Could Canada Ever Have Cheap Domestic Flights?

Imagine booking a round-trip flight from Vancouver to Toronto for $99, or Montreal to Calgary for $150. Sounds like a fantasy, and for most Canadians, it probably feels like one too. Except you are very very lucky to score an error flight! 

In this post, I explored the reasons for the astronomical high prices. The next logical question is whether that could ever change? Could Canada actually have affordable domestic air travel one day? Or are high prices simply part of the deal when you live in a huge country with a small population? The honest answer is cheaper domestic flights are possible, but truly cheap flights would require major policy changes, and even then, there are limits.

Baseline Problems

The dream of cheap flights within Canada feels unrealistic for good reason. Domestic air travel here is shaped by some big structural problems. Canada is a vast country with long travel distances, relatively low population density, limited airline competition, high fees, taxes, and airport costs, and infrastructure bottlenecks at major airports.This is not just about airlines charging whatever they want, it is also about the system around them. That said, expensive airfare is not inevitable. Other countries with their own geographic and market challenges have managed to keep domestic flights more affordable than Canada has. 

Lessons From Other Countries

Before thinking about what Canada could do differently, we can maybe take a closer look at countries that have already made domestic air travel more affordable. Not all of them are perfect by comparisons, but they do show that policy choices matter. Cheap airfare does not happen by accident, the governments and markets have to create the right conditions for competition, lower costs, and enough passenger demand.

Europe’s Budget Airline Revolution

Europe is probably the most famous example of cheap air travel. Flights like London to Barcelona or London to Rome can sometimes cost less than a dinner out at a restaurant. That did not happen because Europe is magically better at flying, it happened because the market was opened up in ways that encouraged aggressive competition. Three things made a big difference:

Open skies and deregulation

After air travel was deregulated across the European Union in the 1990s, airlines gained much more freedom to operate across borders without restrictions. This meant more competition on more routes.

Secondary airports

Budget airlines avoided the most expensive airports and focused instead on smaller, cheaper alternatives outside major cities. This seemingly small change help them lower landing fees and operating costs.

Bare-bones service

Low-cost carriers in Europe stripped away almost everything that was not essential. No free checked bags, no meals, no extras unless you pay. This is the same model Frontier Airlines in Canada adopted, but even they have not been able to get flight prices in Canada to as low as customers would like.

Now, Europe has obvious advantages Canada does not. Population density is much higher, and distances are often shorter. But Europe still proves an important point in that competition and policy reform can dramatically lower fares.

Australia as a Better Comparison for Canada

If Europe feels too different from Canada, Australia is a better comparison. Australia is also a large country with low population density and long distances between major cities. Yet, domestic flights there are usually more affordable than in Canada. One major benefit that favours Australia’s airline industry is competition. The country has several airlines competing in its domestic market, including Qantas, Virgin Australia, Jetstar, and Rex; but just as importantly, Australia treats aviation more like essential national infrastructure. Airports receive stronger support, and the cost structure is less punishing than it is in Canada. Australia shows that geography alone does not explain Canada’s expensive airfares. Policy decisions play a huge role too.

Lessons from the Airline Industry in the United States

The United States is another useful comparison. It is not a perfect model, and its airline industry has plenty of problems, but domestic air travel there is still often cheaper than in Canada and that comes down largely to two things:

More competition

The U.S. market has several major airlines plus multiple low-cost and ultra-low-cost carriers competing on routes.

Different airport funding

American airports receive much more direct public support and are treated more like public infrastructure, similar to roads or bridges. In Canada, airports are expected to support themselves much more directly, and that cost gets pushed onto airlines and passengers. So again, the lesson is clear- how a country funds and regulates aviation affects what travellers end up paying.

Path to Change for Canada 

If Canada seriously wanted cheaper domestic flights, it would need to rethink air travel at a policy level. This would not be about one small reform, it would require several coordinated changes working together.

The biggest areas would be airport fee and rent reform, more competition, lower taxes and regulatory costs, better airport and rail infrastructure. Let’s break those down.

Importance of Airport Fees and Rent

A major part of Canadian airfare has nothing to do with the airline’s actual base fare. Once you start adding in charges like airport improvement fees, security charges, navigation surcharges, and taxes, the total price can jump quickly. That means one of the most direct ways to lower fares would be to reduce some of those costs. Possible changes could include eliminating or reducing airport rent paid to the federal government, capping airport improvement fees, providing more direct public funding to airports, and aligning other fees more closely with U.S. levels. For travellers, this could make a real difference. Even moderate reform could shave meaningful dollars off a round-trip ticket.

