Lower than two years after getting into the market, Lynx Air is winding down operations, making the Calgary-based airline the most recent in an extended line of Canadian low cost carriers which have did not take off.
The corporate — which rebranded from “Enerjet” in 2021 — cited rising operational prices, excessive gas costs, unfavourable alternate charges, elevated airport prices and a difficult financial and regulatory setting as causes for the shutdown.
Different low-cost and extremely low-cost carriers have lately confronted difficulties working within the Canadian market. After functioning as a standalone provider, Sunwing Airways was absorbed into WestJet’s common operations final 12 months for streamlining functions. Swoop Airways was met with an identical destiny solely days later, just a few years after its first flight in 2018.
In the meantime, it was reported earlier this month that Edmonton-based low cost provider Aptitude Airways owes $67 million in unpaid taxes to the Canada Income Company. Whereas its CEO Stephen Jones mentioned the debt will not impression the provider’s operations, the corporate is placing enlargement plans on maintain till additional discover.
There’s an entire graveyard crammed with the ghosts of Canadian low cost airways previous — from Zoom Airways to Roots Air to Jetsgo — prompting questions on why low cost airways have such difficulties sustaining in Canada, and what choices are left for customers who wish to fly for affordable.
Low cost airfare saddled with third-party charges
“For just a few months now, there was a little bit little bit of a demise watch throughout the airline business as to which of the brand new entrants would finally succumb to monetary pressures,” mentioned Duncan Dee, former chief working officer at Air Canada.
He pointed to feedback made earlier this 12 months by Porter Airways CEO Michael Deluce, who predicted that considered one of Canada’s new, extremely low-cost carriers would disappear inside just a few months due to the Canadian journey market’s small measurement in a aggressive business.
Dee mentioned that setting performed the most important function in Lynx’s demise, as a result of it “entered the market, actually, with one hand tied behind its again.”
Whereas low cost carriers within the U.S., Europe and Asia use “cut price basement fares” to stimulate new journey amongst prospects who would not usually fly — like providing a flight from London to Edinburgh for a cool $9 — Canadian travellers are topic to third-party charges that bloat the price of airfare.
That is partly as a result of Canada’s airports, as not-for-profits, depend on what are known as airport enchancment charges to generate income. For instance, the WestJet web site notes a “departure tax,” which it says it collects “on behalf of airport authorities and varied authorities companies.”
Some airports cost $40 or extra in added charges — and that does not embrace different suppliers who add safety prices, air-navigation prices and gas surcharges, Dee mentioned. In contrast, the U.S. enforces a $4.50 US cap on an airport payment known as the passenger facility cost, in keeping with the Federal Aviation Administration.
A brand new airline connecting Canadians to Europe through Iceland has began flying out of Hamilton Worldwide Airport. It provides fares at a major low cost from the foremost carriers, however will it make it in a market the place different carriers have failed?
The added prices finally make it tougher for homegrown low cost airways to remain aggressive in opposition to worldwide airways, such because the Icelandic low cost provider Play Airways, that supply flights from Canada to Europe and different locations.
“In case you check out what’s taking place in Canada, extremely low-cost carriers do not have the leeway to really use such stimulative pricing to draw new prospects,” mentioned Dee.
“So … all they’re doing is that they’re preventing for the very same journey greenback that current travellers are already spending on the massive carriers.”
Increased fares ‘all the time within the playing cards’
Canada Jetlines — which supplies constitution flights to sports activities groups and firms, flies to solar locations and leases its fleet to different carriers within the summertime — was initially conceived as an extremely low-cost provider.
That enterprise mannequin was finally shelved, partly as a result of the beginning value for low cost carriers in Canada “consists of plenty of taxes,” and partly because of the challenges of competing with Air Canada and WestJet, mentioned Canada Jetlines CEO Eddy Doyle.
However Doyle mentioned he nonetheless thinks there’s “sufficient provide there to fulfill demand for the Canadian travelling public,” with Air Canada, WestJet and Air Transat again at full-strength following the disruptions prompted by the COVID-19 pandemic.
Kriti Bhardwaj, whose Lynx flight from Toronto to Los Angeles was all of the sudden cancelled when the airline introduced it was shutting down, mentioned she’s coming round to the concept of spending extra on flights. She mentioned she was rebooked with Air Canada at two or thrice the price of the unique flight.
“I actually do not know if low-cost carriers can maintain,” she mentioned, noting that Lynx’s shutdown follows Swoop’s absorption final 12 months. “So most likely, as a passenger or as a shopper, I am prepared to pay a little bit additional for a greater expertise.”
Passengers of Lynx Air at Toronto’s Pearson airport mentioned their reactions to the low-cost airline’s announcement that it might stop operations on Monday.
“Once you’ve bought three carriers serving a market of about 40 million folks, and insurance policies which actually discourage new entrants into the market, I believe that it is pretty much as good because it’s gonna get,” mentioned Dee, the previous Air Canada govt, “until there are actual adjustments to the underlying insurance policies and laws that hold the market the best way they’re.”
He mentioned that until one other airline — an incumbent like WestJet or an entrant like Aptitude — serves the markets that Lynx is leaving, prospects shall be confronted with extra restricted service.
The one option to assure decrease fares is to extend competitors, he added.
“When opponents both go away the market or disappear completely like Lynx has, the inevitability of upper fares is all the time within the playing cards.”
