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Air Canada Is Grounding Six Routes. Jet Fuel Did What the Trade War Couldn't.
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Air Canada Is Grounding Six Routes. Jet Fuel Did What the Trade War Couldn't.
Air Canada is pulling the plug on six routes starting in June, including daily flights from Toronto and Montreal to New York's JFK. The suspension will be in effect until late October at the earliest, with one route - Salt Lake City to Toronto - not expected to come back until 2027.
The culprit is jet fuel. Prices have roughly doubled since the Iran conflict started, climbing from about US$2.50 a gallon to US$4.32. That's enough to turn marginally profitable routes into money pits. Fort McMurray to Vancouver, Yellowknife to Toronto, and a planned Guadalajara-Montreal route are also toast. All told, it's about one per cent of Air Canada's total capacity - small on paper, but if you're a Canadian in New York or Salt Lake who flies home regularly, this news will not be sparking any joy.
Air Canada still runs 34 daily flights from six Canadian cities to LaGuardia and Newark, so JFK passengers have options. But the broader picture is grim. The IEA's Fatih Birol says that Europe has about six weeks of jet fuel left, and Delta is looking at US$2 billion in extra fuel costs this quarter alone. Lufthansa and KLM have started trimming their own networks.
If the Strait of Hormuz doesn't reopen soon, this is the beginning, not the end.
Read more: CBC News / The Globe and Mail
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Canada and South America Are Racing Toward a Trade Deal. It Could Be Signed by Fall.
Eight years of on-and-off negotiations with Mercosur are suddenly moving at speed. Brazil's director for extra-regional negotiations, Paula Barboza, said this weekend that a free-trade deal between Canada and the South American bloc is on track to be signed by September or October.
Mercosur is Argentina, Bolivia, Brazil, Paraguay, and Uruguay - 282 million people and a combined GDP north of US$3 trillion. Canada already trades about C$15.8 billion a year with the group, but Canadian exporters face tariffs as high as 35 per cent on everything from auto parts to aluminum. A deal would cut those barriers in sectors including machinery, forestry stuffs, pharmaceuticals, and chemicals.
With US tariffs making life unpredictable for Canadian businesses, Ottawa has been shopping for new partners. The EU signed its own Mercosur deal in December, and it’s clear that Canada doesn't want to be locked out while everyone else walks in.
Not everyone’s thrilled though; the Canadian Federation of Agriculture has some reservations about competing with Mercosur's lower production costs and looser (some might even say “lax”) environmental rules. Fair concern. But for Canadians running businesses abroad or eyeing markets beyond the US, this is probably the biggest trade opportunity since CETA. Stay tuned.
Read more: BNN Bloomberg / The Globe and Mail