Canada Jetlines halts operations as airline woes continue

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Canada Jetlines Ltd. announced Thursday that it is temporarily ceasing operations, after four of its executives resigned Monday, including chief executive Brigitte Goersch.

The leisure airline joined the ranks of smaller Canadian airlines to run into financial difficulties this year, saying it has been unable to raise the funds it needs to continue flying and plans to file for creditor protection, adding that passengers with existing bookings should contact their credit card company for refunds.

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Shares of the company, which trades on the NEO Exchange, were halted Wednesday afternoon.

Headquartered in Mississauga, Ont., Canada Jetlines launched in September 2022 and provided charter and scheduled flights out of Toronto to destinations throughout North America and the Caribbean.

However, one expert says the carrier had been struggling to get planes off the ground for a while, pointing to repeated requests for short-term financing to keep operations running.

John Gradek, a lecturer at McGill University’s Aviation Management Program, said Jetlines had been on the “edge of insolvency” for nearly a year.

“You need cash in order to survive in Canada,” Gradek said, noting that Canada Jetlines had been chasing high-volume, competitive markets by branding itself as an upscale carrier, instead of focusing on generating steady income and profits.

You need cash in order to survive in Canada

John Gradek

He said that with just six planes in operation, it faced lower odds of survival than medium sized competitors such as Porter Airlines, which announced it would be expanding its fleet last year.

The more concerning problem, Gradek says, is whether Canada’s commercial aviation market is broken. If Jetlines shuts down for good, it will be the third Canadian carrier to discontinue services this year, following the shut down of ultra-low-cost airline Lynx Air and the folding of Swoop into WestJet.

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Flair Airlines also has faced challenges: its CEO stepped down this summer and it must follow through on a payment plan to resolve $67 million in unpaid federal taxes.

Gradek says Canada Jetlines’ financial troubles are just “a further nail in that coffin” for newer, smaller airlines.

Earlier this year, the Competition Bureau announced it was launching a market study into Canada’s domestic air passenger service.

“Recent incidents such as the bankruptcy of Lynx Air (have) clearly indicated it may be more difficult for smaller airlines to operate in the Canadian marketplace,” Anthony Durocher, deputy commissioner of the bureau’s competition promotion branch, told CBC in July.

Gradek also believes there’s been a lack of oversight of carriers such as Canada Jetlines by Transport Canada — which manages their licences. Gradek is a member of the Transportation Appeal Tribunal of Canada, a quasi-judicial federal body which holds hearings over decisions made by Transport Canada upon request by affected parties.

“The licence to operate Canada Jetlines should have been looked at months ago, and in my opinion, should have been suspended, because Canadians need to have an airline that they could trust, that has a good governance model, that has financial stability,” Gradek said.

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“Our friends at Canada Jetlines did not have any of that.”

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