Increased Competition in Lowering Prices

Canada’s domestic airline market is still dominated by a small number of large players, and this is a problem for price competition. If Canada wanted lower fares, it would likely need to make the market easier to enter and harder to dominate. Meaningful changes like relaxing cabotage rules in limited cases, revisiting foreign ownership caps, making it easier for new carriers to access gates and slots, supporting conditions where budget airlines can actually survive matters a lot in encouraging competition. 

Review of Taxes and Regulatory Costs 

Airlines and passengers in Canada also face a heavier burden from taxes and regulatory charges than many travellers realize. There are charges related to passenger security, airport operations, fuel, carbon costs etc. None of these exist in a vacuum. Airlines pass many of these costs directly or indirectly on to passengers. Government could make travel more affordable by reviewing all of the security charge increases, NAV Canada’s fee structure, fuel tax treatment, broader regulatory costs affecting domestic routesThese may sound like technical issues, but together they have a real impact on ticket prices.

Emphasis on Infrastructure Investment

Canada’s busiest airports already face capacity pressure. When airport slots and gates are limited, it becomes harder for new airlines to enter and harder for existing airlines to expand service. That keeps supply tight, which helps keep prices high. Longer-term solutions could include expanding capacity at major airports, investing in secondary airports, improving terminal and gate access, building better rail alternatives in key corridors such as Toronto–Ottawa–Montreal. More infrastructure means more flexibility. More flexibility can support more competition, and more competition can bring fares down.

The Real Barriers to Cheaper Flights

Now for the difficult part; even if all these ideas make sense in theory, implementing them is much harder.

Political barriers

Airport rent generates revenue for government. Reducing or removing it means giving up money or replacing it elsewhere. There are also regional concerns. Policies that help major routes like Toronto–Vancouver may do very little for remote communities, and governments have to think about the entire country. There is also the national carrier argument. More foreign competition could put pressure on Canadian airlines, which raises concerns about jobs, service levels, and national control over an important industry.

Economic realities

Even with better policy, Canada would still be an expensive place for airlines to operate. There is still harsh weather, long distances, lower passenger density, a smaller overall market than the U.S. or Europe. Budget airlines also face a tough cycle here. They need high passenger volume to keep fares low, but they need low fares first to attract that volume.

Trade-offs

Every solution comes with trade-offs. If airport costs are reduced, somebody still has to pay for airport infrastructure. If foreign competition increases, what happens to service on less profitable routes? If profitable routes become more competitive, do large carriers reduce cross-subsidized service to smaller communities? These are real policy questions, and they do not have easy answers.

What Is Actually Realistic in the Next 2 to 10 Years

So what could realistically happen?

In the short term: modest improvement

Over the next 2 to 5 years, the most realistic outcome would be smaller reforms, such as slight reductions or caps on airport rent, partial fee relief, one or two more competitive carriers surviving on major routes. That could produce more modest fare declines on high-demand routes, especially between major cities.

In the medium term: bigger reform is possible

Over 5 to 10 years, if governments made domestic travel a stronger policy priority, Canada could see more meaningful changes. That might include eliminating airport rent, giving airports more direct public funding, limited cabotage reform, stronger competition on major routes, more serious transportation infrastructure investment. That would not create European-style bargain airfare, but it could make domestic travel significantly more affordable than it is now.

What probably will not happen is the arrival of ultra-cheap, ultra-frequent domestic airfare on the scale seen in Europe. Canada is simply too large, too sparsely populated, and too expensive to operate in for that to become the norm. So the realistic goal is not “cheap” in the Ryanair sense. It is cheaper flights (compared to what we have currently).

Conclusion

Canada could absolutely have more affordable domestic flights than it does today. But that would require major policy changes and a different way of thinking about mobility. Right now, air travel in Canada is largely treated as a private purchase under a user-pay model. If Canada wants more affordable domestic flying, it would need to treat mobility more like a public good, something that supports national connection, economic growth, and access across a very large country. Until then, many Canadians will keep doing what the system quietly encourages: flying abroad for vacations instead of exploring more of their own country.

The problem is not that affordable domestic travel is impossible. It is that Canada has not yet fully decided that it is worth building.