Economy—Air carriers have enjoyed nearly perfect economic conditions. However, a gradual easing of supportive factors on the macroeconomic side—low oil prices and a favourable currency situation—will lead to a gentle moderation in demand for air travel by both domestic and foreign passengers.
New Competitors—Enhanced price competition in the ultra-low-cost carrier segment of the Canadian air travel market will sustain downward pressure on air fares over the next year. The larger incumbent firms have already begun to lower prices to deter potential new entrants.
Strong Performance—Although industry output growth will ease from recent highs, it will remain well above the Canadian average over the medium term. Industry margins will soften as oil prices and labour costs rise, but they will remain above their post-recession average and support steady profitability for the industry beyond the medium term.