ANALYSIS: Air Canada Raises Fuel Surcharges — Who’s Really Footing the Bill?

The Actual State of the Energy Markets in 2026

To assess the validity of the fare increase announced by Air Canada, it is essential to take a dispassionate look at what is happening in the oil markets at the start of 2026. The price of a barrel of Brent crude—the global benchmark for crude oil—has fluctuated significantly in recent months, swinging between downward pressure linked to the global economic slowdown and upward pressure linked to persistent geopolitical tensions, particularly in the Red Sea and the Middle East. The International Energy Agency (IEA) has regularly updated its global demand forecasts, while OPEC+ maintains a policy of production cuts that artificially props up prices. In this complex and shifting context, it is difficult to establish a simple and direct correlation between changes in the price per barrel and Air Canada’s specific decision to increase its surcharges in March 2026.

What is clear, however, is that aviation kerosene—jet fuel—follows its own market dynamics, distinct from those of crude oil. It is refined differently, stored differently, and its price is influenced by refining capacity factors that are not always directly linked to the price of a barrel of crude. Major airlines, including Air Canada, also use financial hedging instruments to protect themselves against fuel price fluctuations. These futures contracts allow the airline to purchase fuel at prices set in advance, which means that its actual fuel cost does not necessarily reflect spot market prices at any given time. In other words: Air Canada knows exactly how much its fuel costs, and this information is never shared with consumers who pay the surcharges.

The sorely lacking transparency

This is precisely where the problem lies. In a truly transparent market, an airline that increases its fuel surcharges should be able to demonstrate, with supporting figures, that its actual fuel costs have risen by a comparable amount. It should be able to explain how—or how not—its hedging strategies influence this calculation. It should specify what proportion of the increase is absorbed by the airline and what proportion is passed on to the consumer. None of this exists in the Canadian airline industry. Airlines announce adjustments, vaguely justify them with references to operating costs, and consumers pay without having access to the data that would allow them to assess the legitimacy of these decisions. The Canadian Consumer Council and the Canadian Transportation Agency (CTA) have a crucial role to play in this area—a role that falls far short of what one might hope for.

Price transparency in the Canadian airline industry is a carefully maintained fiction. Prices are posted, and surcharges are justified, but the actual data that would allow consumers to judge the fairness of these prices remains jealously guarded in the vaults of the major airlines. This information asymmetry systematically benefits the industry.

Results That Tell a Completely Different Story

Air Canada is not a struggling airline begging its customers to help it survive. It’s important to make that clear. After the disastrous years of the COVID-19 pandemic (2020–2022), the airline has made a remarkable recovery, driven by a surge in travel demand in 2023 and 2024. The company’s financial results over the past few quarters reflect a return to and consolidation of profitability. Passenger traffic has returned to and exceeded pre-pandemic levels on several key routes. Revenue per available seat kilometer (RASK) has shown a positive trend. Management has paid substantial bonuses to its senior executives, a sign that business is going well. In this context, presenting an increase in fuel surcharges as a mere, unavoidable operational necessity deserves to be questioned quite vigorously.

It is true that airlines operate with structurally narrow profit margins compared to other industries. Warren Buffett, one of the world’s most respected investors, has long avoided the airline sector precisely because of its difficulty in generating sustainable returns on invested capital. But this structural reality does not automatically justify every individual pricing decision. Air Canada enjoys a dominant position on many Canadian routes, an Aeroplan loyalty program that generates considerable revenue far beyond air travel itself, and competitive advantages that few of its competitors can match. This position of strength provides a relevant context for assessing the legitimacy of decisions that shift costs onto travelers.

Shareholder Interests Versus Passenger Interests

There is a fundamental tension in the governance of a large publicly traded company like Air Canada. On the one hand, shareholders expect returns on their investment, which incentivizes management to maximize revenue and minimize costs at every possible opportunity. On the other hand, travelers—who are often locked into certain routes with no serious alternatives—expect fares that reflect actual costs rather than the extraction of maximum value. Fuel surcharges are a particularly effective tool for serving shareholders’ interests: they allow the company to increase revenue without appearing to raise ticket prices, they can be justified by external factors (the price of oil), and they generate additional revenue from tickets redeemed with Aeroplan points—a source of revenue often overlooked in public discussions about these fees.

