The latest demise of Lynx Air leaves Aptitude Airways alone holding the banner for ultra-low-cost carriers within the Canadian airspace.
Heading into the busy summer season journey season when airways make a lot of their cash, some specialists say travellers reserving tickets throughout Canada should weigh low-cost airfare in opposition to the reputational and monetary uncertainty dogging Aptitude.
The CEO of the Edmonton-based provider tells World Information that he’s assured there’s a spot for the airline amongst “price-sensitive” customers, however specialists say Aptitude faces headwinds in making the ultra-low-cost fare mannequin work in Canada.
Calgary’s Lynx Air introduced in late February that it could shut up store and file for creditor safety. Filings present Lynx had hoped an acquisition by rival Aptitude would assist it keep away from chapter, and Aptitude has mentioned it’s eyeing Lynx jets in plans to develop its personal fleet.
Stephen Jones, CEO of Aptitude Airways, says it was a “unhappy day” when Lynx left the market. He says he feels for individuals at Lynx, significantly as a result of they’d the shared imaginative and prescient of bringing into Canada the ultra-low-cost-carrier or “ULCC” mannequin that’s labored effectively in Europe and the US.
However Jones tells World Information that he’s not discouraged to see the collapse of one other firm with the identical mannequin. Aptitude has seen a “large uptick” in demand for its seats since Lynx’s departure, he says.
“We’re the only real low-cost provider left available in the market, and it’s an awesome place to be. We’ve got the price-sensitive leisure market right here, actually, to ourselves,” he says.
Low-cost flight choices are restricted exterior Aptitude in Canada between Air Canada’s Rouge banner and WestJet’s Swoop, which it absorbed final 12 months. WestJet additionally plans to wind down Sunwing and combine the low-cost provider into its most important enterprise by October. Canada Jetlines additionally flies primarily to heat climate locations out of some Canadian hubs.
Whereas Aptitude has been a participant in Canadian airspaces for over twenty years, its trendy iteration as a ULCC began with its rebranding in 2019. Lynx Air, as soon as generally known as Enerjet, took to the skies as a low-cost provider through the COVID-19 pandemic in late 2021 and folded only a couple years later.
Jones argues that Lynx didn’t have the time to construct up the “economies of scale” wanted to reach the Canadian market. He says the failure of Lynx doesn’t have any bearing on whether or not the identical enterprise mannequin can succeed underneath Aptitude.
“There’s nothing about Canada that claims that the ULCC mannequin shouldn’t work. Individuals like to journey and other people love a deal,” he says.
Challenges of the low-cost mannequin in Canada
Jacques Roy, professor with the division of logistics and operations administration at HEC Montreal, tells World Information that “it’s very tough to function a low-cost airline mannequin in Canada.”
The low-cost mannequin that originated with Southwest Airways within the U.S. and later unfold to Europe depends on having dependable “metropolis pairs” the place airways can squeeze many seats into an acceptable plane to decrease their cost-per-customer sufficient to drive down the value of airfare, Roy says.
The distances between the cities in Canada can imply a much less comfy journey for longer, he says, which impacts the worth proposition for home journey.
Weighing down the underside line for all air carriers in Canada are pricey airport enchancment charges that make taking off and touchdown domestically a substantial price consuming away at airways’ margins, Roy says.
Aptitude itself has acknowledged the affect of touchdown charges at Canadian airports.
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In shifting its spring schedule to scale back its total variety of flights however enhance service to solar locations exterior the nation, the airline indicated in a press release to World Information final week that it was saving extra money on the longer journeys. Aptitude additionally mentioned it was responding to Canadians’ demand for extra solar locations within the spring months.
Jones says the excessive charges imposed in Canadian air journey are distinctive to the market, and that in the end means these prices are coated by the client within the value of airfare.
“The truth that the airport charges are excessive right here does imply that, on the margins, individuals will select to not journey as a result of they’ll’t afford it,” he says.
Duncan Dee, the previous chief working officer at Air Canada, says the choice to pivot away from Canadian locations within the spring season “completely” is smart in the case of lowering airport charges.
Airways are being levied costs of round $50 per passenger after they take off and after they land at varied Canadian airports, he says, a payment that Aptitude can successfully minimize in half each time if flies a global route.
The excessive airport enchancment charges tied to Canadian hubs are a main motive why Dee believes it’s “extraordinarily tough” for the ULCC mannequin to work at-scale within the nation.
