The Big Story What airline travel will look like in 2025
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Dec 9, 2024 John Gradek, an aviation management lecturer at McGill University, shares insights into the evolving landscape of airline travel. He discusses Air Canada's new fees for carry-ons and seat selections, questioning the motivations behind these charges. Gradek analyzes how post-pandemic pricing strategies have shifted, causing airlines to adopt ultra-basic tickets with hidden costs. He also explores the competitive dynamics in Canada’s airline industry and the potential for government regulations to ensure fair pricing amidst rising costs.
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Air Canada's Carry-On Fee Justification
- Air Canada claims their new carry-on fees are a "competitive move," matching WestJet and Porter.
- However, this is unusual, as competitive moves usually involve lowering prices, not raising them.
Cash Grab, Not Competition
- John Gradek views Air Canada's new fees as a cash grab, not a competitive move.
- He estimates these fees will generate $10-20 million in additional annual profits for Air Canada.
Airline Profitability and Fees
- The airline industry has recovered to pre-pandemic levels, but profit margins remain low at 2.5-3%.
- Airlines seek ways to boost profits, leading to practices like charging for carry-on bags.