ONTARIO- Canada Jetlines (AU) has ceased all flights and airline operations, citing financial difficulties. The Toronto-based carrier, known for sun destination routes, failed to secure the necessary capital to continue operations.
The company exhausted all financing options, including strategic transactions and equity and debt financings, according to spokeswoman Erica Dymond. Despite these efforts, Canada Jetlines could not obtain the required funding to maintain operations.
Canada Jetlines Cease Operations
Passengers holding existing bookings are advised to contact their credit card companies for refunds. The airline states it is making efforts to assist affected travelers during this transition.
This shutdown follows a significant leadership shake-up, with four executives, including CEO Brigitte Goersch, resigning on Monday. Canada Jetlines plans to file for creditor protection as part of its wind-down process.
The airline’s closure marks another setback for Canada’s commercial aviation sector, following the recent shutdowns of Lynx Air and budget carrier Swoop. The Canadian discount airline industry has experienced significant turbulence since 2000.
Key observations from the historical data:
- Short-lived ventures: Many airlines, such as Roots Air and Air Canada Tango, had brief operational periods, lasting only a year or two.
- Mid-2000s cluster: The period between 2002 and 2006 saw several airlines enter the market, including Canjet, JetsGo, Zip, and Zoom but failed ultimately.
- Recent casualties: The last few years have witnessed the closure of prominent players like Swoop and Lynx Air, the latter being a rebranding of Enerjet.
- Longer-lasting exceptions: Canjet managed to operate for over a decade, standing out as one of the longer-running discount carriers before ceasing its operations in 2015.
Struggling since Inception
Canada Jetlines, based in Mississauga, Ontario, launched operations in September 2022. The airline serves domestic Canadian routes and international destinations in the U.S., Caribbean, and Mexico.
The carrier operates charter flights for sports teams and corporations and leases its fleet to other airlines during summer months. Initially conceived as an ultra-low-cost carrier, Canada Jetlines pivoted to a leisure airline model under former CEO Eddy Doyle.
Doyle cited high taxes on discount carriers in Canada and intense competition from Air Canada and WestJet as reasons for abandoning the ultra-low-cost strategy. In February 2023, he expressed belief that existing carriers adequately met Canadian travel demand, but noted new entrants would compete for the same market share.
Canada Jetlines has faced numerous challenges since its inception. The airline postponed its initial launch planned for December 2019 due to financing issues and the loss of investment partners, resulting in significant layoffs.
Since its eventual launch in September 2022, Canada Jetlines has struggled to expand its fleet and operations.
Canada Jetlines suspended domestic routes in January 2023, refocusing on sun destinations and aircraft leasing. The airline planned to resume domestic flights in fall 2023.
Failed to Generate Profits
Despite Ottawa raising foreign ownership limits for Canadian airlines to 49% in 2018, Canada Jetlines faced financial challenges. The company reported a $14.2 million loss for the year ending March 2023, with quarterly revenues between $8 million and $12 million.
In May 2023, Canada Jetlines secured a $2-million loan from Square Financial Investment Corp., owned by board member Reg Christian. The company projected fleet growth to seven planes by end-2023 and 15 by 2026.
CEO Eddy Doyle retired in June 2023, with Duncan Goersch assuming leadership.
Aviation expert John Gradek told CBC about the airline’s precarious financial situation, citing operational and funding patterns. He expressed surprise that Transport Canada hadn’t revoked the airline’s license earlier.
Gradek highlighted the airline’s struggle to meet payroll and aircraft lease costs with six planes and a small workforce. He predicted the company’s collapse following the executive departures on August 14, 2023.
The expert criticized Canada’s commercial aviation landscape, questioning the wisdom of consumers paying high fares for tickets on financially unstable airlines. He called it a failure of transportation policy and practices.
Trading of Canada Jetlines shares on the NEO Exchange was halted on August 14, 2023, signaling further financial distress for the airline.
What are your thoughts on the Canadian Aviation landscape? Have you flown with Canada Jetlines? Let us know your thoughts in the comments.
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Canada’s Lynx Air Announced Bankruptcy and Cease Its Operations
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