A company that announces multimillion-dollar bonuses for its executives while raising its fuel surcharges, citing pressure on its operating margins… you’d have to have a certain tolerance for cognitive dissonance to swallow that without batting an eye.

Cents that turn into dollars that turn into hundreds

When the media and airlines talk about a modest impact on prices, they often think in terms of the marginal change on a single ticket. And it’s true that if the fuel surcharge increases by a few dollars on a Montreal-Toronto flight, the immediate impact seems limited. But let’s take a broader view of the situation. Air Canada carries tens of millions of passengers each year. A $10 increase per ticket across its entire passenger base represents hundreds of millions of dollars in additional annual revenue for the company. What the individual traveler perceives as modest is, on a corporate scale, a massive fare adjustment. And this asymmetry—what is small for each individual is enormous for the whole—lies at the heart of the pricing strategy of large companies across all sectors, not just the airline industry.

For a typical Canadian traveler who flies four to six times a year—for business trips, family visits, or vacations—the accumulation of fuel surcharges represents a significant annual expense. Let’s take a concrete example: a round-trip flight from Quebec City to Vancouver with a fuel surcharge of $80 per leg. That amounts to $160 in surcharges for that trip alone. Multiply that by several trips a year, add in international travel where surcharges are even higher, and you easily reach $500 to $1,000 or more in fuel surcharges per year for a frequent traveler. This is no longer a modest expense—it’s a substantial one. And unlike government taxes, these funds don’t finance any public infrastructure. They go directly into Air Canada’s coffers.

Families, seasonal workers, remote communities

The impact of airline fare increases is not evenly distributed across Canadian society. For residents of major metropolitan areas well-served by multiple modes of transportation, flying is often a convenient but non-essential choice. For residents of northern and remote communities in Quebec, Nunavut, the Northwest Territories, and the Yukon, flying is not a luxury—it is often the only way to access specialized medical care, visit loved ones, or maintain economic ties with the rest of the country. For these populations, often among the most economically vulnerable, every increase in the fuel surcharge puts additional strain on budgets that are already extremely tight. This is a dimension of this story that corporate announcements never mention—and that mainstream media coverage struggles to highlight.

There is something profoundly unequal about the way airfare increases impact Canadian society. Those with the fewest choices pay proportionally the most. This is a reality that our policymakers should constantly keep in mind when reviewing the regulatory framework for air travel.

The Canadian Transportation Agency: Guardian or Observer?

The Canadian Transportation Agency (CTA) is the federal agency responsible for regulating air transportation in Canada. Its mandate includes protecting air passengers’ rights, enforcing the Air Passenger Rights Charter, and overseeing the fare practices of carriers operating under a Canadian license. In theory, it is an important institution. In practice, its powers regarding fuel surcharges and general fare practices are extremely limited. The CTA can intervene when an airline fails to adhere to its own published fares, or when rights specifically protected by regulation are violated. But it cannot tell Air Canada that its fuel surcharges are too high or do not reflect its actual costs. That simply falls outside its jurisdiction as it currently stands.

This regulatory gap is well known, well documented, and regularly criticized by consumer advocacy groups. The Consumers’ Council of Canada, Option consommateurs in Quebec, and other organizations have long called for reform of the regulatory framework to enforce greater transparency regarding the breakdown of airfare prices. These calls have yielded only modest results. The Air Passenger Rights Charter, which came into effect in 2019, improved passengers’ rights in the event of delays, cancellations, and overbooking—this was a real step forward. But it did not address the opaque pricing practices that allow airlines to vary their fuel surcharges at will, without substantial accountability to consumers or the public.

