Globe article about Lynx and ULCC market in Canada

[DanWEC]

The Globe just ran an article about Lynx, their CEO, and ULCC market share in Canada.

Their perspective is that they don't want to necessarily take a percentage from the existing market, but rather to grow it by providing opportunity for tickets to people who wouldn't have spent $800 to fly on WJ or AC anyways.

This might mean that maybe there really is room for more carriers if the market will grow proportionally as opposed to taking more slices from the same pie.

Larger market means more tails. No idea where the pilots will come from. I think the labour pool in Canada is actually declining understandably.

[https://www.theglobeandmail.com/busines ... wded-with/]


JEFF MCINTOSH/THE CANADIAN PRESS


Australian Merren McArthur first touched down in Canada in the mid-1980s for a ski holiday that turned into a two-month stay in the Rockies.

“I landed in Calgary and the pilot said it was -40 C. And I was like, `Whoa, I didn’t know that humans could survive in that temperature,”' McArthur recalls.

“I walked into the Banff Springs Hotel and asked them if they had any jobs. I became their first female doorman.”

She loved the skiing. “But I remember being introduced to Caesar cocktails, and I really liked them.”

Now McArthur’s back as CEO of Lynx Air, enticed by the mountainous task of getting an upstart budget carrier off the ground amid intense low-cost competition and the COVID-19 pandemic.

Several ultra-low-cost carriers (ULCCs) have been beefing up since the summer in preparation for a clash with Air Canada and WestJet Airlines Ltd. – and with each other – particularly for domestic flights and sun destinations.

Flair Airlines was down to one aircraft in April. It now has a dozen 737s, with eight more coming by the end of June as the Edmonton-based airline adds routes from Victoria to St. John’s, N.L.

Meanwhile, WestJet budget subsidiary Swoop continues to expand, unveiling nine new routes out of Edmonton in November.

“It is going to be a price war,” said aviation expert and McGill University lecturer John Gradek.

“It’s a harbinger of what’s going to happen this summer with the continuous battle between Flair and Lynx to basically get the price advantage in the marketplace. And Air Canada and WestJet are going to get caught in the crossfire,” Gradek said.

McArthur says “it will be competitive,” but that she sees pent-up demand in Canada, where ULCCs claim only about 12 per cent of the market compared with more than 40 per cent in Europe.

“We’re not really about targeting or taking share away from our competitors, we’re actually about enticing more people to fly and growing the market,” she says.

Lynx, formerly known as Enerjet, plans to make its first flight from Calgary to Vancouver on April 7. By May it aims to operate 76 flights per week along seven routes servicing Vancouver, Kelowna, B.C., Calgary, Winnipeg and Toronto. The company expects more routes will be added this summer.

For the moment, flight cancellations define the sector. In the last three weeks alone Air Canada, WestJet, Transat, Sunwing, Flair and Swoop have scrapped more than 5,300 flights in February alone, or 14.5 per cent of their collective trips, according to figures from airline data company Cirium.

Even if travel restrictions ease and demand rebounds, other hurdles remain.

A shortage of staff, particularly pilots, continues to hamper the industry, though Lynx hopes to hire 450 employees this year, the majority in Calgary. North America will face a shortage of 12,000 pilots by 2023, according to projections from consulting firm Oliver Wyman.

Shifting travel patterns have also seen more Canadians make leisure travel decisions at the last minute, while others opt for road trips instead of air.

“People are finding it difficult to plan months in advance with changing COVID restrictions and developments,” said David Huttner, a London-based expert in low-cost-carriers, which offer bare-bones discount fares and charge extra for services such as checked bags and cancellations.

“The travel habits change, especially on shorter routes. Someone going Montreal-Ottawa now might be more likely to drive in their own car.”

But while the pandemic saw billions of dollars in revenue go up in smoke over the past 20 months, it also burned down barriers to entry for new airlines.

Plummeting demand for aircraft meant carriers could access them more quickly and cheaply. And greater availability of airport slots has given companies leverage when striking deals with airport authorities.

McArthur – like Flair CEO Stephen Jones and WestJet chief operating officer Diederik Pen – cut her teeth in the Australia-New Zealand aviation market, an ideal training ground for Canadian airline executives.

[Flight94]

Interesting read. Regarding the "pilot shortage", I wonder how many qualified 3000ish hr ATPL's are parked at 703/704's, making a comfortable living, who refuse to take a significant paycut to fly a 37. I can't be the only one!!

[‘Bob’]

Yeah.. I don’t think it’s going to happen that way at all.

First, it’s not like there is a huge untapped market. People aren’t just going to all of a sudden decide to fly just because it’s cheap. Every time someone asks me if I want to save money I ask how much is it going to cost me. You cross the country for $100.. but you spend $300-$400 or more a day every day you’re away. If it’s for family, you were flying already.

What most people are looking for is a bargain. So what’s going to happen is for those who don’t care about points or perks or service are going to switch to the ULCC.

The larger carriers know this, which is why they have had flanker brands (Zip, Tango, Rouge, Swoop), CPAs where scope allows, or simply remodel their services and prices (remember hot meal service and complimentary checked luggage and not having your knees up to your shoulders?).

It’s going to be a race to the bottom and not everyone is going to survive. Outlying routes are too thin. Main routes are too competitive.

