Canada is losing yet another airline, as charter carrier Canada Jetlines has stopped flying…
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Canada Jetlines cancels all flights amid crisis
Canada Jetlines has ceased all flights effective immediately, as the airline has been unable to raise the capital needed to continue operating. As a result, the company plans to file for creditor protection. Passengers with existing bookings on the airline are being told to contact their credit card company for a refund.
Per a spokesperson for the airline:
“The continuing operations of the Company have been dependent upon the Company’s ability to raise adequate financing and to grow the airline to the point where it can commence profitable operations. The Company has historically financed its future requirements through a combination of debt, equity or other facilities.”
“The company pursued all available financing alternatives including strategic transactions and equity and debt financings. Unfortunately despite these efforts, the company has been unable to obtain the financing required to continue operations at this time.”
For those not familiar with Canada Jetlines, the airline commenced operations in September 2022, just under two years ago. While the airline has a fleet of four Airbus A320s in a one cabin layout, these planes have primarily been leased out to other airlines, including Corendon Dutch Airlines.
Canada Jetlines operates a few dozen scheduled flights per month. The airline is based in Toronto (YYZ), and primarily operates international leisure routes, to destinations like Miami (MIA), Orlando (MCO), and Cancun (CUN).
The airline hasn’t been profitable since launch, which is of course a major issue. The airline said it needed to grow to become profitable, but couldn’t make that work. Even going back to shortly after launch, the company lacked a cohesive business plan. In early 2023, the airline first planned to operate domestic flights, but then backtracked, and decided to focus on international sun destinations, plus leasing out planes to other airlines.
Things got even worse in recent weeks, as in June 2024, the company’s previous CEO resigned. A new interim CEO was appointed, though this Monday, she quit, along with four board members.
Canada Jetlines is the second Canadian airline to cease operations this year, as Lynx Air ceased operations in February 2024.
Canadian aviation is tough…
As I always say, the airline business is challenging just about anywhere around the globe, but Canada is an especially tough market. Canada is a huge country (marginally larger than the United States in terms of land mass) with only 40 million people.
Travel demand in the country is highly seasonal, and the population is heavily concentrated in several major cities (roughly 13 million people live in the greater Toronto, Montreal, and Vancouver areas). On top of that, airport fees in the country are high, as are taxes for airline passengers. This greatly cuts into margins, especially for low cost, leisure airlines.
When you add up those factors, running an airline just isn’t easy. Despite that, we’ve seen all kinds of new startups in recent years, and on top of that, the existing players have continued to grow as well (like Porter, with its huge Embraer E195-E2 growth).
Bottom line
Less than two years after taking to the skies, Canada Jetlines has ceased operations, as the airline has run out of cash. The Canadian leisure airline was small, and primarily flew to international sun destinations. I can’t say I’m surprised by this development, given the challenges of operating in Canada, plus the carrier’s questionable business model.
What do you make of Canada Jetlines ceasing operations?
Flew on their inaugural route. They have one of the best logos
Any business model supporting a start-up with 4 aircraft making a few dozen flights monthly is doomed to fail (unless operating as a charter). Without a high aircraft utilization cash burn will be too high to sustain operations. Competing to leisure destinations during the winter months must be complimented with other income producing operations during the offseason. Porter identified a niche market, provides the customer service business clientele desire, and has deep pockets.
Any business model supporting a start-up with 4 aircraft making a few dozen flights monthly is doomed to fail (unless operating as a charter). Without a high aircraft utilization cash burn will be too high to sustain operations. Competing to leisure destinations during the winter months must be complimented with other income producing operations during the offseason. Porter identified a niche market, provides the customer service business clientele desire, and has deep pockets.
You can fly as many or as little flights as you want so long as you adjust the rest of the business to accommodate. Most of the major cargo carriers have aircraft that fly twice daily. But they've intentionally purchased cheap secondhand aircraft to do that. Cutting the airframe cost at the expense of higher fuel burn from older engines. Since they only fly a few times a day, that extra fuel burn doesn't really...
You can fly as many or as little flights as you want so long as you adjust the rest of the business to accommodate. Most of the major cargo carriers have aircraft that fly twice daily. But they've intentionally purchased cheap secondhand aircraft to do that. Cutting the airframe cost at the expense of higher fuel burn from older engines. Since they only fly a few times a day, that extra fuel burn doesn't really matter much compared to the airframe savings.
That said. Air Canada already has flights in the sun destination space, as do cheaper airlines like Sunwing and Air Transat. So I don't really understand what the plan here was. Jumping into a space with high competition and no real niche is confusing. Being based in Toronto can't be cheap either, and it's a city with tons of service already.
Why do people say the taxes and airport fees hurt margins? Don't all airlines have to pay the same taxes and fees in Canada?
