WestJet CEO Calls for National Aviation Strategy as Soaring Fuel Costs Squeeze Airlines

WestJet CEO Alexis von Hoensbroech is urging Ottawa to rethink how Canada supports its aviation industry, warning that soaring fuel prices, high operating costs and government intervention are threatening airline profitability and the country’s long-term connectivity.

Speaking to the Calgary Chamber of Commerce Thursday (Oct. 29), von Hoensbroech called for a “National Aviation Strategy” that would address mounting financial pressures on Canadian carriers while creating a more competitive and sustainable industry.

His warning comes as airlines grapple with elevated jet fuel prices, rising operating expenses and a regulatory environment that WestJet argues makes Canada one of the most expensive countries in which to operate an airline.

“That is why the fuel story is not only about fuel. Fuel is bringing to light what was already there: Canada’s aviation system has very few shock absorbers left,” said von Hoensbroech.

Fuel Costs Expose Deeper Challenges

According to WestJet, higher fuel prices are exposing longstanding structural weaknesses in Canada’s aviation sector.

While airlines can attempt to offset rising fuel expenses through higher fares, they can recover only a portion of those costs, leaving already narrow profit margins under further pressure, says WestJet.

Meanwhile, expenses related to aircraft, staffing, airports, navigation services, passenger protection regulations and taxes continue to climb.

WestJet argues that the cumulative impact is making it increasingly difficult for Canadian airlines to remain competitive, invest in new routes and maintain affordable air service.

The airline is also taking aim at federal financial assistance provided to certain carriers, arguing that government-backed financing has “unintentionally swayed market dynamics.”

WestJet maintains that these interventions, while intended to support the industry, are making it harder for airlines to recover rising costs and rebuild their financial health.

“We fundamentally believe that governments should not intervene in markets if they want a healthy and competitive industry,” said von Hoensbroech.

The airline pointed to its own 30-year history of commercially funded expansion, including its decision to absorb pandemic-related losses without direct government funding.

Canada falling behind the U.S.?

WestJet also highlighted what it describes as a significant competitive disadvantage compared with airlines operating south of the border.

Citing an international ranking that places Canada 105th out of 119 countries for airline cost competitiveness, von Hoensbroech outlined several differences between the Canadian and American aviation systems.

Among them are airport improvement fees, which WestJet says frequently reach $40 in Canada, compared with a US$4.50 cap on passenger facility charges in the United States.

Canadian carriers also shoulder the full cost of air-navigation services, while their American counterparts benefit from a government-supported model.

WestJet further pointed to Canada’s passenger-rights obligations, emissions-related costs, taxes and fees as additional financial burdens.

Labour disruptions are another concern, with the airline arguing that repeated interruptions in Canada create uncertainty and added costs for carriers and travellers alike.

The company also contrasted the financial support provided to airlines during the COVID-19 pandemic, arguing that Canadian carriers emerged with weaker balance sheets than many U.S. competitors.

For von Hoensbroech, the solution requires a coordinated national approach rather than isolated policy changes.

“We are asking Canada to be bold and strategic in developing a National Aviation Strategy that advances the essential nature of aviation and leads to a competitive, affordable and healthy airline industry.”

Calgary’s aviation growth offers a model

Despite the challenges, von Hoensbroech pointed to Calgary as an example of what coordinated government and industry investment can achieve.

WestJet now serves more than 100 nonstop destinations from Calgary, nearly double its pre-pandemic network, reinforcing the city’s position as the airline’s primary global connecting hub.

That expansion followed an October 2022 memorandum of understanding with the Government of Alberta, under which WestJet committed to concentrating its global connecting operations in Calgary, basing its widebody fleet there and expanding capacity.

The agreement also included commitments from government, airport and business partners to support the airline’s growth.

WestJet says the collaboration has helped attract major aviation investments, including a Lufthansa Technik engine maintenance facility backed by a 15-year, multibillion-dollar contract.

Another development is CAE’s 126,000-square-foot training Centre of Excellence, featuring eight full-flight simulators and cabin training equipment.

Together, the projects are strengthening Calgary’s position as an aviation and aerospace centre while supporting jobs and economic development.

Von Hoensbroech believes a similar approach could work nationally, provided governments and industry stakeholders align around a shared vision for aviation.

“Calgary didn’t get here by changing one policy. We got here by dreaming big together and lining up every decision behind that goal. Canada can do the same,” said von Hoensbroech.