It was perhaps Canada’s most exclusive dance club — with a twist.
Disco music blared from eight-track players. Mirrored walls reflected revellers grooving on the dance floor.
Only this disco club required a passport to get in — and the party took place 10 kilometres up in the sky.
The year was 1971, and Air Canada had just made the audacious decision to transform the upper deck of its first three Boeing 747-100s into a dance floor and bar for first-class passengers.
“Sometimes stewardesses would even dance with customers,” Heather Tregaskes, a flight attendant who worked in the lounge, told the Star in 2004. “It was all so gracious.”
It’s a far cry from today’s flying experience, as passengers strain to fit into ever-shrinking seats, contend with new fees for previously included features and fight for compensation following cancelled and delayed flights.
The road here was paved by the deregulation of the airline industry and the dominance of Air Canada and WestJet over the Canadian market, aviation experts told the Star. And it’s a story foreshadowed by the fate of Air Canada’s flying nightclubs.
Because, after just one gloriously groovy year of service, the dance floors were torn out in favour of regular seating. As Air Canada pilot Donald Quistberg told the Star in 2004: “People figured they could make more money putting seats in there.”
Do Air Canada and WestJet have a duopoly?
The flight experience began deteriorating after Air Canada and WestJet’s domination of Canada’s airline industry, said John Gradek, a faculty lecturer in supply networks and aviation at Montreal’s McGill University.
Air Canada’s flying dance club came amid an age of intense competition in the skies, after the Boeing 747 and other wide-body jets made flying accessible to the general public. But over the following decades, Canada’s airline industry underwent drastic changes — beginning with the de facto deregulation of the airline industry in 1985.
What followed was a bloodbath of competition that saw most major airlines eliminated or absorbed into Air Canada, and later, upstart airline WestJet. After the two consolidated their power, they got to work crushing competitors by pricing them out of the market, Gradek said.
Without competitive pressure to maintain premium offerings or pricing, service has been declining ever since, he said.
But Peter Fitzpatrick, a spokesperson for Air Canada, defended the airline’s aggressive pricing strategy, saying: “Competing on price is normal, all businesses do, it is the basis of an open economy and free market. Consumers like price competition.”
He also denied that there’s a lack of competition in the Canadian market: “The fact is that competition has been increasing in Canada.
“Today there are new domestic players in the industry who were not here a few years ago and they have been growing,” he said. “Internationally, there is a wealth of competition, so much in fact that it takes six billboards driving into Toronto Pearson to list all the carriers.”
But that doesn’t change the fact that Air Canada and WestJet now account for 56 to 78 per cent of all domestic passenger traffic at major airports across the country, according to a market study by the Competition Bureau last June. And despite the success of upstart airlines like Porter and Flair, the market remains “highly concentrated” with competition “fragile,” the study noted.
WestJet did not respond to the Star’s questions by deadline.
Why is flying in Canada so expensive?
It’s a mix between high taxes and fees, and Air Canada and WestJet’s duopoly, experts say.
In 2024, Air Canada’s average domestic airfare was $966 ($694 US) — nearly double the $532 ($382 US) average in the States, iPolitics reported last August. A basket of domestic Canadian flights costs 25 cents per kilometre; a set of comparable flights in Europe costs just 14 cents.
However, when just one new competitor was introduced on a route in Canada, airfares went down by nine per cent on average, according to the Competition Bureau.
But Air Canada asserts that domestic flights are so expensive due to the far higher taxes and fees governments and third parties charge airports and airlines, in comparison to the U.S.
More fees, less service
Things became worse for the Canadian flyer after the rise of low-cost carriers in the early 2000s, explained Gülnaz Bülbül, an associate professor specialized in airline operations research at the University of Waterloo.
In order for traditional airlines to compete, they began “unbundling” services — charging an extra fee for things that were once standard, she said. “This is not a Canada specific situation, but rather a global shift.”
Profit margins for airlines are razor thin — companies might make three to five per cent profit in a good year — and it’s getting worse with rising costs for fuel, labour and aircraft financing, Bülbül explained. “With the crises, such as COVID-19, airlines sought new revenue streams, leading to the rise of ancillary fees.”
But Fitzpatrick defended the unbundling model, saying the intention was to give choice to customers who may have different needs and willingness to pay.
“The idea is you only pay for the services you want or need,” he said. “Importantly, this is not unique to the airline sector. We see this in all industries, companies returning choice to consumers and empowering them.”
Wesley Lesosky, a long-time flight attendant with Air Canada and president of the Air Canada Component at the Canadian Union of Public Employees, saw the changes in real-time.
“All the service on board has definitely deteriorated when it comes to what it used to be,” Lesosky told the Star. He began working at Air Canada in 2002. “When I started, there was always a snack or a full meal service. Now, it’s pretty much transitioned to a pay-for-service model.”
Most recently, WestJet found itself embroiled in controversy after shrinking the legroom on some planes for most economy seats — before making the costly decision to reverse the reconfiguration following public backlash.
But that’s not the first time airline seats have shrunk. In the economy class of Air Canada’s early 747s, passengers enjoyed an estimated 33 inches of pitch — the distance between one seat and the one in front or behind it — and 19 inches of seat width, said Gregor Milne, director of AeroLOPA, a service that publicizes aircraft seating plans.
In comparison, Air Canada’s modern 787s have only 31 inches of pitch and 17 inches of width.
How can we fix this?
The answer seems simple: Increase competition, improve passenger protections and reduce the fees making domestic travel more expensive, the experts say.
Hicham Ayoun, a spokesperson for Transport Canada, said Canada’s Air Passenger Protection Regulations (APPR) are already battling junk and ancillary fees by mandating airlines be transparent about the fees they charge, like providing customers with a breakdown of fees for optional services.
But Gabor Lukacs, the president and founder of Canadian non-profit Air Passenger Rights, said there’s much more the government could be doing. He pointed to how EU regulators recently voted to review air passenger protections, which could introduce the right to bring aboard carry-on luggage at no additional cost and enable faster and simpler reimbursement.
As for sparking new competition, Gradek believes it’s time for the government to step in. He suggested implementing price floors for Air Canada and WestJet on certain routes, which could allow upstart competitors to compete with low fares without.
“Canadians have been conditioned to dealing with this duopoly for years,” he said. “My take is that maybe it’s time we talk about regulation again.”
