Lynx Air will stop operating on Monday

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Citing financial pressures and “significant headwinds,” Calgary-based low-cost airline Lynx Air announced it will cease operations on Monday.

In a memo to staff, chief operating officer Jim Sullivan revealed the airline had successfully applied for creditor protection in Alberta’s Court of King’s Bench under the Companies’ Creditors Arrangement Act. The company’s fleet will take to the skies for the last time on Sunday.

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In the memo, Sullivan said compounded financial difficulties caused by high inflation, fuel, capital and regulatory costs, along with adverse exchange rates and “competitive tension in the Canadian market,” ultimately proved to be a mountain too much. steep for the Calgary company to overcome.

“I know this is a terrible shock to many of you and this is not how our story was intended to unfold,” Sullivan wrote in the memo that circulated online Thursday night.

“Although we did the best we could, the pressures increased and the risks increased, leading to today’s announcement.”

Lynx Air, first launched in Calgary in November 2021, was billed as an ultra-low-cost alternative to larger airlines, with a mission to “make air travel accessible to all Canadians.”

The low-cost airline, which launched its first flight in April 2022, has grown rapidly and strengthened its network to serve destinations in Canada, the United States and Mexico.

Sullivan’s memo stated that the airline had nearly two million passengers, and that the year-over-year number increased 187 percent in 2023.

However, despite the airline’s substantial growth, ongoing operational improvements, cost reductions and efforts to explore a sale or merger, “the challenges facing the company’s business have become too significant to overcome.” , stated a press release.

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Lynx Air flights will continue to operate as usual until Sunday evening, the statement said. Operations will cease at 12:01 a.m. on Monday.

Passengers with existing reservations with Lynx Air are advised to contact their credit card company for refunds. Additional information for Lynx customers is available here.

In January, airline industry experts predicted that low fares caused by increased competition among airlines could spell the end for at least one of Canada’s ultra-low-cost airlines (ULCC).

“Consumers will be laughing all the way to the bank,” John Gradek, an aviation expert and professor at McGill University in Montreal, told Postmedia in January.

“The problem is that the fares will be so low that it will not be compensation for the airlines that fly those fares.”

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Unique challenges for Canadian ULCCs

Robert Kokonis, president of AirTrav Inc., a Toronto-based aviation advisory firm, said Lynx’s demise is indicative of the difficulties of operating an ultra-low-cost airline in Canada.

He said there are five factors that make it difficult for discount airlines to compete with Canada’s largest airlines, including the small number of large population centers across the country and the distance between those urban centers.

There are also high “structural costs” such as taxes, airport fees and regulatory fees that make it difficult for ULCCs to “stimulate” the market, Kokonis added.

“Canada is one of the highest-cost aviation jurisdictions in the world,” he said. “The challenge for these discount airlines is that, for much of their traffic, they do not depend on ‘stealing’ their share from WestJet or Air Canada, but on stimulating the market to make the whole pie grow.

“But if the starting point for that stimulus – the starting point for those fees, taxes and charges – is already so high, that makes that stimulus effort really difficult.”

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Other challenges for ULCCs, according to Kokonis, are the imposition of airline passenger protection regulations (APPR) and the high degree of “seasonality” within Canada’s travel industry.

“We have a very short, busy summer season, a very sunny season in March, but the shoulder seasons are very difficult to make money in,” he said. “Everyone is still flying, but you can spend a lot of money quickly.”

Lynx’s CEO announced her departure last June and no successor has been named since.

The airline’s fleet consists of nine Boeing 737 Max 8s. Lynx’s website lists 23 destinations, including most major Canadian cities and US locations such as Phoenix, San Francisco and Tampa Bay.

Its investors include Stephen Bronfman’s Claridge Inc. and Bill Franke’s Indigo Partners, a U.S. private equity firm that invests in no-frills airlines such as Wizz Air and Frontier Airlines.

— With files from Matt Scace and The Canadian Press

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