The “snowbird” season has provided airlines with a valuable revenue stream in a typically quiet period of the year as Canadians head to the USA and the Caribbean in search of winter sun.

However, with Canadian sentiment towards the USA dramatically changing under the new U.S. administration, the key question is whether traveller behaviour has led to airlines adjusting capacity to reflect the sentiment. In part, it seems so!

Key Points:

• Total capacity from Canada this quarter stands at 23.6 million seats of which 12.4 million (53%) are operated on domestic services – an increase of 3%, driven largely by Flair Airlines.
• Canadian airlines have reduced USA-bound capacity by nearly 10% for Q1 2026, representing 450,000 seats.
• Capacity shifts away from traditional U.S. sun destinations reflect a change in leisure travel demand.

Shifting International Capacity to Costa Rica and Mexico

Canada’s international capacity for Q1 2026 is set to be 1% less than in 2025, with:

• 75 international country markets served, one more than in 2025
• Services to Israel and Nicaragua planned
• A “one-off” service to Greenland appears to have been dropped this year

The ten largest international markets departing from Canada represent 8 million seats, comprising 75% of total international capacity.

The United States alone constitutes 39% of this capacity. However, scheduled airline capacity to the United States has declined by nearly 10% year-over-year, resulting in a 4% reduction in its share of Canada's overall international capacity.

The increased capacity to Costa Rica (+14%) and Mexico (+5%) likely reflects a shift in leisure travel demand from traditional U.S. sun destinations. In contrast, the 13% rise in capacity to Japan may be less anticipated; however, the destination's growing appeal is evident, with WestJet doubling its capacity and ZIPAIR adding 6,000 additional seats to their schedules.

Reductions in capacity to the Dominican Republic are based around the demise of Sunwing Airlines who last year operated some 139,000 seats to the Island and while WestJet and Air Canada have both backfilled some of that capacity loss the Island will see a few thousand less “snowbirds” this quarter.

Half a Million Lost airline Seats to the USA

While this represents only a 10% reduction in U.S.-bound capacity year-on-year, it equates to:

• Almost 450,000 fewer seats in Q1 2026
• Nearly 5,000 fewer seats each day

Notably, over 95% of these cuts have come from Canadian airlines:

• WestJet has reduced its capacity by 19%,
• Air Canada by 7%,
• Flair Airlines has made the most significant change with a 58% decrease in its USA-bound capacity, as shown in the chart below.

Unsurprisingly, markets with significant leisure travel have been most affected by capacity cuts:

• Las Vegas: a reduction of approx. 82,000 seats (900 per day)
• Orlando: a decrease of nearly 79,000 seats

Major hub airports like Newark, Atlanta, and Los Angeles are also among the top ten in terms of capacity losses.

However, destinations such as Las Vegas, Orlando, Tampa, and Fort Myers will face substantial economic challenges due to this drop in Canadian demand, and finding alternative sources of capacity to offset these losses will be challenging in the short term.

Flair Airlines Leads Domestic Growth

 Canada’s domestic capacity has increased by 3% year-on-year and this quarter 12.4million seats (54% of total capacity) are operated on domestic services.

Flair Airlines have increased their domestic capacity by over one-third, with growth in all the major markets:

• Toronto Pearson seeing a 64% increase
• Calgary seeing a near doubling of capacity

For many airlines operating domestic services in Canada, it’s as much about survival as expansion. So, 2026 will be an interesting year to see how Flair’s traffic grows in line with their capacity.

STRATEGIC FLIPS & SWITCHES

With the vast majority (95%) of the lost U.S capacity coming from Canadian-based airlines, they have all had to be nimble in their network planning and strategic thinking to place that previous “snowbird” capacity into other markets.

AIR CANADA

Air Canada made a conscious strategic choice to develop more connecting traffic from Mexico to Europe, with some success:

• 20% increase in capacity to Cancun
• New services to Monterrey, San Jose del Cabo, and two other leisure destinations
• Representing a 30% increase in traffic from Mexico to Europe for the airline

While this does not fully offset the loss of US “snowbird” revenue, additional capacity to the Dominican Republic and Italy has also helped to close part of the gap.

WESTJET

Similarly, WestJet has added 40% more capacity to Mexico year-on-year:

• Adding five new seasonal destinations to their network
• Cancun now accounts for half of its Mexican services

The airline also expanded further into the Dominican Republic, where, aside from existing services to Punta Cana and Puerto Plata, new flights to Samana and La Romana have been launched.

Short-Term Adjustments Or Long-Term Changes

The key question, of course, is how much of a long-term change will this become, and has the USA perhaps lost one of its most valuable winter markets to other destinations? Certainly, the product offering in the Caribbean is very competitively priced, and the quality of accommodation is always improving, while hotel rates in the USA continue to appear expensive to many international travellers.

Should this year’s "snowbirds" find their new experiences positive and remain willing to accept additional flight hours, the travel trends observed in the first quarter of 2026 may signal a lasting shift in travel patterns and, notably, in spending habits among a traditionally affluent demographic seeking warmth and sunshine. If so, the resulting effects on relevant US markets could persist well into the future.