National Post (National Edition)
WestJet targets 40-per-cent fare cuts
Unveils new ultra-low-cost carrier Swoop
WestJet Airlines Ltd. said it will offer fares that are 40-per-cent cheaper than those currently available in Canada as it unveiled new details about Swoop, the ultra-low-cost carrier it plans on launching next summer.
After months of behindthe-scenes planning, WestJet revealed the new name and logo of its no-frills carrier, which will operate as a separate and distinct brand within the WestJet family. Swoop is expected to start selling discounted tickets in early 2018 and will begin flying passengers on six Boeing 737-800s in late June of 2018.
Bob Cummings, WestJet’s executive vice-president responsible for the launch of the new ultra-low-cost carrier, said in an interview with Financial Post on Tuesday that Swoop will boast the lowest cost per available seat mile (CASM), a measure of how much an airline spends to fly passengers, within less than a year of launching.
“What we modelled out from an ultra-low-cost carrier perspective is that when we reach 10 aircraft (in spring 2019) and scale economies, we will have the lowest cost of any Canadian ULCC,” Cummings said.
While the company announced that Swoop’s headquarters will be located in Calgary, Alta., the same home base as WestJet, the list of markets the airline will serve has yet to be finalized. Cummings confirmed that Swoop will fly in and out of the Abbotsford Airport, located southeast of Vancouver, and that there are ongoing discussions with major airports in Canada as well as the Hamilton, Waterloo and Windsor airports. The goal, he said, is to launch progressive partnerships with airports that will also “repatriate some of the Canadians going across the border” to access cheaper flights.
“We won’t be coming out of the gate with that high of ancillary revenues, so our fares won’t be quite 50-percent lower (as seen in the United States) ... We’ll have potentially up to 40-per-cent lower fares, depending on the market and time of the year,” Cummings said.
“We’re building a cost structure to get at those type of fares ... The No. 1 thing is to make it as easy to purchase and travel as possible, and right beside that is being transparent in terms of what people are buying and what it looks like up-front.”
The company says it plans driving ancillary revenue by charging fees for everything from carry-on luggage and priority boarding to in-flight entertainment and extended leg-room seats. Cummings said featuring advertising within the cabin is not offlimits to Swoop.
The reveal of the new Swoop brand comes as a Canadian startup looks to launch its own ultra-lowcost carrier around the same time.
Aspiring carrier Canada Jetlines Ltd. announced earlier this month that it will fly out of Hamilton and Waterloo, Ont. when it launches next summer and offer a base fare below $100. The company will fly two Boeing 737-800NG planes out of the two airports beginning June 1, serving five markets: Vancouver, Calgary, Edmonton, Winnipeg and Halifax. Jetlines also plans on offering the first 1,000 tickets sold for $10.
Air Canada has also said it is prepared to respond to the new competition by offering an ultra-low-cost fare in areas where ULCCs have entered the market.
But Cummings said the Canadian airline market isn’t big enough to sustain so many new entrants.
“Looking at the market characteristics, population, land mass and what a network would look like in Canada, we believe there’s really only room for one major ULCC in Canada going forward, and WestJet is best suited to be that ULCC,” he said.