The Great Canadian Shakeout Begins as Lynx Shuts Down


It was a surreal moment on Thursday night. We were frantically preparing for the start of the Cranky Network Awards when I received a message from one of the two attendees from Canada’s Lynx Air. A work emergency had come up and they wouldn’t be able to make it. That seemed odd at such a late hour, but about five minutes later, I found out the truth. Lynx had given up and would shut down. A “work emergency” was quite the understatement.

This is a mild surprise that Lynx was first to give up, but there was no question that some Canadian airlines would have to fail. There just isn’t enough demand for them all, and more failures are likely to come.

The Canadian market is not big. I mean that from a population perspective, because from a land area perspective, it is absolutely enormous. By land mass, Canada is actually slightly bigger than the US, but in 2021 it had only a little over 38 million people, about a tenth the size of the US.

The population is also highly concentrated. The top six metro areas in Canada — Toronto, Montréal, Vancouver, Ottawa, Calgary, and Edmonton — account for nearly half the population. In fact, there are only 17 metros in the whole country with more than 250,000 people. In the US, the top six metro areas account for only 20 percent of the population.

The Canadian market is also highly seasonal. In the winter, travelers flood south to warm up. Summer is more of an east-west flow. There are only so many airlines that are needed to serve this country.

Since the 1980s, Canada had been a two-airline market. At the end of 1999, number one Air Canada took over number two Canadian, creating a vacuum. WestJet — which had launched operations in 1996 — stepped right in and began expand rapidly to fill the void as the country’s number two.

This relationship held even though WestJet got distracted, straying away from its lower-cost short-haul operation into everything from turboprops on one end to widebodies on the other. In the last few years, the dynamic between the “big 2” in Canada has changed.

WestJet did a reset during the pandemic and, with a big investment from Alberta, refocused its flying in the west, primarily at Calgary and Edmonton. It also took over Sunwing and folded Swoop into mainline, creating a much greater leisure focus in the company.

Air Canada has continued to grow as Canada’s global carrier, but it has backed off in Calgary where there’s just too much capacity from WestJet.

While this was going on, Porter, long a turboprop operator focused on Toronto/City airport, decided it was time to grow. It placed orders for dozens of Embraer E2 aircraft, opening a base at Toronto/Pearson and growing across the country and deeper into the US.

On the lower end, the race was on to create an ultra low-cost carrier that could carry the torch. Three were in the running. First, there was Canada Jetlines, an airline that had grand plans but never made a serious effort. It still flies a little today, mostly from Toronto with Florida and Caribbean flights, but it is an afterthought.

That left Flair and Lynx to fight it out for supremacy. On the surface, you’d have assumed Lynx would be the winner. Lynx was backed by Indigo, Bill Franke’s investment vehicle that has seen success with several airlines around the world. The airline was well-funded and had experienced backing. Flair, on the other hand, was (and is) entangled in a very messy ownership situation with 777 Partners. It has had problems getting the aircraft it needs, and the airline has had to pullback on growth plans.

In recent days, there had been talk of a merger between the two with Flair the surviving entity. That shows just how desperate things must have been at the end to try to salvage anything from Lynx before it died. In the end, no deal was done and Lynx threw in the towel.

In that announcement last Thursday, Lynx said it would keep flying through Sunday to help people get where they were going. Then it would shut down. It looks like there were enough delays that the airline kept flying into the early morning hours on Monday, but when Lynx 130 touched down in Calgary after 2 in the morning, the airline was done.

Why did it shut down? Well, the answer is obvious… it couldn’t make money. But Lynx specifically called out “compounding financial pressures associated with inflation, fuel costs, exchange rates, cost of capital, regulatory costs and competitive tension in the Canadian market.” Yeah, that.

This leaves Flair as the only credible ultra-low cost operator in the country, but it remains to be seen if that’s a sustainable position. Of course, we all know that Air Canada isn’t going anywhere. It will remain the country’s flag carrier and most important airline no matter what. But if Canada truly is a two-airline market, then who will number two be? Will it be Flair, Porter, or WestJet? There isn’t a simple answer here.

