A work stoppage by Air Canada pilots that lasts more than a week would cost the Canadian economy hundreds of millions of dollars, Desjardins economists predict in an analysis published Thursday.
“We estimate that a two-week pilot strike could result in a loss of GDP [de l’économie canadienne] of approximately $1.4 billion during the month of September,” reads the analysis supervised by Randall Bartlett, senior director of Canadian economic analysis at Desjardins Group.
“A prolonged strike could have even more harmful consequences for the economy. It would represent losses [du PIB] of approximately 98 million per day. In addition, the number of passengers could decrease by 2.1 million,” equivalent to a decline of almost a third (minus 29%) in the monthly number of air transport users in Canada.
In context, the Desjardins economist recalls that “the Canadian air transport industry is valued at 6.7 billion per year and represents approximately 0.3% of the real GDP” of the Canadian economy.
Also, Randall Bartlett points out, “it is an industry that provides an essential means of transportation to many Canadians.”
“Considering that Canada is a large country with a low population density: airlines are not only essential to economic activity, but they are also crucial to connecting cities and regions to each other and to the rest of the world.”
According to the Desjardins economist, another aggravating factor in the impact of a pilot strike at Air Canada is that “the Canadian air transport market is highly concentrated and is dominated by two companies, Air Canada and WestJet, which carry out the vast majority of air travel in Canada.”
According to data analyzed by Randall Bartlett, Air Canada represented 47% of seat kilometers in 2023, or nearly half of the capacity in Canada, while WestJet represented 27%.
Air Canada is also the country’s largest air cargo service provider in terms of capacity.
Therefore, predicts the Desjardins economist, “a short strike would have minimal repercussions on air transport and economic activity, but a prolonged strike [sur deux semaines ou plus] could harm passengers, businesses and industries that rely heavily on this type of transport.”
Furthermore, this analysis of the economic impact of a work stoppage by pilots at Air Canada comes the day after a call for ministerial intervention at the federal level from a coalition of business organizations led by the Canadian Chamber of Commerce.
In a written request to federal Labour Minister Steven MacKinnon, the organizations say “the federal government must act decisively to avoid a work stoppage at Air Canada.”
According to these business organizations, “the consequences of such a work stoppage would affect the entire economy, affecting consumers, employees and Canadian businesses alike. A work stoppage would result in thousands of temporary layoffs for airline employees and will have a negative impact on the air transport ecosystem across the country.”