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Wardair. Canada 3000. Jetsgo. CanJet … Lynx Air.   The pages of Canadian aviation history are littered with the names of companies which launch with great hope, promising lower fares, better service, or more routes only to disappear into insolvency or mergers.

Lynx Air, which filed for protection from creditors last week, is merely the latest.

So why does it keep happening?  Experts cite four key reasons:  A geographically vast and lightly-populated country; giants like Air Canada and WestJet fighting back on routes and lower fares; airport fees; and a lack of political will to help smaller airlines survive.

And yes, says John Gradek, it’s going to happen again.

“We’ve seen this Lynx saga thirty times.  It’s the definition of insanity — doing the same thing and expecting it will change next time.  But it doesn’t work,” said Gradek, a former Air Canada executive and head of McGill University’s global aviation leadership program.

“If you keep having the same behaviour and the same practices, we’re going to get the same results over and over and over again.”

This past fall, with Lynx and Flair Airlines duking it out with ultra low fares — Toronto to Calgary for $69, Toronto to Vancouver for $99 — Gradek noticed the big carriers dropping prices.  Not enough to match the ultralow cost carriers, but a substantial part of the gap disappeared.

“After the summer peak, Air Canada and WestJet basically said ‘screw this.’  I’d say they got rid of about 75 per cent of the gap between their fares and the ULCCs,” said Gradek, who’d like to see at least a partial return to the regulation of fares and routes — something not seen since Canada deregulated the industry in the mid-1980s.

Flair CEO Stephen Jones says there’s no doubt the lower fares from the bigger airlines were a response to Flair and Lynx.

“You absolutely would not have seen that without the ULCCs being there,” said Jones.  “It forces the other guys, what we call Big Air, to try and put us out of business and drop prices around us.  It’s a clear pattern.  The other guys would be dancing in the streets if ULCCs were gone.”

That behaviour, says the head of an antitrust advocacy group, “raises alarm bells.”

“On the one hand you say ‘aren’t these companies just responding competitively.’  But if it’s not sustainable, it’s just a sugar high kind of competition,” said Keldon Bester, executive director of the Canadian Anti-Monopoly Project.  “We get a low cost ticket for a couple of years until Air Canada or WestJet can run them out of business.”

Jones says traditional carriers aren’t going to be able to keep dropping prices to ultralow discount levels forever.

“Anyone can offer low prices, but you can only do it sustainably off a low-cost base,” said Jones, who had been in merger talks with Lynx until Lynx filed for protection from creditors.

It has also been a tumultuous year for Flair.  In November, the airline was ordered by the Canada Revenue Agency to pay $67.2 million in taxes and last March, it had four of its planes seized after an Irish leasing company said the airline fell behind on payments.

Jones insisted the ULCC model can work in Canada, despite Lynx’s insolvency.

“This is not a sign that the ULCC model doesn’t work.  It does work.  It’s proven around the world.  This is just a bad outcome in this particular case,” said Jones.  “We’re very committed to our purpose, and passengers.  People can absolutely continue to book with confidence.”

But airlines disappearing is a feature of deregulation, not a bug, says Barry Prentice, director of the University of Manitoba’s Transportation Institute.

“The competition that we see is the solution to the duopoly pricing that would be there without the ULCCs.  This was the theory of removing economic regulations in the airlines,” said Prentice.  “So we should not think about the demise of a new airline as a failure.  It’s sad for the investors, but it is essential to the system that people try.”

The head of the National Airlines Council of Canada, which represents established carriers including Air Canada and WestJet, insists that the big airlines welcome competition.  If anyone’s to blame for industry struggles, said NACC president Jeff Morrison, it’s the federal government.

“Federal policies inhibit a truly competitive system — including uniquely high service fees and charges, a failure to reinvest over $400 million in airport rents back into essential infrastructure, and costly new forthcoming regulations,” said Morrison.

A spokesperson for federal transportation minister Pablo Rodriguez said the government has tried to encourage competition, and is gratified to see other companies pushing back against the traditional carriers, either on their own or as part of new alliances.

“We’re seeing airlines like Porter and Air Transat work together to compete with bigger airlines like Air Canada and West Jet.  There’s a market for low-cost carriers in Canada, and our government will promote more innovation and collaboration in the sector,” said spokesperson Laura Scaffidi.

Still, said McGill’s Gradek, there’s more the federal government and regulators could be doing.

Gradek pointed to Australia as an example of a country where ultralow cost carriers are successful, despite operating in a large country with a relatively small population.  The big difference?  Large carriers such as Qantas or Virgin Australia are discouraged from operating routes out of small and medium-sized cities, instead leaving them to the ULCCs.

“Don’t fly to Saskatoon, don’t fly to Regina.  Don’t fly to Moncton.  Don’t even fly to Edmonton.  There are (equivalent) markets in Australia where they’ve basically told Qantas ‘stay away,’” said Gradek. In Canada, however, the carriers have been left to their own devices, said Gradek. 

“They’ve been given free reign by the regulators which services they fly and how much they charge — no oversight,” lamented Gradek.  “And we now have a duopoly in Canada whose role is to ensure its survival as a duopoly.”