Jetlines revives ultra-lowcost goal
New CEO aims for takeoff next summer
Canada Jetlines Ltd., a startup airline hoping to bring affordable fares to Canadians, has set its sights on launching an ultra- low cost carrier next summer under the leadership of a new chief executive.
Stan Gadek, t he company’s newly minted chief executive and former head of Sun Country Airlines, says there is an immediate need for Canada to have its first ultra-low cost carrier.
“Canada still doesn’t have a true ultra- low cost carrier and it has some of the highest air fares in the world. The environment is perfect for this kind of opportunity,” Gadek said in an interview with the Financial Post.
Gadek’s first major move as chief executive? He says he is conducting a top-down review of Jetlines strategy outlined under his predecessor.
Last month, the company shook up its leadership in the midst of trying to get the airline off the ground. Jim Scott, co-founder and former chief executive, was “the original visionary” behind Jetlines, said Mark Morabito, the company’s executive chairman.
“But he didn’t have the experience in commercial aviation in general, or in ultralow cost carriers,” Morabito said. “I quickly realized as we started to embark on the execution of the business plan that we needed to get that experience at the company right away.”
In addition to the review of the company, Gadek said Jetlines is in the process of selecting a southern Ontario city that will serve as the company’s main hub while developing a business strategy that will be ready to launch in the summer of 2018. Gadek said he is currently considering Hamilton and Kitchener, and avoiding pricey hubs such as Toronto’s Pearson airport.
Jetlines sees opportunity to target customers that travel to the United States in order to take advantage of more affordable flights. According to the company, five million people cross the border for flights.
But Jetlines isn’t the only company vying for the ultralow cost market. In April, WestJet announced plans on launching an ultra- low cost carrier by the end of the year, a move Gadek says was a direct response to Jetlines’ ambitions to launch the first ULCC in Canada.
Gadek said there are several challenges that will prevent WestJet from being successful in the ultra- low cost market, including the recent decision by pilots to unionize, and a growth strategy that includes expanding in both ultra-low cost and long haul segments.
“If you’re going to be an ultra- low cost carrier, you have to have ultra-low costs,” Gadek said.
“It’s not just talk. I do believe WestJet is going to try the ultra- low cost carrier strategy, but I also believe they’re going to fail. They do not have the necessary cost for this to be successful, and they don’t have the culture in place to make it work.”
Part of the strategy in keeping fares so low includes fees for things that are often part of ticket price — including carry- on luggage stored in overhead bins. Gadek says Jetlines plans to charge customers more for storing luggage in overhead bins than checking bags into the cargo hold, as carry- ons can slow down the boarding and deplaning process.
A Kiwi. com survey released last month detailing the average cost for both short and long haul flights in 80 countries found that Canada was among the most expensive places to travel out of in the world. This year, Canada ranked 65th in the world in terms of affordability, with an average flight cost of US$ 23.90 per 100 km of travel, up slightly from 70th.
YOU HAVE TO HAVE ULTRA-LOW COSTS. IT’S NOT JUST TALK.