Pacific Western Airlines Ltd

In 1984, with the advent of the Economic Regulatory Reform (ERR), most of Canada experienced a deregulation program similar to that in the United States. The ERR had several significant effects. Two large trunk carriers, CAI and Air Canada, emerged, competing on major domestic routes.

Canadian Airlines Jet
(courtesy Canadian Airlines)

Pacific Western Airlines Ltd

Pacific Western Airlines Ltd (PWA) began in 1946 as Central British Columbia Airways Limited and grew by purchasing other airlines, including Kamloops Air Services (1950) and Skeena Air Transport (1951). In 1953 it became Pacific Western Airlines Ltd. In March 1987 Canadian Pacific Airlines was purchased by PWA Corp. CP Air had already acquired Nordair and Eastern Provincial Airways. The 4 airlines combined to form Canadian Airlines International (CAI). It later expanded with the purchase of WARDAIR.

In 1984, with the advent of the Economic Regulatory Reform (ERR), most of Canada experienced a deregulation program similar to that in the United States. The ERR had several significant effects. Two large trunk carriers, CAI and Air Canada, emerged, competing on major domestic routes. The regional airline industry disappeared and 2 commuter/feeder airline families emerged, each of which were affiliated with one of the major carriers. A mega-carrier structure was implemented through a variety of acquisitions and agreements; CAI became part of the American/British Airways-led one-world structure and Air Canada joined United/Lufthansa's Star Alliance. These alliances competed with each other and with other international conglomerates on a global basis. The equity base of the 2 major airlines eroded at the height of the aircraft re-equipment cycle, incurring massive debts and lease obligations. Specialized carriers developed, whose strategy was to develop the low-cost niche market.

The "Open Skies" agreement signed by Canada and the US in 1995 gave carriers on both sides of the border direct access to new trans-border markets. In the highly competitive market, it became apparent in 1999 that CAI would require a significant infusion of funds to continue as a major national airline. Air Canada proposed that it buy CAI's international routes and operate them jointly. The government instituted a 90-day suspension of competition rules to allow discussions between the airlines and other interested parties. On 4 January 2000, AIR CANADA formally took control of CAI.