travel south of the border.

Fueled by rising nationalist rhetoric, trade tension, and open insults from , a growing number of Canadians are choosing not to spend their dollars in the U.S. this summer. That decision has led to a in Canadian bookings to American destinations, leaving popular border towns in states like Vermont and South Carolina reeling from the absence of their northern neighbors.

What began as a cultural statement has now collided with economic reality: Canadians want to travel more locally — but domestic flights are simply too expensive.

To address the growing crisis, the spent over a year reviewing the state of the domestic airline industry. Their findings, released this week, outline a deeply concentrated market where competition is low, fares are high, and barriers for new players are nearly insurmountable.

One of the report’s is a bold call to open domestic Canadian air routes to . These carriers would be required to follow all domestic regulations and use Canadian crews, but they would bring much-needed competition to a market that has grown stale and unaffordable.

The proposal mirrors a similar move that proved successful in , where foreign entry helped lower prices and improve service on once-monopolized routes.

Not everyone supports the idea. Critics argue that foreign carriers could “cherry-pick” the most profitable routes — like Toronto to Vancouver — while ignoring smaller, rural connections that are vital to the country’s regional infrastructure.

Labor groups warn that the plan could come at the expense of , especially in regional aviation markets already struggling to stay connected. While the bureau insists that foreign carriers would still need to hire Canadian crews and adhere to all local laws, the idea of outside competition has sparked fierce debate.

Beyond foreign ownership, the Competition Bureau offered a range of other reforms to shake up the market:

While these changes may not have the same headline impact as foreign airline entry, experts say they’re just as critical to building a more balanced and competitive airline market in Canada.

As the aviation market struggles, other sectors are stepping in to offer relief. The agency managing Canada’s national parks recently launched the , which includes:

It’s a clear attempt to ease the financial burden on domestic travelers and redirect tourism spending into more sustainable, homegrown experiences — especially during a summer when many Canadians are hesitant to cross borders or pay airline premiums.

Canada’s travel crisis is worsening due to soaring domestic airfares, the collapse of budget airlines like Lynx Air, and declining U.S. travel driven by political tensions — all of which have sparked urgent calls to allow foreign airlines into the domestic market to restore competition and lower prices.

While the Competition Bureau’s recommendations mark a clear step toward reform, the federal government is not required to act on any of them. And for now, no formal action has been announced.

That leaves Canadians stuck in a travel limbo — caught between rising domestic costs, fewer airline choices, a shrinking U.S. travel appetite, and an uncertain future for air competition in their own country.

Unless major changes are made, the crisis is likely to grow. Whether Canada opens its skies to foreign airlines or doubles down on protecting its legacy carriers, travelers will be watching — and waiting — for better options to finally take flight.