Air travel demand is hitting record highs again and the center of gravity in this new cycle is quietly shifting north. As many global hubs grapple with uneven recoveries and political headwinds, Air Canada is using 2025 as a launchpad for ambitious growth, positioning Canadian skies as one of the most dynamic gateways in the post-slump travel revival. With capacity climbing, new long-haul routes planned and tourism flows rebalancing away from the United States toward Europe and Asia, Canada’s flag carrier is fast becoming a bellwether for how airlines can turn turbulence into renewed global influence.
Global Demand Surges While Markets Realign
The broader context for Air Canada’s 2025 growth story is a world that is once again flying in record numbers. The International Air Transport Association reports that global passenger traffic in 2024 not only surpassed 2019 levels but did so decisively, with demand rising more than 10 percent year over year and load factors reaching historic highs. Early figures for 2025 show that momentum continuing, even as airlines struggle against capacity bottlenecks, delayed aircraft deliveries and labour constraints.
International travel is doing the heavy lifting in this phase of the rebound. Both IATA and Airports Council International point to cross-border traffic as the primary driver of growth through 2024 and into 2025, while domestic markets in mature economies have plateaued or grown only modestly. That pattern plays directly to Canada’s strengths as a long-haul, internationally connected market where Air Canada already punches above its weight, particularly across the Atlantic and Pacific.
At the same time, the geography of travel demand is changing. Western European and North American hubs are seeing slower growth compared with emerging regions, but the story is more nuanced at the country level. The United States, once the undisputed magnet for international visitors, is experiencing a notable and potentially prolonged downturn in inbound tourism. Canadian travelers, historically one of the most important international segments for U.S. destinations, are cutting back sharply on southbound trips as border frictions, tariffs and political tensions mount.
For Air Canada, these global shifts create both risk and opportunity. Diminishing appetite for short-haul U.S. leisure trips is being offset by Canadians’ renewed enthusiasm for overseas travel and by a steady rebound in inbound tourism to Canada itself. In that landscape, the carrier’s strategic emphasis on connecting Canada with Europe, Asia, the Middle East and Latin America is increasingly well aligned with where the most resilient demand is coming from.
Air Canada’s Capacity Rebuild Sets the Pace
After weathering one of the aviation industry’s deepest crises, Air Canada spent 2023 and 2024 methodically rebuilding its network, restoring capacity to and then beyond pre-pandemic levels on key international routes. By late 2024 the airline had reported strong revenue growth, robust load factors and a meaningful reduction in pandemic-era debt, giving management the financial headroom to plan a more expansive growth phase for 2025.
That next step is now taking shape. Air Canada’s 2025 guidance and schedule planning point to measured but significant capacity increases, particularly in long-haul markets where yields remain healthy and competition is intensifying. Capacity, measured in available seat kilometres, is slated to rise faster on international services than in the domestic network, reinforcing the carrier’s evolution from primarily a Canada-focused airline to a global connector that happens to be based in Montreal and Toronto.
This growth is underpinned by a modernizing fleet. Deliveries of new-generation aircraft, particularly fuel-efficient wide-bodies, are enabling Air Canada to add seats and frequencies while limiting cost inflation and carbon intensity per passenger. Narrow-body jets with extended range are also opening new possibilities for thinner transatlantic and sun destinations that were previously uneconomical, allowing the airline to spread its risk across a more diversified route map.
Crucially, the growth plan is not simply a volume play. Management has repeatedly emphasized a focus on profitable demand segments, using detailed origin-and-destination data to identify where connecting flows through Canadian hubs can create a sustainable edge. That approach has seen Air Canada lean into markets where it can act as the prime connector between secondary cities in the United States and major centers in Europe and Asia, while also deepening links to fast-growing tourism and business destinations overseas.
Canadian Hubs Turn into Global Gateways
The physical backbone of Air Canada’s growth is its trio of major hubs: Toronto Pearson, Montreal Trudeau and Vancouver International. Each is being positioned as a different kind of gateway in the emerging travel landscape, collectively turning Canada’s skies into a lattice of routes that rivals much larger markets.
Toronto remains the primary global junction, connecting high-yield business travelers and growing leisure flows between North America and Europe, as well as to secondary Asian destinations. Increased frequencies to key European capitals, combined with expanded banks of connecting flights to U.S. and Canadian secondary cities, are designed to shorten connection times and capture traffic that might otherwise flow through New York, Chicago or European megahubs.
