What Canadians should know about Spirit Airlines’ shutdown

Karl Moore, business strategy professor, discusses the growing concerns with rising jet fuel prices and the impact it will have on the industry.

Teller desks are vacant and the skies are clear of Sprit Airlines’ signature yellow planes after the company ceased operations Saturday, leaving some customers with refunds and many concerned about the future of global air travel.

It’s the deepest wound so far on industry cut deep by the Iran war’s impact on fuel prices. Spirit Airlines had been dealing with cost issues for months, but the company attributed its ultimate shutdown in part to the price of oil.

Spirit, a U.S. company, did not have operational routes to Canada, though companies servicing both sides of the border are wrestling with symptoms of the cost crisis.

Air Canada suspended six routes, affecting domestic travel from Alberta to B.C. and a handful of international destinations. WestJet is consolidating flights on lower-demand routes, and Transat – parent to Montreal-based Air Transat – announced a six per cent capacity cut.

• A list of airlines suspending flights due to jet fuel costs

Canada does have an advantage against jet fuel import headwinds due to its domestic refineries. Distillates, a category of refined oil products, accounts for about a third of the industry’s product sales.

However, Canadian travellers are likely to see more cancellations as the Iran war churns on. Karl Moore, a business strategy professor at McGill University, told CTV News he expects the effects to be “dramatic.”

“The longer flights,” he said, referring to trips to Europe and Asia, are particularly challenging “because of the lack of fuel altogether.”

“Right now, it’s a lot of negative signs for the next four to six months,” he said.

Even after a resolution to the conflict, delays in refining and transport associated with resuming shipping could are likely to stretch on, he said.

What are your rights?

So, what happens to your travel plans if your flight is cancelled?

“When an airline sells you a ticket, it’s a contract. They assume a risk that prices of the fuel may go up. Sometimes they go down, and they make more money, but it’s an economic risk,” explained Air Passenger Rights President Gabor Lukacz during an interview with CP24.

“As long as jet fuel is available to the destination airport, and there are no restrictions, no embargoes on buying jet fuel, the airline has a legal obligation to operate your flight or to rebook you on another flight of a competitor airline,” he said.

An exception, he said, is if there is a “prospect of all flights being grounded” due to airspace restrictions. But that’s an unlikely scenario, he said.

If an airline cancelled your flight due to economic reasons, they are still on the hook for your travel, accommodations, and “even lost wages,” he added.