Daily Memo: Rivalry, History Rife In Air Canada’s Toronto Expansion

Air Canada has announced its largest expansion at Billy Bishop Toronto City Airport (YTZ) in several decades.

The new service presents not only competitive pressure on rival Porter Airlines but also marks a new chapter in the somewhat-complicated story of Air Canada and Toronto Island.

Beginning in spring 2026, the flag carrier will launch four transborder routes: Boston Logan (3X-daily), Chicago O’Hare (2X-daily), New York LaGuardia (4X-daily), and Washington Dulles (daily). Services will be operated as Air Canada Express by regional partner Jazz Aviation on 78-seat De Havilland Canada Dash 8-400s.

Porter serves all four cities from Billy Bishop.

The carriers will now compete directly in the Boston (BOS) and Washington (IAD) markets, and indirectly in Chicago and New York, where Porter serves Midway and Newark. Announced Oct. 23, Air Canada’s expansion will also bolster frequencies on existing Toronto Island routes to Montreal and Ottawa and is set to follow the opening of a U.S. Customs and Border Protection pre-clearance facility. Air Canada’s service to New York begins March 29, 2026, followed by Chicago and Washington starting June 1, and Boston on July 1.

“This is our most significant expansion at Toronto Island since Air Canada first served the airport 35 years ago,” said Mark Galardo, Air Canada’s chief commercial officer. The flights build on current offerings from Toronto Pearson, “where we will operate more than 600 return flights a day to 124 destinations next summer,” he noted.

The carrier is targeting both business and leisure travelers, and performing cabin upgrades on the 25 Dash 8s operated for Air Canada Express by Jazz to appeal to premium appetites. Galardo said the new service “ensures the Greater Toronto Area [GTA] and beyond are highly connected for business and leisure travel, making Air Canada the preferred choice for travel to and from the GTA.”

The expansion comes during an interesting year for Canadian carriers, with transborder demand to the U.S. riled by political tensions and a new report from the country’s competition watchdog seeking to improve conditions in the domestic market. The situation at Billy Bishop, notes new analysis, is somewhat ironic.

“The Competition Bureau report was calling for more competition [and] less concentration to allow for smaller airlines to better compete and grow, and consumers to get better fares,” explains Bloomberg Intelligence analyst Francois Duflot. “In 2025, Porter serves about 80% of the flights, seats and available seat miles [ASM] capacity departing from Billy Bishop airport, with Air Canada doing the rest.” When annualized, “The new routes announced by Air Canada from YTZ virtually double Air Canada’s capacity from this airport.

“Air Canada is de facto increasing competition and likely lowering fares, one of the goals aimed by the Bureau,” he notes. “Yet, we definitely see Porter hurt by this move, as routes from Billy Bishop are a large part of its overall business (~10% of its 2025 total ASM capacity, and even ~30% in seats/flights), while it’s less than 0.5% for Air Canada.”

Airport and government officials welcomed the addition. The expansion “reflects confidence in Billy Bishop Toronto City Airport’s role as a gateway to the future of passenger-centric urban air travel,” said R.J. Steenstra, CEO of PortsToronto, the airport’s owner and operator. Canadian Transport Minister Steven MacKinnon described the new flights and frequencies as a win for more convenient, stronger connectivity.

Billy Bishop is located on Toronto Island—part of a chain of 15 islands on Lake Ontario adjacent to downtown Toronto—physically constrained by its geography and operating under related parameters. Porter Airlines launched operations there in 2006, the year Air Canada announced it had been “evicted” by a terminal-management company owned by then-startup Porter.

Air Canada resumed flights to Billy Bishop in 2011 with 30 of 202 slots—the rest controlled by Porter, which owned the terminal at the time. Air Canada considered leaving the airport again in 2015, telling investors it was “assessing the viability of Billy Bishop operations based on current imposed terminal rates and terms.” Porter sold the terminal that year to a Canadian investors’ consortium.

Today, Air Canada approximates 23% of Billy Bishop’s activity, PortsToronto confirms. Overall, the mainline carrier accounts for 50.2% of all transborder capacity from the Toronto area, according to OAG data, for the week of Oct. 27, compared to Porter’s 13.7%. United Airlines is the third-largest provider of Toronto-U.S. capacity, with 10.8% of the market.

“Offering more rotations, sometimes to smaller, more convenient airports like Chicago Midway, could help Porter,” observes Duflot. “But competing with Air Canada for leisure travelers on YTZ-BOS or YTZ-IAD will be much more difficult, considering that they are using the same aircraft types and about the same number of rotations.”

As for Air Canada’s intent? Don’t read too much into it, the analysis suggests. “Considering the size of these routes in Air Canada’s total network, it’s probably an easy, smart way to get the ‘biggest bank for the buck,’” Duflot says, suggesting the carrier is “looking for better yields, and going for routes that could offer more opportunities” than sun destinations, on the heels of a difficult year for trans-border travel.

In another moment of irony, planned or otherwise, Air Canada announced its expansion on the 19th anniversary of Porter’s founding. Porter responded to the timing with a quip on social media: “Hey Air Canada: You just showed up at our birthday party today with no gift [how rude!] and a lot more talk about trying to match what we’ve been doing for 19 years,” the brand wrote. “No cake for you!”