TORONTO — Navigating the transborder downturn and its impact on U.S. route networks was just a warm-up, as it turns out. After a dizzying year, Canada’s airlines, and carriers around the world, are now grappling with the jet fuel supply crisis.

As aviation industry expert John Gradek put it, “it’s been a whirlwind.”

A whirlwind for sure, with a side of whiplash. After widespread media coverage of sky-high airfares and fuel surcharges, not to mention warnings about jet fuel running out, there’s word that at least in Europe, airfares for some top routes were actually trending down in the weeks after April 9. Why? Airlines are looking to woo back skittish travellers – and April 9 was the day before Europe’s airports issued its dire warning about jet fuel shortages this spring and summer.

So far Canada’s airlines have implemented route and capacity cuts here and there, and there are certainly higher fares and fuel surcharges. Lufthansa Group made headlines when it announced it was cutting approximately 20,000 short-haul services from its summer schedule. Amazingly, that’s just 1% of the Group’s total capacity. Lufthansa Group is the parent company of Lufthansa Airlines as well as SWISS, Austrian Airlines, Brussels Airlines and ITA Airways.

Another sobering stat – and possibly a sign of things to come for aviation worldwide –  data from aviation analytics firm Cirium showed that roughly 13,000 flights were cancelled worldwide in May. That took close to 2 million seats out of the global market just ahead of summer.

CANADA’S LCCs & ULCCs

South of the border, Spirit Airlines cited soaring oil prices as a key factor in its May 2 demise. In business since 1992, the ultra-low cost carrier with the bright yellow planes had been through two bankruptcies over the decades but couldn’t pull through a year-over-year doubling in the cost of jet fuel.

Airline industry insiders called Spirit’s collapse a “warning” for low-cost carriers in these precarious times.

By dint of geography and population size (and some would say tough competition, along with high costs and foreign ownership rules), Canada will never see an low-cost carrier (LCC) and ultra-low-cost carrier (ULCC) operate on such a large scale as Spirit Airlines or its competitors in the U.S., or Ryanair or EasyJet in Europe. But that’s not to say we haven’t had our share of budget carriers.

The average Canadian traveller probably has no memory of Greyhound Air – but travel advisors will never forget the ULCC’s anti-agent ads (and there were more than a few cheers from the trade when the airline folded in short order).

Some were beloved, others less so. There was Canada 3000, Jetsgo, Roots Air, Harmony Airways – and more recently, Lynx Air and Canada Jetlines. Even Swoop was folded into WestJet’s mainline operations. Some LCCs and ULCCs valued and worked with travel advisors. Others didn’t.

Now there’s just one: Flair Airlines. The value-minded carrier has former Sunwing Airlines head Len Corrado as its CEO, and just recently named industry veterans Jamie Fox as Director of Agency Sales and Partnerships, and Nicole Bursey as President of the Flair Vacations tour operator arm. Flair Vacations was announced last fall as part of the airline’s Flair FWD strategy, a plan that also included network expansion and its Flair Partners program for agents.

Given the jet fuel supply crisis and Spirit’s demise, Travelweek asked Gradek for his take on the future of LCCs and ULCCs in Canada.

“Proliferation is effectively done. Now we need to await the next generation of ULCCs. There will be one!” says Gradek. “Legacy carriers have already created the architecture of the next round, given their substantial economy fare increases in recent months. There is room for the next iteration of ULCCs, just need aviation fuel to settle down to its new level, post the Gulf conflict. My take? Early 2027 announcement and flying by summer 2027.”

HIGH-COST AVIATION ECOSYSTEM

Flair has moved away from the ULCC category, argues Gradek, given its rebranding and pricing.

Another airline industry insider, Robert Kokonis, President and Managing Director, AirTrav, agrees.

“Flair’s re-positioning as a value-add carrier recognizes that it is difficult to be a ULCC in Canada, and to leverage low costs to deliver consistently low pricing,” says Kokonis.

Kokonis adds that at least in the U.S., “some of the issues faced by the ULCC market (Spirit, Allegiant, Frontier and Sun Country), and even the LCC sector (jetBlue specifically), have been a combination of poor carrier strategy and macro market forces impacting the success of their models.”

He adds: “Don’t forget, until the start of COVID, the ULCC carriers were about the most profitable air carrier segment in the U.S. Then the troubles began. U.S. legacy/network carriers rolled out Basic Coach (economy) pricing, giving them a comparable price point to the ULCCs. The legacy carriers were also able to leverage the money they made off their highly lucrative co-brand credit card products, re-investing some of that into their loyalty programs. So passengers figured they could get the same low fare, plus loyalty program benefits, if they flew a legacy carrier versus an LCC.”

In Canada, he notes, it’s “difficult to make the pure-play ultra-low-cost carrier (ULCC) model work. A ‘lower’ cost carrier model is possible. Canada is a high-cost aviation ecosystem. … Take a family of four. Before the family van has even left the driveway to the airport, they are paying $280 for taxes and fees, before their actual base fare. For price sensitive travellers, that is a lot to swallow.”

Labour rates, notably for pilots, are another factor, says Kokonis. “The rich negotiated contract agreements from the past two years, with U.S. legacy carriers plus Air Canada and WestJet, have put cost pressure on the discount carriers. As well, higher wage rates instigated outflow pressure, enticing pilots to leave discount and regional/express partner carriers, to the large legacy airlines.”

This article appears in the May 21, 2026 edition of Travelweek; click here.