Canada 3000 was once considered to be the main alternative airline to Canada’s two national airlines, Air Canada and Canadian Airlines. They offered a comparative advantage to other airlines by offering low fares. In 2000, Canada 3000 decided it wanted to be in the same field as the national airlines, and attempted rapid expansion by acquiring Royal Aviation Inc. and Canjet Airlines. Their expansion strategy was to increase their market by purchasing already existing companies. This growth added many financial problems, resulting in major losses. This led to the companies bankruptcy as they were unable to cope with the new problems caused by the September 11th, 2001 Terrorist Attack.

WestJet on the other hand, has become a major competition to Air Canada by sticking to their plan. WestJet’s business strategy was to be the lowest cots operator in the market specializing in short non-stop flights. Another key element of their business strategy which ties into their growth strategy is that they want maximum use of their aircrafts. Unlike Canada 3000, WestJet had a planned growth strategy that the company followed. They planned to grow by adding new frequently flown routes while maintain the already existing ones. They also hoped to initiate their inter-border business by expanding into the United States. A more steady expansion plan has allowed them to expand into a competitor against Air Canada. This is just one example of the competition Air Canada has to deal with. The competition does not end there as there is also inter-border completion from some American airlines. This competition will lead to Air Canada’s demise in the domestic and inter-border markets.

As of 2007, Air Canada controlled 65% of the Canadian domestic market, but WestJet is coming up with plans to change that, and hopes to control half of the market by 2013. In 2007, WestJet had 63 flights leaving Toronto daily but very few flying in or out of Montréal and none flying to and from Quebec City. The two cities are considered Air Canada strongholds but WestJet is intending on entering this market. President and CEO Sean Durfy realize that to compete in the bilingual markets, WestJet needs to develop a French product. To reach his goal, Durfy estimates that 450 French-speaking flight attendants will be needed. This goal ties into Chandler’s concepts. In order to compete in the French-speaking market that is Montreal and Quebec City, Durfy realizes he has to eliminate the competitive advantage offered by Air Canada. By diversifying his staff, and strengthening its bilingualism, Durfy would be able to offer a comparative advantage. This would provide the same quality service Air Canada offers for francophone flyers, at the same lower price WestJet provides which would allow WestJet to compete for the French Canadian market.

The competition for Air Canada doesn’t end with WestJet in Canada, but there is some heavy competition just on the other side of the border. Plattsburg and Burlington are American cities often frequented for shopping day-trips by Canadians living in Montreal and the surrounding St Lawrence River Area in Quebec. This is no longer the only reason Canadians visit the two cities. The Las Vegas based airline Allegiant Air, began offering non-stop service, twice weekly, to Fort Lauderdale, Florida in November 2007. Allegiant Air’s announcement was one that followed a similar one made by JetBlue Airways announcing that they would be offering the non-stop service to Orlando from Burlington beginning in January 2007. Brian Searles, director of aviation at Burlington International Airport estimates that Canadians represent 30% of the travelers flying from the airport, a number that is rising. The Plattsburg Airport has gone as far as referring to itself as “Montreal’s U.S Airport.” Airport President Garry Douglas explains that it Canadians can take advantage of much lower ticket prices by flying out of Plattsburgh, a seventy-five minute drive from Montreal. Douglas points out that Montreal is the last remaining major North American city without a secondary airport. Douglas is using Allegiant Air as an example to promote his airport to other airlines and persuade them to offer service from his airport. This situation is not unique to the St Lawrence Are of the province of Quebec. Close proximity to American airports cause problems for Air Canada at their largest hub in Toronto at the Pearson International Airport. Buffalo is less than two hours from Toronto, and the Buffalo Niagara International Airport provides much cheaper options in terms of flights to different American cities. The Buffalo airport has charted some significant number increases in recent years. It is not a very scientific method of counting, but the airport started counting licence plate in their parking lots in 2000. In 2000, Ontario licence plates were on the back of about 10% of the cars in the lot. That number has increased to about 30% in recent years. This represents a significant amount of Canadian passengers flying out of Buffalo and not Toronto. A similar situation occurs in Vancouver located about two and half hours from Seattle.

To conclude, Air Canada is on the verge of a major decline in the domestic and inter-border markets because it will not be able to compete with its competition. WestJet’s simple yet strong plan for growth has allowed them to become a huge competitor in the domestic market. They continue to grow and make adjustments to make it work. Furthermore, competition from nearby American cities will take away more customers from Air Canada which will lead to their demise in the inter-border market.

http://www.usatoday.com/travel/flights/2007-09-06-allegiant-canadians_N.htm http://www.atwonline.com/news/story.html?storyID=10172 http://www.buffalonews.com/145/story/389648.html?imw=Y