Montreal is emerging as a transatlantic specialist with a strong Francophone and leisure orientation. Expanded capacity toward France, the United Kingdom, North Africa and Southern Europe is tapping into both visiting friends and relatives traffic and a surge in Canadian interest in Mediterranean and cultural destinations. The city’s bilingual character and cosmopolitan tourism appeal are being used as a selling point in Air Canada’s marketing, positioning Montreal not just as a transfer point but as an attractive stopover in its own right.
Vancouver, meanwhile, is consolidating its role as Canada’s western bridge to Asia-Pacific. As key Asian markets continue to normalize travel after prolonged restrictions, Air Canada is reinstating and adding services to major East Asian and South Asian cities, positioning Vancouver as a competitive alternative to West Coast U.S. gateways. With international passenger traffic rebounding faster than domestic in many Asia-Pacific markets, that westward growth is becoming one of the carrier’s most important engines of 2025 demand.
Tourism Flows Tilt Away from the United States
One of the most consequential shifts underpinning Air Canada’s international strategy is the reorientation of Canadian outbound tourism. Recent travel and tourism data show a pronounced decline in Canadian trips to the United States through 2025, especially by road but increasingly by air as well. In several months, the number of Canadians returning from U.S. trips has been down by more than 25 percent compared with the previous year, signaling more than a temporary slowdown.
Multiple factors are at work. The return of stiff tariffs on Canadian goods, a strong Canadian dollar, stricter border inspections and the tone of political rhetoric coming from Washington have collectively eroded the appeal of short U.S. getaways. Canadian visitors are still important to many American states, but the trend line is weakening, prompting officials in popular destinations like Florida and California to launch fresh campaigns to woo Canadians back.
Where are those travelers going instead? Overseas markets are absorbing much of the diverted demand. Statistics underline a sharp rise in Canadian trips to Europe and other long-haul destinations, and tourism organizations note that overseas travel has been climbing steadily even as U.S.-bound travel shrinks. That shift plays directly into Air Canada’s wheelhouse, given its dense transatlantic network and expanding links to Asia, the Middle East and Latin America.
The same realignment is visible on the inbound side. While some markets, particularly parts of the United States, are reporting softening international arrivals in 2025, Canada is edging closer to and in some metrics surpassing its pre-pandemic tourism benchmarks. International visitors increasingly see Canada as a stable, welcoming and comparatively predictable destination. Air Canada, as the country’s dominant international carrier, is central to turning that perception into booked seats, hotels and tour packages.
Canada’s Tourism Recovery Nears Full Strength
Tourism is a critical pillar of the Canadian economy and its recovery trajectory helps explain why Air Canada is leaning so confidently into growth. By 2023, the sector had already returned to roughly 98 percent of its pre-pandemic economic contribution in nominal terms, with more than 18 million international tourist arrivals and tourism-related employment close to 2019 levels. Domestic tourism, the bedrock of the industry, actually surpassed pre-pandemic volumes, cushioning the impact of slower international recovery.
Through 2024 and into 2025, that trend solidified. Destination Canada and other agencies have highlighted record domestic tourism revenues, even when inflation-adjusted figures remain a step behind. Canadians are traveling more within their own borders, exploring coastal regions, national parks and northern destinations that were previously overlooked in favor of cross-border shopping trips or beach vacations in the United States.
Internationally, Canada is steadily narrowing the remaining gap to full recovery. Overseas arrivals are rising, with particular strength from Europe and select Asian markets, while U.S. arrivals have been more volatile. Total tourism expenditure has already surpassed 2019 levels in nominal terms, and forecasts from federal and provincial agencies point to continued acceleration toward the end of the decade, with internal tourism spending expected to break new records by 2030.
This macro backdrop is essential to understanding Air Canada’s 2025 posture. The airline is not betting on a fragile or speculative rebound. It is scaling into a tourism market that is broadly healthy, with domestic demand providing a buffer and international segments offering strong upside. That combination allows Air Canada to take calculated risks on new long-haul routes and increased frequencies without stretching its balance sheet beyond comfort.
Route Strategy: From Niche Long-Haul to Sun Markets
Behind the headlines about record demand and shifting tourism flows lies the granular question of where, exactly, Air Canada is adding capacity in 2025. The answer spans a wide spectrum, from niche long-haul markets to bread-and-butter sun destinations that satisfy Canada’s enduring appetite for winter escape.