What Other Countries Are Doing

Canada is not alone in facing this challenge. Several countries and economic blocs have adopted different approaches to regulating airlines’ pricing practices. The European Union, through its regulation on price transparency in air transport, requires that the final price displayed always be the total price—including all taxes and surcharges—from the very first click. While this rule does not cap surcharges, it at least mandates their full and immediate disclosure, making price comparisons fairer for consumers. Australia and the United Kingdom also have regulatory frameworks that require greater transparency regarding the composition of airfares. Canada, for its part, has adopted similar total price disclosure rules, but these remain insufficient to allow for a genuine assessment of the legitimacy of the individual components of that price, particularly fuel surcharges.

When comparing Canada to the European Union in terms of consumer protection in air travel, it becomes clear that we are not among the leaders. We are in the middle of the pack, with a long way to go. And while we waited for serious reforms, airlines have continued to optimize their pricing strategies to their advantage.

A duopoly that dictates everything

To understand why Air Canada can afford to raise its fuel surcharges without fear of losing large numbers of customers to the competition, one must take a clear-eyed look at the structure of the Canadian airline market. Canada is essentially a duopoly: Air Canada and WestJet dominate the domestic market, with combined market shares exceeding 85% to 90% on most major routes. Porter Airlines, Flair Airlines, and a few other low-cost carriers occupy specific niches and slots, but do not constitute a serious alternative across the entire national network. In such a context of limited competition, the market discipline that should theoretically prevent unjustified price increases simply does not function as it should.

This duopoly is the result of a long and complex history marked by consolidations, bankruptcies (such as Canadian Airlines in 2001), and protectionist policies that have long restricted foreign carriers’ access to the Canadian domestic market. The gradual liberalization of the sector has brought in new low-cost carriers, but their impact on prices has been less transformative than advocates of deregulation had hoped. On many regional routes and to secondary destinations, Air Canada operates as a de facto monopoly, which gives it pricing power that few companies in other sectors can afford to exercise so openly. It is within this context that every decision to raise fuel surcharges must be evaluated.

Will WestJet follow suit?

A practical question immediately arises when Air Canada announces an increase in its fuel surcharges: Will WestJet follow suit? The history of the Canadian airline industry shows that the two major carriers tend to quickly align their pricing strategies on routes where they compete directly. This phenomenon—which economists call price leadership or, less flatteringly, implicit price coordination—requires no formal agreement between the companies. All it takes is for each to monitor the other’s decisions and react rationally to maximize its own revenue. If WestJet keeps its surcharges lower than Air Canada’s after this increase, it will gain customers on competitive routes. But if it follows suit, both airlines will increase their revenue without losing market share at the other’s expense. Guess which of these options is most likely.

A duopoly is a form of competition that is just real enough to prevent regulators from intervening, but just limited enough to keep prices well above what a truly competitive market would produce. Canadian travelers have been paying this premium for decades, and fuel surcharge increases are one of the most visible manifestations of this structural reality.

The Art of Minimizing While Maximizing

The way Air Canada communicates its fare increases deserves analysis in and of itself, given how sophisticated its approach is. The March 2026 announcement, as reported by the Journal de Québec, follows a well-established communication strategy. First, acknowledge the increase without exaggerating it: yes, surcharges are going up, but no specific figures are given that might fuel a negative reaction. Second, immediately put it into perspective: the impact on prices remains modest. This description is particularly effective because it is vague—modest compared to what? Compared to the total ticket price? Compared to inflation? Compared to other airlines’ surcharges? The comparison is never specified, leaving the consumer in the dark but reassured. Third, cite external factors to justify the decision—fuel prices, market conditions, operational pressures—which depoliticizes the decision and presents it as a necessity rather than a choice.

This type of corporate communication is not unique to Air Canada—it’s a widespread practice throughout the industry and far beyond. But mastering it as well as the major airlines do requires years of practice and top-tier communications and public relations teams. Every word is weighed, every phrasing is tested. The goal is not to provide consumers with comprehensive and balanced information—it is to manage the public’s reaction in a way that minimizes negative fallout while justifying the revenue increase. This is perception management, not transparent communication. And since the media reports on the announcement by essentially adopting the framing proposed by the airline—the impact remains modest—it’s fair to say that the strategy is working.

