DALLAS — Canada Jetlines (AU) announced this week that it would temporarily stop its airline operations starting August 15, 2024. This decision came as the company faced challenges in securing sufficient financing needed to sustain and expand its operations.

The airlines states that it has historically relied on a mix of debt, equity, and other financial mechanisms to fund its operations.

Despite rigorous efforts by the company's independent Board committee and external advisors to explore all available financing options, including strategic deals and various funding avenues, the low-cost carrier (LCC) says it has been unable to secure the necessary capital.

In response to this situation, AU is making efforts to assist affected passengers. Travelers with existing bookings are advised to contact their credit card companies to arrange refunds for their pre-paid travel.

Canada Jetlines joins a growing list of LCCs and ultra-low-cost carriers (ULCCs), including Lynx air and Swoop, that have faced challenges in the Canadian market. With Air Canada (AC) and WestJet (WS) dominating the sector, there is a significant need for increased competition, as noted by the Canadian Becca Alkema from runwaygirlnetwork.com.

There are two main challenges Canadian budget airlines must face. Canadian airports impose substantial fees, which poses a significant challenge for LCCs aiming to offer affordable ticket prices.

Additionally, the geographic distribution of Canada's population, combined with the popular leisure destinations sought by travelers, further complicates the competitive landscape for these airlines.

While AU plans to seek creditor protection and will provide further information about this filing in due course, the above hurdles won't go away any time soon.