Flair may end up being the winner on unit costs, but then again, Canadian airport costs are very expensive so it’s harder to be a real low cost operator. Porter looks the most like a national carrier, but it is taking on a lot of debt to put all those airplanes into service. It’s not an easy burden to bear. And WestJet, well, there’s been so much uncertainty about WestJet that it’s hard to know where that airline ends up after all its route shifting, mergers, and acquisitions.

It is a shame to see Lynx fail, but it is hardly a surprise. Now the question is… who is next?

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21 comments on “The Great Canadian Shakeout Begins as Lynx Shuts Down

    1. Air Transat has entered into a JV with Porter, which puts them in a slightly odd position since they also codeshare with Westjet.

      1. I remember reading that air Transat was going to be acquired by somebody but can’t remember who. Guess that fell through.

      2. Cranky pretty much nails it in this view of the Canadian scene such as it is. Two monopoly airlines both bolstered by ongoing government money. One the big one, the one with the worst on time performance among the top 10 airlines in NA. The other is the “little airline” that doesn’t know what it wants to be when it grows up.Government restrictive measures on airline investing/ownership not helping competition.

        1. Complete rubbish! Read your Globe and Mail today. It’s the other way around. There is no government money going to airlines. In fact, government is sucking huge amounts of cash out of the airline industry. Lynx (and Flair) haven’t a hope. There are so many high taxes, fees and charges even before the airline figures out the fare. So a low ‘fare’ cannot end up as a low ticket price.

        2. WestJet is a mess. As others have stated, they’ve tried to be all things to all customers (low fare/business class/international). Their “Business Class” is a joke and one wonders what the strategy is for flights to Korea and the Middle East. As is often the case when a business tries too many things like throwing poop on the wall to see what sticks, nothing is done well. Classic case of no coherent vision or strategy. Just try everything…..

          And now that Delta has abandoned a lot of their Canadian routes, we’re stuck flying WJ to the U.S.

    2. Jarvis – That’s a great question. Transat is such an interesting question mark. The summer business to Europe is good. Then in the winter it competes with everyone else for that warm weather traffic. But unlike the rest, Transat is a hometown carrier in Québec, so that presumably will give it some additional help if needed from more local operators. I can see Transat being a nice add to another airline’s portfolio. Heck, Air Canada agreed but its bid was shot down by competition authorities.

  1. To answer Cranky’s question about who is #2 in Canada, the answer probably ends up being WestJet in the west and Porter in the east. I wonder if the long-term outcome is that WestJet and Porter end up merging to be a competitor on closer footing with Air Canada?

  2. Over on one of the commenters dutifully tracked Lynx’s on time performance and it was abysmal. That doesn’t make much for repeat business.

    Also beyond checked luggage there was no ancillaries. Nothing to buy onboard and they only served water, no other drinks. This included on 5 hour or so flights.

    In short this was just a poorly run airline.

    1. That’s weird. Even the smallest European holiday airline has figured out how to monetize anything and everything. What did they get out of the Indigo connection?

  3. Wait — the same 777 Partners with a sideline in buying somewhat troubled European soccer teams and turning them into complete s#*shows? Or is that a coincidence?

  4. There’s another factor that makes Canada a weird airline market – it’s not one nation, but two. Anglo and French Canada do not interact much. That further reduces the size of the domestic market.

    1. Oliver – Yeah, they were up for Most Improved Network. Oakland airport actually announced those nominees, and I couldn’t hear anything they were saying from my place on the stage. I know they were planning on saying that our thoughts are with the employees and we wish them the best, but I don’t know what exactly happened.

  5. There’s also the slew of regional airlines. Pacific Coastal, Central Mountain, Transwest, Calm Air, Perimeter, Air Creebec, Pascan, Air Inuit, PAL, Canadian North, Air North, and probably a few others.

    1. Buffalo Airways! Don’t forget Buffalo!

      (I am still sad that I missed the opportunity to fly scheduled service on a DC3 from Yellowknife to Hay River)

      1. Yes, sadly, Buffalo stopped passenger service several years ago and is now primarily a cargo carrier.

        The other carriers seem to primarily serve their home provinces, and many are owned by First Nations corporations.

        I’ve flown on Canadian North and FirstAir (now merged with Canadian North), and they both seemed to harken back to an earlier age of flying.

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