Air Canada Flight Attendant Strike: The Costly Symptoms of Canada’s Aviation Infrastructure Crisis

The recent Air Canada flight attendant strike that began on August 16, 2025, affecting over 130,000 daily passengers, has once again highlighted the deep structural problems plaguing Canada’s aviation sector. While the government’s swift intervention to force workers back to arbitration within hours may have ended the immediate disruption, it masks a far more concerning reality: Canada’s aviation industry operates under a fundamentally broken cost structure that makes such labor disputes inevitable.

Canada’s government forced Air Canada and its striking flight attendants back to work and into arbitration Saturday after a work stoppage stranded more than 100,000 travelers around the world during the peak summer travel season. The 10,000 flight attendants, represented by CUPE, voted 99.7% in favor of strike action after rejecting Air Canada’s offer of a 38% total compensation increase over four years. The union’s core grievances centered on unpaid work during ground operations and wages that they argued were “below inflation, below market value, below minimum wage.”

The Flight Attendant Cost Fallacy

What makes this strike particularly telling is how little flight attendant wages actually impact ticket prices. According to global airline operating cost data, flight crew salaries and expenses at 8.6% represent a relatively small portion of total airline costs compared to fuel and oil at 28.7% and depreciation at 9.1%. When you drill down further, cabin crew specifically represent an even smaller fraction of overall operational expenses. By labor I believe you mean flight and cabin crew, the percentage is roughly 12%, with cabin crew being just a subset of that figure.

The math is straightforward: even if Air Canada granted flight attendants every demand they made, the impact on ticket prices would be minimal compared to the infrastructure costs that passengers already absorb. Yet airlines consistently frame labor negotiations as existential threats to affordability while remaining conspicuously silent about the infrastructure burden that represents the real driver of high Canadian airfares.

Canada’s Infrastructure Cost Crisis

The true culprit behind Canada’s expensive aviation sector lies in its unique “user pay” model that has created some of the world’s highest operational costs for airlines. Canadian airport fees for landing and terminal use, paid by airlines, are 35 per cent to 75 per cent higher than those at U.S. airports, with the total cost differential reaching 83% higher per seat when passenger fees are included.

Consider the staggering numbers: Pearson charges Air Canada around $1,500 to land a Boeing 737 Max, $7.49 for every domestic passenger on board, and $2.91 for every minute the plane is at the gate. Meanwhile, US airports can charge a maximum of $4.50 USD per ticket while Canada’s 3rd and 4th busiest airports (Montreal and Calgary) both charge $35 CAD, or 400% more than in the US.

The infrastructure cost pyramid extends beyond airports. Nav Canada, the country’s air navigation service provider, raised its fees to airlines by almost 30 per cent in September, 2020, seven months into the pandemic, adding another layer of expense that ultimately flows through to passengers.

The Lease Model Problem

At the root of Canada’s high airport costs lies a fundamentally flawed ownership structure. Canada’s airports are operated on lease from the government and must be returned after a 60 or 80 year period with no debts, creating a financing nightmare that forces airports to rely on user fees rather than traditional debt financing.

This system has generated enormous government revenue while handicapping the aviation sector. The government has collected CAD5 billion in airport rent since 1992, “already well in excess of the value of the assets transferred, and is estimated to collect at least CAD12 billion more over the next 40 years”.

The lease structure creates perverse incentives where airports must constantly raise fees to fund infrastructure improvements while simultaneously paying rent to the federal government. “Almost 60 per cent of the anticipated increase in landing fees is directly attributable to the increase in rent payments to the federal government that the GTAA must pay in 2006 compared to the rent paid in 2005,” exemplifies how this model directly drives up operational costs.

International Comparisons Reveal the Problem

The scale of Canada’s cost disadvantage becomes clear when comparing to international peers. The landing charge is C$11.64 ($8.50) per 1,000kg, based on MTOW. A Boeing 777-300 would be approximately C$3,495 ($2,548) at Toronto Pearson, making it among the world’s most expensive airports for airline operations.

This cost structure has real consequences for competition. Ultra low cost and low cost carriers (ULCCs and LCCs) in America including Frontier, Spirit, JetBlue, and Southwest, which routinely serve Canadian airports for international flights, are heavily disincentivized from entering the Canadian airspace market. Instead, these carriers serve border airports, allowing Canadians to drive across the border for savings of roughly 30% on comparable flights.

The Competition Solution Framework

Addressing Canada’s aviation cost crisis requires systematic reform across multiple dimensions, moving beyond the current oligopoly structure that concentrates 75-85% of domestic traffic between Air Canada and WestJet.

Airport Cost Commoditization

The most impactful reform would involve transitioning Canadian airports to a model similar to the U.S. system, where nearly all airports are owned by state or local governments rather than operating under federal lease agreements. This would eliminate the rent burden that currently flows through to airlines and passengers while enabling airports to access traditional debt financing for infrastructure improvements.

A commoditized airport model would create genuine competition on operational costs rather than the current system where each airport operates as a regional monopoly. Open government contracts to as many bidders as possible. When there are more bidders, competition drives better value for Canadians.

Route Competition Enhancement

Canada’s foreign ownership restrictions and cabotage limitations artificially constrain competition. Canada’s aviation sector is constrained by foreign ownership limits and restrictions on foreign carriers operating domestic routes in Canada (known as cabotage). These restrictions make it harder for airlines to access capital from investors outside Canada.

Eliminating these restrictions would allow foreign carriers to provide domestic service, creating immediate competitive pressure on the Air Canada/WestJet duopoly. For the same destinations, crossing the border can save a traveler roughly 30 percent on fares even with the extra cost of crossing the border by car and parking at one of the American airports.

Security Cost Rationalization

Canada treats aviation security as a user pay service rather than a public good, creating another cost burden unique among developed nations. Mexico is the only NAFTA member that treats aviation security as a public good and imposes no passenger taxes. Shifting security costs to general government funding, as done with other national security functions, would immediately reduce the cost burden on travelers.

Implementation Roadmap

Phase 1: Immediate Relief (6-12 months)

• Freeze current airport rent payments pending comprehensive review
• Eliminate Nav Canada fee increases and establish cost based pricing
• Allow foreign carriers to bid on domestic routes through pilot programs

Phase 2: Structural Reform (1-3 years)

• Transfer airport ownership from federal leases to local government control
• Eliminate foreign ownership restrictions on Canadian airlines
• Transition aviation security funding to general treasury

Phase 3: Competition Enhancement (3-5 years)

• Establish open access requirements at major airports
• Create secondary airport development incentives
• Implement slot trading systems to enhance route competition

Beyond Labor Relations

The Air Canada flight attendant strike represents a symptom, not the disease. While media coverage focused on service disruptions and wage negotiations, the underlying issue remains Canada’s systematically uncompetitive aviation infrastructure. Flight attendant wages, even with generous increases, represent a rounding error compared to the infrastructure cost burden that makes Canadian aviation among the world’s most expensive.

True airline affordability in Canada requires confronting the structural factors that drive costs: government rent extraction, monopolistic airport operations, foreign competition restrictions, and user pay models that treat aviation as a luxury rather than essential infrastructure. Until policymakers address these fundamental issues, Canadians will continue paying premium prices for aviation services while airlines and workers bear the blame for a system designed to extract maximum revenue rather than deliver efficient transportation.

The path forward requires political courage to challenge entrenched revenue streams and regulatory capture, but the economic benefits of genuine aviation competition far exceed the short term costs of reform. Canadians deserve an aviation sector that serves passengers rather than government balance sheets.