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Industry Difficulties

Through the 1960s and 1970s, Canada’s airline industry was tightly regulated by the Federal government to protect the position of Trans Canada Airlines (TCA) as the main carrier. The regulations dictated what airline could fly where, when, and how frequently.

These regulations often denied airlines other than TCA from flying in lucrative markets, but it also forced TCA to fly where there was limited profitability. With negotiations, unprofitable routes were handed over to private carriers like Pacific Western Airlines. In 1963, for example, PWA received the right to fly between Edmonton and Calgary with its AirBus service.

At the same time, the Federal government was providing subsidies to airlines to assist with the unprofitable routes. There was a period where the profitability of airlines improved substantially as the economy improved. However, economic down turns had significant impacts on the airlines.

In 1987, the airline industry was deregulated and there was optimism as newly formed Canadian Airlines and Air Canada expanded their fleets, expecting continuous growth, but a worldwide economic downturn caused airlines to face increasing debt loads in the 1990s.

By 1999, Canadian and Air Canada merged to become more viable, but the debt and structural problems forced Air Canada to file for bankruptcy protection on April 1, 2003. Air Canada emerged from bankruptcy protection on September 30, 2004.

The difficulties that were faced by the airline industry have brought about an entirely new way of doing business. Smaller aircraft are used, and flights booked in such a way as to ensure fewer empty seats.
 

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