First Max

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tbaylx
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First Max

Post by tbaylx »

Yesterday we launched the first of 9 Max's this year in a media event in YEG. First flight operated from CYEG to CYYZ. There will be more hiring this fall and a further 24 pilots a month beginning in Jan 2022.


https://westernaviationnews.com/rebirth-flair/

https://globalnews.ca/news/7938965/flai ... g-737-max/

https://simpleflying.com/flair-airlines-boeing-737-max/

https://edmonton.ctvnews.ca/airlines-an ... -1.5465931

https://www.youtube.com/watch?v=bADPqSVJ1cs
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Realitychex
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Re: First Max

Post by Realitychex »

Anyone who’s been around the industry, and especially around startups world wide knows the perils of rapid expansion prior to achieving consistent profitability.

Jetsgo was the Canadian poster child for this strategy. When cash became tight, as it perpetually was at SG, they simply announced further expansion and used tomorrow’s advance booking dollars to pay today’s bills.

Come mid August, Flair will announce a slew of $39 fares from Canada to sun destinations that, even with ancillary revenue, don’t even cover the trans border fixed costs and fees charged by the US and Canadian governments. But that’s not the point. When they do it, it will be to generate an immediate surge of cash to pay today’s bills as they watch the post Labor Day bookings cliff develop.

Yet here we are in 2021 with another new entrant blazing away, expanding like a weed with no strategic vision other than to cover as much territory as possible with as few airframes as possible, charging fares that were unsustainable 25 years ago with $15 bbl oil and comp packages roughly 60% of today’s rates.

It’s basically a Ponzi scheme. It works until you run out of Grande Prairies with 189 seat jets, (recall WS operated 120 seats in the day...big difference), It’s all very predictable and rarely ends well.

8)
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vrefplus5
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Re: First Max

Post by vrefplus5 »

Aaaaaah.......so there you are!!! Thanks for stopping by :prayer:
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Spaceshuttle
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Re: First Max

Post by Spaceshuttle »

Realitychex wrote: Wed Jun 16, 2021 9:05 am Anyone who’s been around the industry, and especially around startups world wide knows the perils of rapid expansion prior to achieving consistent profitability.

Jetsgo was the Canadian poster child for this strategy. When cash became tight, as it perpetually was at SG, they simply announced further expansion and used tomorrow’s advance booking dollars to pay today’s bills.

Come mid August, Flair will announce a slew of $39 fares from Canada to sun destinations that, even with ancillary revenue, don’t even cover the trans border fixed costs and fees charged by the US and Canadian governments. But that’s not the point. When they do it, it will be to generate an immediate surge of cash to pay today’s bills as they watch the post Labor Day bookings cliff develop.

Yet here we are in 2021 with another new entrant blazing away, expanding like a weed with no strategic vision other than to cover as much territory as possible with as few airframes as possible, charging fares that were unsustainable 25 years ago with $15 bbl oil and comp packages roughly 60% of today’s rates.

It’s basically a Ponzi scheme. It works until you run out of Grande Prairies with 189 seat jets, (recall WS operated 120 seats in the day...big difference), It’s all very predictable and rarely ends well.

8)
Interesting! If they live off tomorrows ticket sales that must mean they owe MILLIONS to pre-pandemic passengers for cancelled flight like the other airlines!!

Wait for it........

Not one cent? Hmm, that does seem to cast shadow on this amazing theory...

Haha,

Tell us another story please!
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47north
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Re: First Max

Post by 47north »

Spaceshuttle wrote: Wed Jun 16, 2021 11:25 am
Realitychex wrote: Wed Jun 16, 2021 9:05 am Anyone who’s been around the industry, and especially around startups world wide knows the perils of rapid expansion prior to achieving consistent profitability.

Jetsgo was the Canadian poster child for this strategy. When cash became tight, as it perpetually was at SG, they simply announced further expansion and used tomorrow’s advance booking dollars to pay today’s bills.

Come mid August, Flair will announce a slew of $39 fares from Canada to sun destinations that, even with ancillary revenue, don’t even cover the trans border fixed costs and fees charged by the US and Canadian governments. But that’s not the point. When they do it, it will be to generate an immediate surge of cash to pay today’s bills as they watch the post Labor Day bookings cliff develop.

Yet here we are in 2021 with another new entrant blazing away, expanding like a weed with no strategic vision other than to cover as much territory as possible with as few airframes as possible, charging fares that were unsustainable 25 years ago with $15 bbl oil and comp packages roughly 60% of today’s rates.

