C3 to India: The Rise & Fall of Canada 3000

Deregulation has brought its share of turbulence to the Canadian aviation scene as it has elsewhere. With Canadian Airlines on the ropes as the new century arrived the charter airline Canada 3000 transformed itself into a new competitor for Air Canada. It stretched its reach to global destinations like India as well as scheduled domestic ops. Sadly for Canada 3000 it overstretched itself dramatically, resulting in a bizarre and unexpected collapse.

Canada 3000 was formed initially as a charter affiliate of the British tour operator Air 2000, partly no doubt to facilitate the movement of the airline's fleet between busy periods in Canada and Europe. Operations began in late 1988 after Air 2000 was forced to remove itself from an onwership position. By 1991 Canada 3000 was the largest charter airline in Canada and by 1998 it was carrying 2.5 million passengers annually to over 20 countries. The fleet that year gained three of an eventual four Airbus A330-200s on lease from ILFC and was otherwise built around Airbus A320s and Boeing 757s. Impressively the airline had been consistently profitable since its creation.

The fleet in 1999

Under the leadership of Angus Kinnear and John Lecky the carrier was in a strong position, which was bolstered in 2000 when the company went public with a $30 million IPO. Canada 300 began to see itself as the heir apparent to the no2 throne in Canada following Canadian Airlines takeover by Air Canada. Tt began scheduled operations and that year it ordered A319s for cross border and new domestic services. Unfortunately the airline's golden streak would not continue. The purchase of charter competitor Royal Aviation in early 2001 for $84 million was a major error. The amalgamation was far from smooth and Royal's financial position far worse than it seemed. Canada 3000 didn't stop with just one takeover though and in March also purchased CanJet for $7.5 million.

All of this activity and growth was a major strain on the airline's finances. By late July the airline was already having financial difficulties with only $82 million in cash available but liabilities of over $100 million. It seemed however that the carrier could pull through given time and the grandiose plans it had for expansion continued.

Canada 3000 Airbus A340-313X C-GZIA Aeroclassics 1:400 Scale Model Airliner

One of these was, rather oddly, to open direct scheduled services to India. The rights had been won in October 2000 when it was granted Air Canada's exclusive rights to servce the country following its pullout from the routes earlier in the year. The airline's plans were announced on July 26, 2001. They included an initial twice weekly flight between Toronto and Delhi to begin on October 8 and a once weekly Vancouver-Delhi non-stop. These would use the polar route. From November 5, 2001 another new route would be opened connecting Toronto with Mumbai twice weekly, though this would use a short stopover at London Gatwick. These five services were seen as just the start as the carrier had permisson for seven flights per week.

Mr Kinnear at a press conference in Delhi, early 2001

The Mumbai services could use Canada 3000s existing A330s (in an 18 club class, 309 economy layout) but for the other three weekly services new equipment would be needed due to the distance and flight time (14 hours). This came in the form of a new Airbus A340-313X leased from ILFC and registered C-GZIA. This aircraft was delivered on September 19 and configured with 32 seats in Executive First class and 264 in economy. The seats in the new first class were not quite flat beds but nonetheless were superior to anything Air Canada could provide.

That the delivery of the A340 went ahead at all is all the more surprising given that its finances were so weak and only eight days earlier the September 11 attacks had changed the world. The day before the attacks Canada 3000 had sold 25,000 tickets but in the week following its sales halved to only 46,000. It could ill afford the grounding of its fleet in the post 9-11 chaos but the longer term impacts of the fall in traffic were to be cataclysmic. Ironically the day of the A340's arrival at the airline's AGM it was forced to report a steep first quarter loss of $15.8 million. Worse was to come.

The Canadian government's bailout for the airlines was miniscule but but still Canada 3000 persisted with the Indian service. The first flight took off on Monday October 8 only one day before the US and British began bombing Afghanistan. Canada 3000 at least made a nod to its dire situation by cancelling the Vancouver-Delhi service. To add to the woes Air Canada began operations competing directly against Canada 3000 with its new low cost Air Canada Tango subsidiary.

The situation was so bad at the airline that in an amazing game of brinkmanship Canada 3000's chairman and largest shareholder John lecky went on record, apparently without talking to anyone else, to say that without government aid it would be out of business by Christmas. This had the unintended affect of upsetting the Canadian government, causing creditors to begin to call in debts and sending the airline's bookings into a tailspin all at once. No government deal could be reached and the Christmas date became optimistic. The resulting whirlwind destroyed the once profitable airline and it shutdown for good on November 11.

The apparent speed of the airline's collapse took the whole of Canada by surprise and stranded thousands of passengers as far away as Australia and of course India. The Canada 3000 A340 had been in revenue service for just a month. She being only a 2001 build aircraft had no trouble finding a new home. On January 18, 2002 she joined Air Tahiti Nui as F-OJTN and has served with them ever since. For Canada 3000 there was no comeback and they left in their wake thousands of jobless employees, millions in debt and a gaping hole in the Canadian aviation scene that would be filled by Westjet.

Above: Some of the C3 fleet after the collapse - including the sole A340. Note some aircraft still in Royal Aviation colours.

References

2001, Nov. Canada 3000 placed in bankruptcy. CBC News
2001, Nov. McArthur, K & McNish, J. Canada 3000: Airline Woes. The Globe & Mail
2001, Oct. McArthur, D. Canada 3000 launches N.A.'s only non-stop India route. The Globe & Mail
2001, Jul. Canada 3000 plans more flights to Delhi, Mumbai. The Hindu Business Line
Canada 3000. RzJets.net