The Media’s Role in Normalizing Price Hikes

It would be unfair to single out Air Canada in this story without mentioning the role the media plays in normalizing these practices. Economic and business journalism, in its most common forms, tends to report on corporate decisions through the lens that the companies themselves provide. A surcharge increase is presented as economic news, not as a political decision that affects consumers’ well-being. The sources cited are often financial analysts whose job is to assess the impact of these decisions on Air Canada’s market value—a legitimate but partial perspective. The voices of consumers, advocacy groups, and transportation policy experts—who could offer a more sustained critical perspective—are rarely given equal weight in this type of article. This asymmetry in representation helps normalize practices that deserve to be scrutinized much more vigorously.

Media coverage of major airlines’ pricing decisions often resembles corporate PR rather than genuine, critical economic journalism. When the airline’s description as “modest” appears in the article’s headline, one is justified in wondering who actually wrote that headline.

When Fuel Surcharges Also Apply to Award Tickets

There’s one particularly frustrating aspect of rising fuel surcharges that rarely gets the attention it deserves: its impact on Aeroplan loyalty program members. Millions of Canadians patiently accumulate Aeroplan points—through their everyday credit card purchases, hotel stays, car rentals, and, of course, flights—in the hope of one day treating themselves to a free or discounted trip. What many don’t fully realize is that even when redeeming points for a flight, fuel surcharges are generally still payable in cash. As a result, on a transatlantic flight redeemed with Aeroplan points, a traveler may end up paying several hundred dollars in fuel surcharges and taxes, significantly reducing the perceived value of the loyalty program.

The increase in fuel surcharges announced in March 2026 therefore affects not only travelers who pay for their tickets with cash but also loyal Aeroplan members who use their valuable points. It’s a double whammy: on one hand, Air Canada benefits financially from selling points to partners (credit card issuers who buy these points in bulk), and on the other, it continues to collect significant surcharges even on supposedly free tickets. This practice is legal and disclosed in the fine print of the program’s terms and conditions, but it raises legitimate questions about the true value of what the Aeroplan program promises its members.

The Eroding Real Value of an Aeroplan Point

Analysts specializing in loyalty programs have observed, over the years, a gradual erosion of the value of Aeroplan points. Formal devaluations—when the number of points required for a specific trip increases—make headlines when they occur. But there is a quieter, more insidious form of devaluation at work through fuel surcharges: even when the face value of a point remains stable, rising surcharges increase the actual monetary cost of a trip redeemed with points. If the fuel surcharge increases by $20 on a round-trip flight, the effective value of the point used for that trip decreases by the same amount. This is a form of devaluation in disguise, one that systematically benefits Air Canada at the expense of its most loyal members—precisely those who have placed the most trust in the program.

There is something particularly troubling about the idea that a program designed to reward loyalty is structured in a way that allows the airline to extract value even when the customer thinks they are using their “rewards.” Fuel surcharges on Aeroplan tickets are the perfect illustration of this paradox.

Accessibility, Mobility, and Social Justice

The debate over Air Canada’s fuel surcharges cannot be confined to the technical realm of fare structures and financial markets. It touches on fundamental questions about the accessibility of air travel in a country as geographically vast as Canada. In a country where the distances between major urban centers are sometimes comparable to those separating entire nations in Europe, air travel is not a luxury reserved for the wealthy—it is often an essential means of transportation. The question of who can afford to fly, and at what cost, is therefore as much a matter of social justice as it is a market issue.

Inequalities in access to air travel manifest themselves on several levels. First, there is geographic inequality: residents of major metropolitan areas generally have access to more competitive prices thanks to greater supply and fiercer competition. Residents of smaller cities and rural areas often pay higher base fares, on top of which fuel surcharges are added for routes that are often not very competitive. Then there is economic inequality: affluent travelers can often avoid or minimize these surcharges through their elite loyalty programs, their flexibility with travel dates, and their access to business-class tickets purchased in advance by their employers. Travelers with modest incomes, who book at the last minute or on routes with little competition, bear the full brunt of these costs. Fuel surcharges are, in this sense, a regressive pricing tool—they disproportionately affect those with the fewest resources and the least flexibility.