“What you find yourself with is a really, very excessive place to begin for a lot of of those ultra-low-cost carriers, from a fare foundation,” he says.
“It’s nearly unattainable for ultra-low-cost carriers like Aptitude to take a web page out of their American, European, Asian counterparts, that are ready to make use of extraordinarily low fares to stimulate the market.”
Dee says the failure of Lynx displays the necessity for change within the Canadian market, which he says is the one one on this planet the place air journey infrastructure is “100 per cent funded by charges and taxes which might be charged to, in the end, the fliers.”
Aptitude has confronted quite a few public authorized and monetary challenges prior to now few years, although CEO Jones says a lot of the turbulence going through the airline is behind it.
Aptitude’s made-in-Canada bona fides have been up within the air for months amid an investigation from the Canadian Transportation Company, which in the end dominated the airline met the necessities for Canadian possession in June 2022.
The corporate confronted a seizure order for its property from the federal authorities again in November associated to $67.2 million in unpaid taxes. Jones confirmed to World Information that the airline nonetheless has a plan to pay that quantity to the Canada Income Company, saying the corporate has a “good relationship” with the tax authority.
A 12 months in the past, Aptitude had quite a few its planes seized by the supervisor of its jet leases which alleged the airline was behind on its funds there as effectively; Aptitude has since sued that firm and its lessors. Jones claims the seizure was “illegal” and says the corporate’s present fleet of 20 jets is “100 per cent secured.”
And simply final weekend, Aptitude confronted a technical challenge that took down its reserving platform for a number of days till Tuesday when providers have been again up and operating.
Jones says that the outage was associated to a problem in switching over cost suppliers and that there have been no flight disruptions associated to the issue.
Whereas Aptitude had beforehand mentioned it was having a monetary dispute associated to its cost processor, the Peoples Belief, Jones says that has been resolved and Aptitude is again working with the Vancouver-based monetary providers agency.
Till talking with World Information on Wednesday, Aptitude hadn’t mentioned publicly what brought on the interruption in service on its web site.
Dee says that headlines about Aptitude’s monetary or technical difficulties could be exhausting for the corporate to bounce again from within the eyes of consumers.
“It’s straightforward for customers to lose confidence in an airline that has an lack of ability to handle its personal communications and its lack of ability to deal with lots of the considerations which were raised by the media publicly,” he says.
Jones doesn’t consider Aptitude is shedding its enchantment in prospects’ eyes, pointing to a surge of recent flight bookings on Tuesday when the corporate’s system got here again on-line. It was the corporate’s “largest gross sales day ever,” he says.
“The customers, I believe they’re voting with their toes,” he says. “Individuals have been ready for our system to come back again on-line they usually have been hungry for it.”
Aptitude servicing ‘value delicate prospects’
Shoppers are “completely value delicate” proper now after an extended bout of elevated inflation and a fast soar in rates of interest over the previous two years, Jones says.
“In a world the place affordability is without doubt one of the largest challenges for everybody, having some competitors within the airline market is critically essential to them,” he says.
Dee isn’t satisfied that Aptitude has discovered its area of interest available in the market but. He says that the airline helps to drive down presents from rivals on the routes that it serves, however that it’s restricted in how a lot it could undercut WestJet and Air Canada and isn’t but widespread sufficient to have “large affect” on costs customers pay.
And in situations the place fliers can avoid wasting cash on their tickets, he says that some travellers may nonetheless decide to stay with the bigger airways if they’ve factors constructed up of their loyalty applications.
Roy additionally says he thinks many travellers may forgo Aptitude and spring for a bit of additional legroom on longer flights in Canada.
However he agrees with Jones that buyers are value delicate proper now, and are more and more viewing flights as a way to an finish.
“They only wish to get there as shortly and as cheaply as potential,” he says.
Regardless of the challenges of the ULCC mannequin, Roy is hopeful that Aptitude can develop into a viable third various to the Air Canada-WestJet duopoly.
“I hope they’ll succeed, as a result of I want there was a 3rd airline in a number of the markets in Canada. It will actually present for extra competitors,” he says.
Jones’ personal outlook for the airline is unsurprisingly rosy. He tells World Information that the skies are clear for the ultra-low-cost provider, with expectations for a robust summer season season and a runway to ramp up the corporate’s fleet once more beginning in 2025.
“I believe it’s going to be a busy summer season for all airways, however actually for Aptitude,” he says.
“We’ve received some nice fares on the market. We’ve received actually nice locations. And I believe that is going to be our greatest season ever.”