Continental US and Europe? Similarly sized landmasses with 10 times our population? Sure. Asia where population is even greater, labour is cheap, and regulations nearly nonexistent? Absolutely. Even Australia where population is more evenly distributed around the perimeter of the country making many trunk routes is a lot better.

And you can definitely count me out for working for any of these airlines. What’s even worse is if you go all in and bet on the losing horse.

But hey.. at least it’s not JetsGo.

[qwe221sd]

Interesting read. Regarding the "pilot shortage", I wonder how many qualified 3000ish hr ATPL's are parked at 703/704's, making a comfortable living, who refuse to take a significant paycut to fly a 37. I can't be the only one!!

Not too much..I think.
People who become a pilot are targeting to fly a shiny jet mostly.
But I don't think there's a pilot shortage , cheap pilot shortage maybe.
At least you can hire a 250hr pilot or cadet program like europe unless ATPL requirement come to.

[co-joe]

Interesting read. Regarding the "pilot shortage", I wonder how many qualified 3000ish hr ATPL's are parked at 703/704's, making a comfortable living, who refuse to take a significant paycut to fly a 37. I can't be the only one!!

At the moment, the ULCCs are busy scooping up unemployed and highly experienced CX, EK, GF, and EY drivers. Once that's done and they transition to hiring FOs, I don't think Either ULCC will have trouble attracting 703/4 pilots. I think it will be Encore and Jazz that have trouble competing. When first year FO pay at Lynx and Flair are on par with Year 7 Jazz FO pay, and year 2 Captain pay at Encore, anyone with experience will see the lifestyle of a Max 8 pilot, vs moving back in with their parents to fly a Q as a major boost.

[flyinhigh]

with changing COVID restrictions and developments,” said David Huttner, a London-based expert in low-cost-carriers, which offer bare-bones discount fares and charge extra for services such as checked bags and cancellations.

“The travel habits change, especially on shorter routes. Someone going Montreal-Ottawa now might be more likely to drive in their own car.”

Haha,really. An expert is saying that one would rather drive an hour and a half from YUL-YOW than fly an 1:20 to YYZ, wait for a connector than fly :50 min to YOW. Maybe the business sector lad would to pad his miles, but any Joe blow is certainly not going to do that.

Good expert, AGAIN

[JBI]

with changing COVID restrictions and developments,” said David Huttner, a London-based expert in low-cost-carriers, which offer bare-bones discount fares and charge extra for services such as checked bags and cancellations.

“The travel habits change, especially on shorter routes. Someone going Montreal-Ottawa now might be more likely to drive in their own car.”

Haha,really. An expert is saying that one would rather drive an hour and a half from YUL-YOW than fly an 1:20 to YYZ, wait for a connector than fly :50 min to YOW. Maybe the business sector lad would to pad his miles, but any Joe blow is certainly not going to do that.

Good expert, AGAIN

Jazz operates 5 direct YUL-YOW flights a day showing a 0+46 minute block time.

Now that being said, I agree it’s not a good example that he used.

[fish4life]

Typical southern Ontario media that doesn’t realize Canada is bigger than that.

ULCC’s in Canada have one big disadvantage compared to other places in the world and it has to do with the lack of secondary airports. ULCC’s in Europe can be successful because they can save money in multiple areas like cheap landing and gate fees. In Canada a ULCC is going to be paying the same exorbitant landing, ATC and security fees at the majors since they have no other airports than can reasonably use except Vancouver and Toronto (yxx and ykf)

[palebird]

This nonsense has been tried again and again and again, ever since the industry was "deregulated". It always fails because... well I don't have to list the reasons why because lot's of posters already have. Race to the bottom as far as Canada goes. It will never work no matter how hard you wish.

[igorcanuck]

Spirit and Frontier just announced a merger down in the States. Most likely that’s gonna happen here in Canada with the ULCCs at some point.

[Airbrake]

Spirit and Frontier just announced a merger down in the States. Most likely that’s gonna happen here in Canada with the ULCCs at some point.

Isn’t that the ultimate goal of all these start up investors? Be just “good enough” to get bought.
It doesn’t matter what carnage is left behind for the employees or other airlines, just get a payout and walk away.

They won’t be there saying sorry to anyone if their desire to stir up demand doesn’t work and they close up shop in the middle of the night some night soon.

[piperdriver]

[quote=igorcanuck post_id=<a href="tel:1182165">1182165</a> time=<a href="tel:1644249660">1644249660</a> user_id=67237]
Spirit and Frontier just announced a merger down in the States. Most likely that’s gonna happen here in Canada with the ULCCs at some point.

Isn’t that the ultimate goal of all these start up investors? Be just “good enough” to get bought.
It doesn’t matter what carnage is left behind for the employees or other airlines, just get a payout and walk away.
[/quote]

Sounds very similar to Onex taking over Westjet.

[Airbrake]

[quote=igorcanuck post_id=<a href="tel:1182165">1182165</a> time=<a href="tel:1644249660">1644249660</a> user_id=67237]
Spirit and Frontier just announced a merger down in the States. Most likely that’s gonna happen here in Canada with the ULCCs at some point.

Isn’t that the ultimate goal of all these start up investors? Be just “good enough” to get bought.
It doesn’t matter what carnage is left behind for the employees or other airlines, just get a payout and walk away.

Sounds very similar to Onex taking over Westjet.
[/quote]

Oh absolutely it Is!