The Urgent Need for a Renewed National Aviation Policy

Canada’s national air transport policy is an outdated document, drafted in an economic and technological context vastly different from today’s. The rise of low-cost carriers, the digital revolution in ticket sales and distribution, the emergence of climate concerns related to aviation emissions, and the transformation of post-pandemic travel habits collectively call for a thorough review of the framework within which domestic airlines operate. This review should include, among other things, increased transparency requirements regarding fare structure, strengthened powers for the CTA to assess the legitimacy of non-governmental surcharges, and a serious reevaluation of mechanisms to protect competition in a market as concentrated as Canada’s air transport sector.

Air travel is a national infrastructure. Treating its fare-related dysfunctions as mere market issues amounts to ignoring the fact that, in 21st-century Canada, access to mobility is as much a matter of citizenship as it is a matter of consumer choice.

What You Can Do in Practice

Faced with Air Canada’s rising fuel surcharges, travelers aren’t entirely powerless, even if their options are often limited. First, systematically comparing prices remains the most powerful tool available to consumers. Aggregators like Google Flights, Kayak, Skyscanner, and Momondo let you quickly compare total prices (including taxes and fees) among different airlines on the same route. On routes where WestJet, Porter, or Flair offer an alternative, this comparison can reveal significant differences. Second, flexibility with travel dates remains one of the most effective ways to reduce the total cost of a ticket. Calendar-based price search tools make it easy to quickly identify the most advantageous fare windows. Third, for frequent travelers, understanding exactly how fuel surcharges apply to Aeroplan redemptions and factoring this into the calculation of the true value of their points can lead to more optimal redemption strategies.

Beyond individual strategies, there are class-action remedies that deserve greater awareness. The CTA accepts complaints from air passengers regarding pricing practices—even though its powers to intervene remain limited when it comes to surcharges, documenting systemic issues helps build a case for future reforms. Consumer advocacy groups such as Option consommateurs in Quebec or the Consumers’ Council of Canada collect testimonials and lobby for regulatory reforms. Supporting these organizations, even symbolically, strengthens their ability to influence policy. Finally, elected officials—particularly at the federal level, since air transportation falls under federal jurisdiction—are legitimate channels for voicing concerns about the airline industry’s pricing practices.

Misguided Approaches to Avoid

It is also important to mention what is unlikely to work. Individual boycotts of Air Canada are largely ineffective in a duopolistic market: on many routes, the alternative is simply the other major carrier, which follows similar policies. Expressing outrage on social media, while sometimes receiving media coverage, has limited impact on decisions as structural as fuel surcharge policies. And individual legal challenges against surcharge increases are generally unfeasible: the amounts at stake for an individual consumer are too small to justify the legal costs, and the fare conditions published by the airlines generally give them broad discretion to adjust their surcharges. The real leverage lies in collective, regulatory, and political action—which requires a longer-term commitment and is less immediately satisfying than posting one’s dissatisfaction online.

Individual powerlessness in the face of large corporations is real, but it is not absolute. The regulatory changes that have truly improved the situation for consumers in air travel—and there have been some—all began with collective mobilization, the groundwork laid by advocacy organizations, and sustained political pressure. Patience and perseverance are weapons in their own right.

When Fuel Surcharges Meet Decarbonization

Any analysis of Air Canada’s fuel surcharges in 2026 would be incomplete without addressing the climate dimension. Aviation accounts for approximately 2.5% to 3.5% of global greenhouse gas emissions when all of aviation’s climate impacts are taken into account (including contrails and high-altitude effects). The sector is under increasing pressure to accelerate its decarbonization efforts. Air Canada has announced ambitious goals to reduce its emissions, notably through the adoption of sustainable aviation fuels (SAF). These alternative fuels, produced from agricultural waste, forest residues, or other renewable sources, are currently two to five times more expensive than conventional kerosene. This raises the question: Is the increase in fuel surcharges linked, in part, to the costs of the aviation sector’s energy transition? The airline has not provided a detailed breakdown that would allow this question to be answered with certainty.