It's not like Southwest can't go to Vancouver and compete with airlines there in the same way they compete on the same routes elsewhere, but news articles say they can't... I don't get it.
I always think of how comparable Canada is to Australia when it comes to relatively populations, geographic size, handful of major population centers.
- Flagship airline dominance in both
- The locals don't think well of their flagship airlines, but they have limited options
- Both have a good secondary airlines (with CAN also having Porter)
- AUS has New Zealand, but that's a limited market itself, and has to compete with...
I always think of how comparable Canada is to Australia when it comes to relatively populations, geographic size, handful of major population centers.
- Flagship airline dominance in both
- The locals don't think well of their flagship airlines, but they have limited options
- Both have a good secondary airlines (with CAN also having Porter)
- AUS has New Zealand, but that's a limited market itself, and has to compete with Air NZ
- CAN has the US with a ton of markets, but has to compete with the world's biggest 3 airlines, plus highly seasonal
Makes me wonder what these airline entrepreneurs are evaluating with these start-ups in these "small" and fiercely competitive/saturated markets?
You could also throw in South Africa and some other countries into the same conversation.
There's some similarities and not.
Canada still has a notably larger population than Australia. Canada's population center are all basically along the US border, whereas Australia is far more distributed across its large land mass.
On top of that, it cannot be ignored that Canada is right next to the US and therefore simply in closer proximity to much more of the world.
TPAC Australia flight are among some of the longest, making it very...
There's some similarities and not.
Canada still has a notably larger population than Australia. Canada's population center are all basically along the US border, whereas Australia is far more distributed across its large land mass.
On top of that, it cannot be ignored that Canada is right next to the US and therefore simply in closer proximity to much more of the world.
TPAC Australia flight are among some of the longest, making it very expensive to run such operations. Australia to Europe and the East Coast is very difficult to do due to the range. Canada's geography allows it to run much more reasonable TATL to Europe and TPAC to East Asia.
Not true Yoloswag420.
Australia's population (90%) is overwhelmingly concentrated on the east coast - Brisbane, Sydney and Melbourne being our major centres, with Perth being the only major population centre out west. It is most definitely NOT "far more distributed across its large land mass". That large land mass you refer to is mostly...desert, desert, desert, and even more desert. If you can get this most basic fact wrong, how trustworthy is everything else...
Not true Yoloswag420.
Australia's population (90%) is overwhelmingly concentrated on the east coast - Brisbane, Sydney and Melbourne being our major centres, with Perth being the only major population centre out west. It is most definitely NOT "far more distributed across its large land mass". That large land mass you refer to is mostly...desert, desert, desert, and even more desert. If you can get this most basic fact wrong, how trustworthy is everything else you say?
I wonder if you know how dumb you sound. The distance between Perth and the Australian East Coast is enough to make nonstop flights to Europe impossible. Many of other large cities like Adelaide, Darwin, and others that are far from the East Coast.
No reason to take anything you say seriously when you can't even understand something that simple.
@yoloswag420
Um, you lost all credibility. Your first paragraph in response to Shaun makes no sense whatsoever...WHATSOEVER.
Then you made your ignorance shine bright...ADL is far from Australia's East Coast? It's like CHI to NYC...not like LAX to NYC...
Back to your first paragraph to Shaun (which was absurd)...are you not aware that PER is now QF's developing gateway to Europe?
Porter's presence in the west is extremely limited so Westjet is certainly not shaking in their boots. If you live in Toronto I can understand using Porter but here in Kelowna there's nothing going.
Wish Alaska would return to Kelowna full time.
@Ben I just got an email from Frontier this morning that their credit card will now include 2 free checked bags. While I would rather have a carryon for free, it is an improvement for ULCC
Its sad to see a start up airline go out like this. There is ONE thing that Canada Jetlines had going for them (not that it helped): that livery is really cool. Quite sharp (or smart, if you're British). C'est la vie!
Wouldn't happen on Delta
It is impossible for Detla to do wrong. Detla is life.
That's too bad.
AC is utter garbage in every aspect, and Westjet just slightly better.
This is why Porter is growing so fast.
Go Raccoon!
ehh Porter is burning money as if there's no tomorrow. I want Flair and Porter to stay in business and not fold, because if they do, prices will skyrocket for us.
The Porter CEO has deep pockets but the problem is that AC can out price them in the East and similarly so can Westjet in the West. So it’ll be interesting to see how they fare in the next few years.
Wouldn’t be too concerned about Porter, they have some very smart people running the airline. They’re the ones who threatened Air Canada, not WestJet.
Porter is a delight !
Porter is burning money funded by OMERS, a large Canadian public service pension fund.
Funny enough, the WestJet Link brand is going to fold later this year and everything will be transferred to the WestJet Encore brand.