The State of North American Transborder Demand
President Trump has started a trade war with Mexico and Canada. He's also threatening Canada's sovereignty. How bad is this for Canadian and Mexican airlines?
Dear readers,
I’m back from a wonderful but short spring break with my kids (Phoenix is underrated, and yes, I flew Southwest — way more comfortable than Frontier). Today, I am updating you on a few things I’ve learned about the fallout from President Trump’s economic war with Canada and Mexico, as well as this administration’s attacks on Canadian sovereignty.
I recently spoke with executives from Flair, Air Canada, Porter, and Viva (the Mexican airline that once had the best name in all of the Americas1). All told me roughly the same thing: don’t believe all fatalistic accounts you see or read. Or, said a different way: demand is a lot worse than it should be, but this is not a repeat of spring 2020, when airplanes flew empty day after day. The executives assured me that these are the kind of problems that can be solved with targeted cuts and maybe some fare sales, but they don’t require the massive overhaul to networks that recent media reports might suggest.
I think Eric Tanner, vice president of commercial at Flair, said it best when I asked whether there’s truth to the social media memes I’ve seen comparing two pictures of U.S. Customs and Border Protection pre-clearance waiting areas at Canadian airports — one an image of a packed room from spring 2024, and the other an empty space, purportedly from spring break 2025. “Memes are kind of silly,” Tanner said. He said people are still visiting the United States this month for vacation, if only because they bought their tickets a long time ago and preferred Arizona sun and Orlando theme parks to cancelling or paying a fortune to switch destinations.
At the same time, many of you are seeing (and sharing with me) information about hefty capacity cuts and very low fares. One top commercial executive from a U.S. airline told me that while his airline doesn't "have a dog in the fight," he is seeing some "crazy stuff" in pricing between the United States and Canada, suggesting things might be worse than any airline wants to admit to journalists. Another subscriber sent me an unsolicited email on Wednesday with the subject line: “Canadian airlines are screwed,” noting that in March, flights between the United States and Canada accounted for 30 percent of Air Canada’s seats, 24 percent of WestJet’s, and 41 percent of Porter’s, according to this person’s search of Cirium data.
OAG released a blog post on Wednesday that got many of you talking even more, because it suggests the bottom might be falling out of the market. First, OAG verified what you’ve been telling me: airlines have made capacity cuts in the last three weeks, slashing the number of seats in the U.S-Canada market by 3.5 percent for July and August, just in filings between March 3-24. But it’s OAG’s warnings about future bookings that are most dire; using data from a "major GDS supplier," OAG said bookings for the next six months are down more than 70 percent year-over-year.
After I published this story, Christophe Hennebelle, Air Canada’s vice president of corporate communications, wrote to me to push back against OAG’s blog post. “This is not reflective of Air Canada’s booking patterns, nor the state of the market, based on all information sources available to us,” he said in email. “While we have experienced a softening in the transborder market … the decline Air Canada has experienced is not of the magnitude cited in the blog. According to our information, when aggregating all indirect and direct booking channels, the decline is significantly less.”
So what is going on and how will airlines deal with it? And how do the Canadian and Mexican markets differ? Here's what Canadian and Mexican airline executives are telling me, as they promise us that they will be OK.