This ambiguity raises an interesting issue in climate governance. If part of the surcharges is indeed used to fund the adoption of SAF or other decarbonization technologies, one could argue that this is a legitimate—even desirable—use of these funds. Travelers who want to support the aviation sector’s climate transition might even be willing to pay more if the use of these funds were clearly communicated and verifiable. But in the absence of this transparency, consumers have no way of knowing whether their money is being used to fund the green transition or simply to boost profit margins. This lack of transparency undermines trust and prevents a genuine public dialogue on how to equitably finance the decarbonization of aviation—a crucial issue for the decades to come.

The Tension Between Affordability and Sustainability

Decarbonizing aviation will inevitably be costly. Sustainable fuels, new electric or hydrogen-powered aircraft (still under development), carbon offsets, and emissions trading systems—all these measures come at a cost that will ultimately be passed on to ticket prices. This is a reality that climate advocates and consumer advocates will have to learn to navigate together. The tension between the affordability of air travel and ecological necessity is real and profound. The solution cannot be to make air travel so expensive that only the wealthiest can afford it—that would be a profoundly unjust ecological transition. Nor can it be to keep prices artificially low by passing environmental costs on to future generations. Striking a fair balance between these two imperatives is one of the most complex public policy challenges Canada will face in the transportation sector in the coming years.

The decarbonization of aviation is inevitable and necessary. But it cannot become a convenient excuse to justify indiscriminate fare increases. If airlines want consumers to agree to pay for the green transition, they must demonstrate, with verifiable data, that this is indeed what the additional revenue is being used for. Trust is built through transparency, not through cleverly worded communications.

What This Story Says About Our Relationship with Air Travel

Air Canada’s fuel surcharge increase, announced in March 2026, is—taken in isolation—an event of limited significance. That’s true. It’s not a crisis. It’s not a sensational scandal. It’s a routine corporate decision in an industry accustomed to opaque pricing practices. But it is precisely because it is routine that we must discuss it clearly and without reassuring euphemisms. The routine, repeated often enough, becomes the unacceptable that we have come to accept. The pricing practices of the Canadian airline industry—price fragmentation, surcharges with opaque justifications, a weak regulatory framework, and a lack of real competition on many routes—deserve serious and sustained public scrutiny, not just when a price hike makes for a brief mention in the Journal de Québec.

Ultimately, what is at stake is the question of what kind of air travel market Canadians want for themselves. A market where airlines dominate, consumers suffer, and regulators watch from afar? Or a more balanced market, with more effective competition, greater regulatory transparency, and stronger consumer protection? This fundamental political and economic question will not be resolved by travelers’ individual decisions. It will be resolved—if at all—by political will and civic engagement, which discreet announcements about fuel surcharges generally fail to spark. This, perhaps, is the true, albeit modest, impact of this story: it serves as yet another reminder of systemic problems that still await solutions.

Vigilance as an Ongoing Commitment

As a columnist, my role is not to dictate how travelers should behave or what decisions regulators should make. My role is to shed light on, contextualize, and put into perspective what corporate press releases and news briefs leave in the shadows. Air Canada’s increase in fuel surcharges is not just economic news—it’s a telltale sign. A telltale sign of how a concentrated industry manages its costs and profits. A telltale sign of the shortcomings in Canada’s regulatory framework. An indicator of structural inequalities in access to mobility. And an indicator of how skillful corporate communication can transform a questionable decision into a fait accompli accepted without resistance. Vigilance is not a hostile stance toward businesses—it is a healthy stance toward any powerful economic actor operating in a market where consumers are structurally in a position of weakness.

Today’s “modest” impact is tomorrow’s significant increase, normalized by years of increases labeled as “modest.” The reassuring language of corporate communications always deserves to be read with eyes wide open and a pencil in hand.

Signed, Jacques Pj Provost