The drop in travel from Canada to the U.S. has had an outsize impact on one industry segment north of the border: Canadian airlines.
Air Canada, far and away the biggest Canadian carrier, has navigated through this year's pronounced decline in transborder travel demand by slashing U.S. flights and beefing up service elsewhere in its network -- Europe, the Caribbean and Mexico.
And while Air Canada is banking on a resurgence in U.S. demand as it looks toward next summer, negative Canadian sentiment toward the U.S., tariffs and the unpredictability of Trump administration policies make that strategy a risky one.
In August, the most recent month for which Statistics Canada has released data, the number of Canadian-resident air trips back into the country from the U.S. was down 25.4% year over year, as Canadian anger over tariffs and the U.S. president's patronizing comments about Canadian sovereignty persisted.
Still, Air Canada is gearing up for a turnaround. Its U.S. seat count during the third quarter was down 9.2% year over year, Cirium data shows. But in late September, the airline said it intends to bring its U.S. capacity next summer back to the summer 2024 level.
"I think what Air Canada has decided in its analysis of the marketplace is that it's a short-term blip," John Gradek, a lecturer in aviation management at McGill University in Montreal, said of the depressed U.S.-Canada market.
"They are looking at this reduction in demand holding through maybe the beginning of November when the snow starts to fly and Canadians want to get away from winter."
Air Canada didn't respond to a request for comment, but it could be predicting that Canadians' ire toward Trump can't carry the day over the long term, especially when weighed against the ease and appeal of visiting the U.S., where many Canadians have family, friends, property and other long-standing ties.
"Winter will tell the tale about whether there will be a rebound," said Jeff Barrow, owner of Toronto-based Fourth Quarter Aviation Consulting. "I think that sentiment will change over time. There are just too many markets down there, and there are too many connections between the two countries."
Until June, Barrow was the director of airline relations and service development at Toronto Pearson Airport, where he worked with Air Canada and other Canadian carriers as they pivoted capacity plans away from the U.S. this past spring.
Porter Airlines, for example, accelerated plans to begin Caribbean, Mexico and Latin America service, Barrow said.
In a similar vein, Air Canada increased its seat count to Mexico, Latin America and the Caribbean by 9.8% during the third quarter. Its total domestic seats and seats to Europe were up 5.2% and 7%, respectively.
Nevertheless, the dramatic drop in Canadian travel to the U.S. has taken a toll on Canada's flag carrier, Gradek said.
Transborder flying, he explained, typically accounts for approximately 20% of Air Canada's revenue. The airline has not yet reported third-quarter earnings, which will also be impacted by an estimated $269 million hit in operating income from a four-day flight attendants' strike in August. But in the second quarter, its operating margin dipped slightly to 7.4% from 8.4% the previous year.
The flagging Canadian sentiment toward the U.S. has raised the hackles of American ambassador to Canada Pete Hoekstra, who late last month raised the specter of closing U.S. Customs and Immigration Preclearance locations in Canada, a move that would end a program that began in 1952.
"We're not sure we can make the numbers work anymore. … Preclearance is something that is done at the expense of the U.S. government," Hoekstra said at a forum in Banff, Alberta, according to the Canadian Broadcasting Corp.
Gradek warned of the potential for the Trump administration to take further actions that could hurt Canada-U.S. travel broadly or target Canadian airlines directly. For example, upcoming hikes in U.S. tariffs on Canadian lumber and some furniture products are likely to bite further into business travel demand.
Meanwhile, he said, Canadian airlines have placed extra emphasis this year on attracting U.S. customers for one-stop itineraries via Canadian transatlantic gateways to Europe. Newly planned Air Canada routes from Cleveland and Columbus, Ohio, to Toronto for next summer are a perpetuation of that tactic, Gradek said.
But the Trump administration could quash the strategy by putting an end to Preclearance and by assessing a new tax on such itineraries, he said.
"That would be devastating," Gradek said.