It’s basically a Ponzi scheme. It works until you run out of Grande Prairies with 189 seat jets, (recall WS operated 120 seats in the day...big difference), It’s all very predictable and rarely ends well.

8)
Interesting! If they live off tomorrows ticket sales that must mean they owe MILLIONS to pre-pandemic passengers for cancelled flight like the other airlines!!

Wait for it........

Not one cent? Hmm, that does seem to cast shadow on this amazing theory...

Haha,

Tell us another story please!
Realitychex has alot of experience in this. I wouldn't bet against him.
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Realitychex
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Re: First Max

Post by Realitychex »

Realitychex is involved with his 4th heavily capitalized startup which recently commenced flight ops south of the border.....

8)
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notwhoyouthinkIam
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Re: First Max

Post by notwhoyouthinkIam »

JetsGo suffered from the exact same issue as Royal and Canada 3000: Michael LeBlanc.
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Realitychex
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Re: First Max

Post by Realitychex »

This is also true.

8)
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seriousflyer
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Re: First Max

Post by seriousflyer »

Flair will ride the wave of customer demand happening now or about to happen in Canada. The test will be how well there operate their Maxs throughout this business cycle. Max's are reliable, high dispatch rate, comfortable airplanes. If flair has an effective OCC center, they should achieve profitability with this surge in demand.
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tbaylx
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Re: First Max

Post by tbaylx »

47north wrote: Wed Jun 16, 2021 12:03 pm
Spaceshuttle wrote: Wed Jun 16, 2021 11:25 am
Realitychex wrote: Wed Jun 16, 2021 9:05 am Anyone who’s been around the industry, and especially around startups world wide knows the perils of rapid expansion prior to achieving consistent profitability.

Jetsgo was the Canadian poster child for this strategy. When cash became tight, as it perpetually was at SG, they simply announced further expansion and used tomorrow’s advance booking dollars to pay today’s bills.

Come mid August, Flair will announce a slew of $39 fares from Canada to sun destinations that, even with ancillary revenue, don’t even cover the trans border fixed costs and fees charged by the US and Canadian governments. But that’s not the point. When they do it, it will be to generate an immediate surge of cash to pay today’s bills as they watch the post Labor Day bookings cliff develop.

Yet here we are in 2021 with another new entrant blazing away, expanding like a weed with no strategic vision other than to cover as much territory as possible with as few airframes as possible, charging fares that were unsustainable 25 years ago with $15 bbl oil and comp packages roughly 60% of today’s rates.

It’s basically a Ponzi scheme. It works until you run out of Grande Prairies with 189 seat jets, (recall WS operated 120 seats in the day...big difference), It’s all very predictable and rarely ends well.

8)
Interesting! If they live off tomorrows ticket sales that must mean they owe MILLIONS to pre-pandemic passengers for cancelled flight like the other airlines!!

Wait for it........

Not one cent? Hmm, that does seem to cast shadow on this amazing theory...

Haha,

Tell us another story please!
Realitychex has alot of experience in this. I wouldn't bet against him.
He does certainly have experience. What he doesn't have is any inside knowledge of Flair's internal workings which is apparent in his post. It's all good with us. The more industry insiders that write Flair off as a ponzi scheme the better it is for us. We'll just keep doing our thing and lets see where things lie in a couple of years.
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DanWEC
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Re: First Max

Post by DanWEC »

I would suggest the difference here is that Jetsgo wasn't capitalized by 777 Partners. They didn't even seem to blink funding them through the pandemic. Pockets seem pretty deep and willing. They must see something pretty substantial in their long term plan otherwise their voting shareholders would have pulled the plug a while ago.
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palebird
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Re: First Max

Post by palebird »

Robbing Peter to pay Paul only works for so long. As has been said ..this has all been done before..many times. Deep pockets you say. Are they stupid pockets too? A fool and his money are easily parted. There is nothing to gain in this game, no huge profits, no big bag of candy at the end of the rainbow. Just a lot of flailing about for nothing. Good luck.
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Realitychex
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Re: First Max

Post by Realitychex »

Economics are economics. They don’t change much.

It’s pretty easy to reverse engineer the economics of any airline in Canada, and especially small ones like Flair, down to a granular level.

Anyone recall Raymond James’ 2018 report titled “The Scoop on Swoop”?

Deep pockets are useful, but keep foreign ownership rules in mind.

If Flair is up to the foreign investment / defacto control limit, unless 777 likes to pour endless cash into ventures, but never increase its ownership and control to levels commensurate with their investment, (which isn’t a strategy most funds would touch with a ten foot barge pole), for every dollar they pump in, they need to attract a matching Canadian sourced investment dollar to stay onside.

