The US–Canadian air traffic market is one of the largest international markets in the world – estimated at 23million passengers in 2008. The market is currently regulated by an “Open Skies” agreement, which eliminated all restrictions on the frequency of flights, the aircraft flown, and...

An investigation is conducted of the contribution of low-cost carriers (LCCs) to traffic diversion from Canadian airports to nearby US airports. An estimated five million Canadian passengers divert to US airports each year. We find that LCCs contribute significantly to the diversion of traffic...