Flair Airlines is a Canadian-based low-cost carrier based in Edmonton, Alberta. The company bills itself as Canada’s first and only independent Ultra-Low-Cost-Carrier (ULCC). Using the route analytics tools available, we’ve examined Flair’s route network to determine which routes appear to be the most profitable and which are less profitable.
As an ultra-low-cost carrier, Flair competes based on price, with a menu of amenities and bundled services ranging from baggage allowances to early boarding. Flair’s fleet included 19 Boeing 737 MAX aircraft and 2 Boeing 737-800 aircraft. It has leased Boeing 737 MAX aircraft from 777 Partners, which also holds minority equity in the airline. The airline last year was reviewed for a potential violation of Canadian ownership requirements but survived the challenge and was re-approved by the CTA as Canadian.
On March 11, 2023, Airborne Capital Ltd. seized four leased aircraft operated by Flair for alleged non-payment. That resulted in a schedule disruption, and Flair Airlines continued to operate despite the difficulties.
With an eventful year, let’s examine Flair’s routes for 2022 and how they stack up via-à-vis the competition. The chart below shows each route that Flair Airlines flew in 2022. Using a logarithmic scale, the vertical axis shows comparative costs to competitors, and the horizontal axis market share for a particular route. Each circle represents a route, with airport codes for major routes shown and the size of the circle representing traffic levels on each route.
The box labeled 1 is where an airline aspires to be, having both cost and market share leadership in a given market. As one can see clearly in the chart, Flair has only five markets on the right side of the central axis with clear market leadership. The four routes with cost and market leadership are indicated in green and should be highly profitable.
However, most of Flair’s routes are above the horizontal axis from a cost standpoint, indicating cost leadership. Even in markets without market share leadership, cost leadership enables profitability, as shown in the box labeled 2 in the upper left-hand corner. Those routes, in yellow, should also be profitable as the carrier has lower costs than its competitor if it can charge similar fares. Given its market advantage, the route with market leadership but slightly higher costs should also be profitable.
The routes in the lower left quadrant, labeled 3, are routes in which the airline lacks both cost and market leadership and is subject to being undercut by competitors. These are routes in which the carrier needs to either reduce cost or grow traffic and represent key routes to focus on. Fortunately, most routes are close to the baseline, indicating only a slight cost disadvantage vis-à-vis the competition.
Despite its recent regulatory and lease payment battles, Flair appears to be in a relatively good position as a ULCC in multiple Canadian markets. While the carrier’s fleet has increased, its goal is to double the fleet by 2025 to achieve better scale economies and increase service to successful destinations. While early 2023 has been disruptive, the carrier shows promise based on its 2022 route and cost data. It can focus on increasing capacity on key routes as it generates the “critical mass” needed for better economies of scale.
If the airline can succeed in doubling its fleet over the next two years and get to 45 to 55 aircraft, it should be able to succeed against higher-cost competitors in key markets. After the recent aircraft repossession, the carrier remains well-positioned for growth if its cash flow can sustain the required payments.