As many others have discovered before, the appetite in Canada to invest serious cash in startup airlines to challenge both AC, (now partially government owned and who will never be allowed to fail), and WestJet, (now owned by as deep a pocketed and profitable conglomerate as can be imagined), is marginal, and even more so if the capital being raised is to underwrite operating losses created as a result of an ill conceived “we’ll grow into profitability $39 at a time with another $30 in ancillary revenue, and do it with low frequency so we can never attract any higher yields to ensure TRASM exceeds TCASM” strategy.

As an investor, there are far more interesting airline investment opportunities out there, and I see many of them.
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GRK2
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Re: First Max

Post by GRK2 »

So why not tell us what you see smart guy?
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fish4life
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Re: First Max

Post by fish4life »

I wish Flair the best but I think any ULCC model in Canada is super handicapped by our governments fee structures. AIF’s at most airports are +/- $39 now so it’s equivalent to companies giving away free seats in exchange for marketing/ hopeful ancillary revenue
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Re: First Max

Post by Old fella »

tbaylx wrote: Thu Jun 17, 2021 7:25 am
47north wrote: Wed Jun 16, 2021 12:03 pm
Spaceshuttle wrote: Wed Jun 16, 2021 11:25 am

Interesting! If they live off tomorrows ticket sales that must mean they owe MILLIONS to pre-pandemic passengers for cancelled flight like the other airlines!!

Wait for it........

Not one cent? Hmm, that does seem to cast shadow on this amazing theory...

Haha,

Tell us another story please!
Realitychex has alot of experience in this. I wouldn't bet against him.
He does certainly have experience. What he doesn't have is any inside knowledge of Flair's internal workings which is apparent in his post. It's all good with us. The more industry insiders that write Flair off as a ponzi scheme the better it is for us. We'll just keep doing our thing and lets see where things lie in a couple of years.
Flair must be doing something right as they have made it thus far(even during this COVID-19 shit show). Good on them I would say and wish them the very best in the many years ahead. I live in the Maritimes and if opportunity presents itself in the very near future as we have some travel plans , shall try Flair out.
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Realitychex
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Re: First Max

Post by Realitychex »

As long as ownership is prepared to underwrite operating losses in the hope that someday the operation turns the corner as they try to “expand into profitability”, the business will continue to operate.

Summer is summer. A duck with a lawn chair on its back is a viable operation in Canada from now til Labor Day.

Maybe the answer is for Flair to build its own terminal for $50m and sell it down the road for $700m and use that windfall to reward investors and underwrite the venture?

Then again, according to recently filed court documents, it would appear that even that strategy hasn’t exactly worked out either.
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Re: First Max

Post by C-GGGQ »

Realitychex wrote: Sun Jun 20, 2021 7:22 am
Summer is summer. A duck with a lawn chair on its back is a viable operation in Canada from now til Labor Day.
Hahahahaha. I love it and totally agree. As an aside though if Flair could ramp up frequency to their new atlantic routes so I didn’t need to spend 27 hrs layover in yul….. i’d book tomorrow now that i don’t need to quarantine. Duck with a lawn chair
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Big Pistons Forever
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Re: First Max

Post by Big Pistons Forever »

Money is the sincerest form of flattery. How long the current iteration of Flair lasts is entirely dependent on how long the deep pockets of triple seven partners want to keep it capitalized.

I am pretty sure no one who is going to post here has any insight into that question.

I would suggest that COVID caused disruption will create change of the same order of magnitude that resulted from the airline de-regulation of the nineties. The rear view mirror might not be all that useful in predicting what the industry will look like going forward.

That being said the Canadian reality of a small population mostly concentrated in pockets far apart does impose undeniable constraints on the art of the airline possible.

Personally I think the “go big or go home” strategy is the only logical way to break into the market given the strength of the existing airline duopoly. It will certainly be an interesting ride over the next year or so.
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Realitychex
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Re: First Max

Post by Realitychex »

Lest anyone forget, there was a dominant duopoly in place in 1996 / 1997 not to mention Transat, Canada 3000, Royal, Greyhound, CanJet and a couple others that came and went in that general period.

The only one to survive and flourish employed a strategy that specifically avoided the “go big or go home “ mantra and went a very different way.

It took almost 4 years for WS to move east of Winnipeg. That wasn’t by accident.

The “go big” strategy is pretty typical thinking from US controlled companies trying to apply concepts that work in markets that are 11-15x larger than Canada.

It has never worked in Canada.

Maybe it will this time, but as serial investor in proven successful startups, I wouldn’t bet on it.
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