On the long-haul front, Europe remains the centerpiece. Air Canada is funneling more seats into high-demand transatlantic city pairs, adding frequencies during peak summer months and extending shoulder-season service where winter city breaks and visiting-friends-and-relatives traffic are strong. Secondary European cities that were once served only seasonally are seeing more sustained operations, reflecting a belief that blended leisure and business demand will stay resilient.
Asia-Pacific presents a different kind of opportunity. As travel restrictions have eased and consumer confidence has returned, pent-up demand between Canada and key Asian markets is coming through in the booking data. Air Canada is rebuilding capacity to major gateways and exploring new or reinstated routes to cities that can sustain year-round demand. Here, Vancouver’s role is critical, with schedules carefully timed to capture both local origin-and-destination traffic and connections from the U.S. West Coast and the Canadian interior.
Closer to home, Canada’s sun markets are evolving. While some carriers are cutting back on U.S. leisure routes, Air Canada is bolstering services to Mexico, the Caribbean and parts of Central and South America. These destinations allow the airline to redeploy capacity away from politically fraught markets toward countries actively courting Canadian visitors. Packages that bundle flights with resorts and cruises are being promoted heavily, providing an additional revenue layer beyond the base airfare.
Competitive Edge in a Capacity-Constrained World
One of the paradoxes of the current travel boom is that demand is outpacing the industry’s ability to add supply. Aircraft delivery delays, pilot shortages and airport infrastructure limits mean that extra seats are a scarce commodity in many markets. For an airline with financial flexibility and a strong brand, that scarcity can be an asset.
Air Canada is using this environment to sharpen its competitive edge. With a fleet strategy that locked in deliveries of new aircraft ahead of some rivals, it is better positioned than many carriers to add capacity where it sees profitable gaps. At the same time, the airline can be selective, avoiding overcrowded routes where adding seats would simply trigger fare wars and erode margins.
Network design is another advantage. By concentrating connecting flows into three primary hubs and fine-tuning connection banks, Air Canada can support routes that would not be viable based solely on local demand. This is particularly true for flights linking mid-sized U.S. and Canadian cities with international destinations. In a world where some U.S. carriers are trimming international ambitions and secondary airports are losing nonstop options, the ability to route passengers efficiently through Canadian hubs becomes a meaningful differentiator.
The carrier is also leaning into product and service upgrades that cater to high-yield travelers. Premium cabins, upgraded lounges and more consistent onboard offerings across the fleet aim to ensure that business travelers and affluent leisure passengers see Air Canada as a credible alternative to major U.S. and European competitors. In a capacity-constrained marketplace, airlines that can command a fare premium while still filling seats will be in the strongest position to sustain growth.
Sustainability and Policy Shape the Next Phase
Any discussion of airline growth in 2025 comes with a caveat: the industry is under mounting pressure to reconcile expansion with climate commitments. Air Canada is no exception. While global aviation still relies overwhelmingly on conventional jet fuel, leading carriers are under scrutiny to accelerate their use of sustainable aviation fuel, modernize fleets and improve operational efficiency.
In this context, Air Canada’s growth plan is as much about quality of capacity as quantity. Newer aircraft with better fuel burn, more direct routings through optimized hubs and investments in digital operations all help lower emissions intensity per passenger. Partnerships and offtake agreements for sustainable aviation fuel, while still a small share of total consumption, signal a recognition that growth must be compatible with long-term decarbonization goals.
Policy will also play a decisive role in whether Canadian skies can continue to lead the global travel revival. Visa regimes, border processes and aviation taxation influence how easily travelers move through Canada’s gateways compared with competing hubs. Early signs suggest that Canada is benefiting from being perceived as comparatively open and predictable in an era of geopolitical friction elsewhere, but the advantage is not guaranteed.
For now, the balance of forces appears to favor Air Canada. Global demand is rising, international travel is leading the rebound, Canadian tourism is nearing full strength and U.S.-bound flows are being reallocated toward long-haul markets where the airline already has a strong foothold. If 2023 and 2024 were the years of cautious recovery, 2025 is shaping up as the year when Air Canada decisively leans into growth, helping redefine how and where the world travels in the post-slump era.