A Canada Jetlines Airbus A320 jet pulls up to the Calgary airport gate on the airline's inaugural flight at Calgary, Alta., Thursday, Sept. 22, 2022. THE CANADIAN PRESS/Larry MacDougal
Canada Jetlines, the low-cost airline that took to the skies less than two years ago, has ceased operations due to a severe financial crisis. The move makes it the third Canadian airline to shut down in less than a year.
On Thursday, Jetlines announced it would file for creditor protection after failing to secure the necessary funds to stay in business. The airline, which primarily offered flights to sunny destinations from Toronto, had been exploring various financing options, including equity and debt, but was unable to find a viable solution, according to spokesperson Erica Dymond. Passengers with existing bookings are advised to contact their credit card companies for refunds, as the company works to assist them.
The airline's shares were halted from trading on the NEO Exchange late Wednesday, a day after four board members, including chairwoman and CEO Brigitte Goersch, resigned. This shutdown follows the recent closures of Lynx Air in February and Swoop last October, reflecting ongoing concerns about competition in the Canadian airline industry.
Jacques Roy, a transport management professor at HEC Montreal, noted the impact of losing competition on travelers. With fewer budget options, prices might not be as competitive, which could be disappointing for consumers. Canada Jetlines, which began operations in September 2022, struggled to gain a foothold in a challenging market marked by vast distances and limited hubs.
Despite efforts to expand, including flights to Miami, Orlando, and Cancun, the airline faced continuous obstacles. It also provided charter services for Canadian Football League teams but will not fulfill a three-year contract with the Ottawa Redblacks. The shutdown leaves only one budget carrier, Flair Airlines, in Canada, alongside major players like Air Canada, WestJet, and Porter Airlines.
Earlier this year, competition commissioner Matthew Boswell initiated a study of the domestic airline market due to ongoing passenger concerns about service and pricing. Canada Jetlines had a rocky start, facing delays in its launch and experiencing financial difficulties despite changes in ownership regulations that were intended to attract more investors.
The airline had reported a loss of $14.2 million over the past year, with revenues fluctuating between $8 million and $12 million quarterly. Despite a $2-million loan secured in May, the company struggled with a $38.3-million deficit and negative working capital of $14.9 million as of March 31.
In summary, Canada Jetlines' abrupt exit highlights the ongoing volatility in the Canadian airline industry, where financial challenges and intense competition continue to shape the landscape.
