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
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.