Federal government transportation policies — and tax gouging — are what ultimately led to the demise of Lynx Air, according to a long-time Alberta aviation analyst.And it’s consumers who are going to suffer as a result of fewer choices and competition, said Rick Erickson, president of RP Erickson & Associates in an interview.“I liked Lynx,” he said. “I thought Lynx was very professional, I thought they did a very good job on the marketing side. I thought their management was very strong as well. I thought it was a good low-cost airline.”.That didn’t stop the Calgary-based upstart from announcing Friday it would cease operations at the end of this weekend, potentially stranding hundreds of travellers. Although it won’t be offering refunds, the company on its website advised customers with flights booked after Monday to contact their credit card company to reverse the charges.The irony is that Erickson actually had a flight booked on the carrier in March, “and it's gone now, right?” Despite the disappointment, he said he was impressed with the way the airline handled its customers and employees in contrast to other high-profile airline failures that often left people stranded at the gate.But in the bigger picture, the raft of surcharges and fees, along with carbon and fuel taxes, make it unlikely that the ultra-low cost carrier model can thrive in Canada the way it does in the US and Europe, he said. .“They (small carriers) just don't have the other tools that airlines have put in place, particularly the big ones WestJet and Air Canada have put in place to manage their revenue stream to be able to live with like taxation,”Rick Erickson, president of RP Erickson & Associates .Although the federal government owns all the airports in the country, they’re independently operated under a fee structure that skims $400 million in rents annually without putting anything back. Erickson said Canada is the only country in the world to operate under such a model, which fails to recognize the economic and social value of commercial air travel.In addition, federal ownership restrictions limit foreign ownership in airlines to just 23%. Lynx’s Canadian backers — or lack thereof — simply determined they’d lost enough money and decided to walk away.And unlike Canada, the US has dozens of smaller regional airports that can cater to smaller airlines without imposing onerous gate fees. The US government also pays for items such as security, costs which are recouped this side of the border.Consequently several low-cost carriers cater to Canadian travellers in places such as Washington state, Montana and Buffalo NY without actually coming into Canada itself — even though they could. .“That’s telling. What does that tell you? It tells you that they've done their homework. They've had a look and said, we can't make any money in Canada,”Rick Erickson.“Those US airports are catering to these US ultra-low cost carriers and are being fed by Canadians crossing the border largely because we have this high cost environment and government taxes. Federal government taxes are a significant part.”The situation was compounded by the looming carbon tax increase on April 1. The fuel burn rate for even a small company such as Lynx was likely hundreds of thousands of dollars per day.“Fuel is one-third of the cost of airlines offering flights. The carbon tax is going up. That bumps it up to 34% to 35%. It just another one of the escalating factors that continues to occur. Our taxes keep going up. The cost of airfare keeps rising and it becomes difficult to the small players who just don't have the volume nor the product range.”He also pointed to the “two 400 pound gorillas in the cage” that are extremely defensive about hoarding market share.“They (small carriers) just don't have the other tools that airlines have put in place, particularly the big ones WestJet and Air Canada have put in place to manage their revenue stream to be able to live with like taxation,” he explained.
Federal government transportation policies — and tax gouging — are what ultimately led to the demise of Lynx Air, according to a long-time Alberta aviation analyst.And it’s consumers who are going to suffer as a result of fewer choices and competition, said Rick Erickson, president of RP Erickson & Associates in an interview.“I liked Lynx,” he said. “I thought Lynx was very professional, I thought they did a very good job on the marketing side. I thought their management was very strong as well. I thought it was a good low-cost airline.”.That didn’t stop the Calgary-based upstart from announcing Friday it would cease operations at the end of this weekend, potentially stranding hundreds of travellers. Although it won’t be offering refunds, the company on its website advised customers with flights booked after Monday to contact their credit card company to reverse the charges.The irony is that Erickson actually had a flight booked on the carrier in March, “and it's gone now, right?” Despite the disappointment, he said he was impressed with the way the airline handled its customers and employees in contrast to other high-profile airline failures that often left people stranded at the gate.But in the bigger picture, the raft of surcharges and fees, along with carbon and fuel taxes, make it unlikely that the ultra-low cost carrier model can thrive in Canada the way it does in the US and Europe, he said. .“They (small carriers) just don't have the other tools that airlines have put in place, particularly the big ones WestJet and Air Canada have put in place to manage their revenue stream to be able to live with like taxation,”Rick Erickson, president of RP Erickson & Associates .Although the federal government owns all the airports in the country, they’re independently operated under a fee structure that skims $400 million in rents annually without putting anything back. Erickson said Canada is the only country in the world to operate under such a model, which fails to recognize the economic and social value of commercial air travel.In addition, federal ownership restrictions limit foreign ownership in airlines to just 23%. Lynx’s Canadian backers — or lack thereof — simply determined they’d lost enough money and decided to walk away.And unlike Canada, the US has dozens of smaller regional airports that can cater to smaller airlines without imposing onerous gate fees. The US government also pays for items such as security, costs which are recouped this side of the border.Consequently several low-cost carriers cater to Canadian travellers in places such as Washington state, Montana and Buffalo NY without actually coming into Canada itself — even though they could. .“That’s telling. What does that tell you? It tells you that they've done their homework. They've had a look and said, we can't make any money in Canada,”Rick Erickson.“Those US airports are catering to these US ultra-low cost carriers and are being fed by Canadians crossing the border largely because we have this high cost environment and government taxes. Federal government taxes are a significant part.”The situation was compounded by the looming carbon tax increase on April 1. The fuel burn rate for even a small company such as Lynx was likely hundreds of thousands of dollars per day.“Fuel is one-third of the cost of airlines offering flights. The carbon tax is going up. That bumps it up to 34% to 35%. It just another one of the escalating factors that continues to occur. Our taxes keep going up. The cost of airfare keeps rising and it becomes difficult to the small players who just don't have the volume nor the product range.”He also pointed to the “two 400 pound gorillas in the cage” that are extremely defensive about hoarding market share.“They (small carriers) just don't have the other tools that airlines have put in place, particularly the big ones WestJet and Air Canada have put in place to manage their revenue stream to be able to live with like taxation,” he explained.
