Air Canada cuts routes as fuel crisis hits airline economics

Air Canada has suspended six routes and reduced capacity as surging jet fuel prices—linked to conflict in the Middle East—render some services “no longer economically feasible.”

The airline said fuel prices have more than doubled since the start of the Iran conflict, forcing adjustments across its network. The cuts affect both domestic and international routes, including:

Fort McMurray–Vancouver (from May 28)
Yellowknife–Toronto (from August 30)
Salt Lake City–Toronto (suspended from June 30, planned return in 2027)
Toronto and Montreal to John F. Kennedy International Airport (from June 1 to October 25)
A planned Guadalajara–Montreal route (cancelled before launch)

Despite these reductions, Air Canada will maintain strong service to the New York area via LaGuardia and Newark, and says affected passengers will be rebooked.

The overall impact represents about 1% of the airline’s annual capacity, highlighting that the cuts are targeted rather than structural.

Industry-wide pressure

The move reflects a broader crisis across aviation, as fuel shortages and price spikes disrupt global operations. The International Energy Agency has warned that Europe could face jet fuel shortages within weeks, raising the risk of further cancellations.

Other Canadian carriers, including WestJet, have also reduced capacity and introduced surcharges. Airlines globally are:

Increasing fares
Adding fuel surcharges
Cutting less profitable routes

Aviation experts describe the situation as one of the most severe fuel crises in industry history, with potential long-term impacts even if supply routes stabilise.

Uncertain outlook

Although a temporary ceasefire and partial reopening of the Strait of Hormuz briefly eased oil prices, uncertainty remains high due to ongoing geopolitical tensions and supply constraints.

The key risk for airlines is structural: even if oil flows resume, refining capacity and supply chains may take years to normalise, meaning elevated costs—and potential service reductions—could persist.

Bottom line

Air Canada’s route suspensions illustrate how rapidly rising fuel costs are forcing airlines to prioritise profitability over network breadth, with even small capacity cuts signalling deeper stress across the global aviation sector.