From “not surprised” to a “significant blow”: Agents, execs sound off on Lynx shutdown

The Canadian travel industry is reacting to the closure of ultra-low-cost carrier Lynx Air, which revealed Thursday night (Feb. 22) that it will file for creditor protection and end operations at 12:01 a.m. MT on Mon., Feb. 26, 2024.

Jim Sullivan, interim CEO of the Calgary-based airline, announced the news to all employees in an internal memo last night.

"Unfortunately, we have been unable to secure adequate funding for the airline,” wrote Sullivan, in the memo that PAX obtained.

He said the outcome is a "terrible shock" and "not how our story was intended to play out."

READ MORE: "Difficult news”: Lynx files for creditor protection, final flight set for Feb. 26

Lynx, which launched in April 2022, said it executed plans over the years to enhance its brand, foster company growth, and explore new markets and destinations.

With that, Sullivan said the airline “exceeded expectations upon the return of travellers to the skies once travel restrictions were lifted.”

But financial pressures associated with inflation, fuel costs, exchange rates, the cost of capital, regulatory costs and “competitive tension” in the Canadian market proved to be key challenges.

"An uphill battle"

Travel advisor McKenzie McMillan of The Travel Group based in Vancouver told PAX that he “wasn’t surprised” when he heard the news.

“The ULCC model has always had an uphill battle in the Canadian market. That being said, especially since the pandemic, there has probably been room for an ultra-low-cost carrier to succeed,” McMillan wrote PAX in an email on Friday (Feb. 23).

But then the market rapidly became “saturated” with other players, vying for the same customers, he said.

READ MORE: WestJet offers discounts, repatriation fares on routes served by Lynx

“It was only a matter of time before they started to disappear one by one,” he said.

He added that he’s “not really sad” about Lynx’s departure.

“These airlines overextend themselves to try and appear like they can compete with the mainstream options, and really, the customer suffers with delays, cancellations and the inevitable closure of the airline,” McMillan said.

“Eventually, there will be a last airline standing to offer a ULCC option, and at that point, it may be a healthy, low-cost solution for travellers wanting to save a few dollars.”

Competition & consolidation

Competition and consolidation in Canadian aviation has heated up in recent years.

The WestJet Group completed its acquisition of Sunwing, a transaction that was first announced in March of 2022.

Since then, WestJet has integrated all jets from its own low-cost subsidiary, the now-defunct Swoop, and it will do the same with Sunwing Airlines, a process that the company says will be completed by October 2024. 

Canada’s other ULCC, Flair Airlines, is still chugging along, despite owing the Government of Canada more than $67 million in unpaid taxes.

Last week, reports suggested that Lynx and Flair entered merger talks. Although, no confirmation of an official deal ever materialized.

There’s also newcomer Canada Jetlines, which is aiming to have 15 aircraft in the next 13 months. Jetlines, which identifies as a leisure carrier, will begin Halifax flights (serving Toronto and Orlando), starting this June.

Air Transat maintains competitive routes in Ontario, Quebec and Atlantic Canada. Then you have Porter Airlines, which is in the midst of rapid North American expansion.

By the way, Michael Deluce, CEO of Porter, called the demise of Lynx, months ago – in an interview with the Canadian Press in December, the CEO predicted that at least one Canadian airline would fold within the next two years (to be clear, he did not name names).

“Growing pains”

Travel advisor Brenda Slater of Beyond the Beach, who is also a co-founder of the Association of Canadian Independent Travel Advisors (ACITA), said “low-cost airlines are generally something I avoid selling, until they have sorted out their growing pains.”  

“And we all know they tend to have some big ones,” Slater told PAX. “Sadly, [Lynx shutting down] is not surprising.” 

Competition to larger airlines “is a great thing,” she said. She wonders if Flair is next on the chopping block.

Slater, meanwhile, has questions about how Lynx will refund its customers.

Passengers with existing bookings are being advised to contact their credit card company to secure refunds for pre-booked travel. (Lynx has posted an FAQ here).

“What happens to those using VISA debit, or paying agencies in cash to purchase on their behalf? Do we know the financials of expected refunds? Will TICO be helping those passengers?” Slater asked.

(Shortly after PAX published this story, The Travel Industry Council of Ontario (TICO) issued Compensation Fund guidance for Lynx customers. It can be found here.)

Beyond the immediate impact felt by Lynx customers – which WestJet is assisting with – the Airline Pilots Association International says 160 pilots and flight crew will be affected by the closure.

The timing couldn’t have been worse – Friday, February 23, the day after Lynx broke the news, happens to be National Aviation Day, which is meant to celebrate Canada's air transportation safety, strength and success.

TravelOnly's Nancy Wilson, also an ACITA co-founder, said she doesn't book her clients on ULCCs "out of fear of something like this happening." 

"It’s difficult for me personally to take any other position as I myself won’t even risk it for my own personal travel," she said. 

Still, failures are disappointing, said Wilson, who feels for the consumers.

"It will be difficult for Canada to maintain multiple low-cost carriers in our marketplace, given the expanse of Canada and lower populations compared to regions such as Europe or the United States," Wilson said.

Another reason to use a travel advisor

In a statement to PAX, Wendy Paradis, president of the Association of Canadian Travel Agencies and Travel Advisors (ACTA), said it was “disappointing to learn that another ultra-low- cost carrier has ceased operations and passengers are stranded.”

“Unfortunately, travel advisors across Canada have seen this over and over again,” Paradis said. “This is another example of how booking with a professional travel advisor is beneficial when things go wrong. Customers who booked direct have nobody to assist them.”

Travel advisor Pat Probert of the Bob Family Travel Team at Travelonly is on the same page.

READ MORE: Lynx Air shutdown - TICO posts Comp. Fund guidance for Ontario customers

Discussing the news on Facebook, he said the situation highlights why everyone should book with trusted travel advisors “who will guide you in the right direction.”

“If you think you can fly to Florida for $36 like Lynx was advertising, plus bags, seat, and carry on, how long do you think they can be in business?” Probert wrote, advising his customers to book with Canada’s larger airlines “at fair prices.”

A “blow” to the industry

Lynx's website listed 23 destinations, including most major Canadian cities and U.S. cities, such as Phoenix, San Francisco, Orlando and Tampa Bay.

The airline had nine Boeing 737 MAX 8 in service, with eight on order, plus 29 Boeing 737 MAX 8-200 on order, according to Cirium, an aviation analytics company.

Calling itself an “ultra-affordable airline,” Lynx entered the market with a promise to improve customer service and grow the low-cost model in Canada. 

Zeina Gedeon, CEO of Trevello Travel Group, called Lynx’s demise “a significant blow to the Canadian travel industry and a disappointing setback for competition in the aviation sector.”

“Low-cost airlines like Lynx Air are critical to making travel more accessible and affordable for Canadians, and its absence will be felt by many,” Gedeon told PAX on Friday.

“This news emphasizes the challenges facing the aviation industry as it recovers from the pandemic, and the need for continued support to ensure a vibrant and competitive travel market in Canada.”

“Our hearts go out to the employees and customers of Lynx Air, and we hope that other airlines will step in to fill the void left by their departure and to take care of customers impacted from the closure.”

In a farewell statement posted to its website, Lynx had this to say:

“We hope in our absence that our vision to inspire more Canadians to fly leaves its mark on our passengers.''

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