Lynx Air CEO Merren McArthur with one of the airline's Boeing 737 Max jets in Calgary, on April 11. Lynx investors include Stephen Bronfman’s Claridge Inc., TorQuest Partners and Indigo Partners LLC, the U.S. private equity company run by Bill Franke.Todd Korol/The Globe and Mail
Like the seasoned airline executive she is, Merren McArthur arrives promptly and travels light, striding unaccompanied into a Toronto café and hooking her bag over the chair back before settling in to order a latte. The chief executive officer of Lynx Air is here to talk about the discount carrier she launched 364 days ago after moving to Calgary from her native Melbourne.
Or maybe that’s relaunch. This isn’t the first time Lynx has tried to get going. Or even the second. The airline founded in 2006 by former WestJet Airlines Ltd. executive Tim Morgan has been branded, at various times, Enerjet, Jet Naked and FlyToo.
None of those was a success. So, in 2021, Lynx announced plans to become a scheduled low-cost carrier led by Ms. McArthur, a lawyer credited with turning around two Australian airline brands and launching an air freight division.
Lynx investors include Stephen Bronfman’s Claridge Inc., TorQuest Partners and Indigo Partners LLC, the U.S. private equity company run by Bill Franke, whose stable of discount airlines includes Frontier Airlines and Wizz Air.
Ms. McArthur’s strategy is familiar to anyone who follows the budget airline game – don’t compete directly with the big airlines and keep prices low to increase the number of people who can afford to fly. Fly one model of new, fuel-efficient planes and fly them often. Lynx’s aircraft will be in service a sizable 14.5 hours a day in the summer, reducing per-seat costs at a time fuel expenses are high. Charge for checked bags and anything that can’t be stowed under the seat. Keep the cabin service attentive but simple – no food, but a bottle of water is free.
“No one really likes airline food, anyway,” Ms. McArthur says. “So long as the passengers know, they are fine with it.”
Lynx flies seven Boeing 737 Max planes and has 280 employees. By year’s end, the fleet will number 10 aircraft with 450 employees. Lynx will have 46 planes by 2028, Ms. McArthur says. The discounter sells seats to Montreal from Calgary for prices that start at $59. Baggage fees start at $60 a bag and go up to $103, depending on the distance and check-in method.
The appeal of running Lynx, Ms. McArthur says, is it’s essentially a startup, a “clean sheet of paper” upon which she can write her story, backed by experienced airline investors. She often huddles with executives at Indigo’s other discount airlines to swap tips and strategies.
Complexity is the enemy of low costs, Ms. McArthur says. Problems with catering can delay flights, and training employees to fly and maintain a second type of plane is expensive.
But unlike Lynx’s budget rivals such as Flair Airlines, and the discounts brands of Air Canada and WestJet, Lynx flies into big cities in order to capture higher fares than routes between secondary airports. Lynx lands in Vancouver, Calgary and Toronto, with flights starting shortly to Montreal.
Lynx enters its second year at a time of upheaval in the domestic airline industry. Air Canada AC-T and WestJet, which control a combined 81 per cent of the market, are retrenching to their respective strongholds on opposite sides of the country. This offers room for other airlines to grab market share, said Prof. David Gillen, director of University of British Columbia’s school of transportation studies.
However, recent travails at domestic carriers underline the challenges faced by the industry as it tries to emerge from the COVID-19 pandemic. Flair Airlines lost four planes owing to missed lease payments; Porter Airlines cancelled several flights after buying larger aircraft; and tiny Canada Jetlines suspended domestic routes. Even the Australian airline she once led, Tigerair Australia, has stopped flying.
Like its rivals, Lynx has scaled back its ambitions lately. The airline’s April schedule has been trimmed by about four flights a day to 602 flights in April, down from the 736 April flights it posted several weeks ago, according to Cirium, an aviation data company. The cuts include some Vancouver-Toronto and Vancouver-Calgary flights.
Anup Srivastava, a finance professor at the University of Calgary, said discount carriers need to stick with their traditional role of short-haul flights and leave longer routes to the majors. “That’s not a sustainable model, because if it was that easy, then Air Canada will adopt the same model,” Prof. Srivastava said.
Still, he said the poor customer service and website technology of the large carriers, along with the trends to end free food and no-charge baggage, make it easier for the discount carriers to compete. “If you’re getting the same level of service and the same level of unreliability, why would you pay extra?” Prof. Srivastava said.
UBC’s Prof. Gillen said the shortage of pilots means they are commanding premium wages, and could undercut Lynx’s expansion plans, However, demand for travel is strong, and Lynx’s strategy of competing with trains, buses and coaches – not the giants – is a good one, he said.
“If you’re able to supply, you’ll do well,” Prof. Gillen said.