SWOOP TARGETS PRICE-WARY PASSENGERS WITH $0 FARES.
TRANSPORTATION
began selling tickets for its ultra low-cost carrier Swoop on Thursday, the first major step in the airline’s plan to build up the price- sensitive segment of Canada’s travel market.
Swoop, which WestJet said will remain distinct from its mainline operations with separate employees and check-in counters at airports, will begin flying passengers on June 20. air
The carrier will offer six weekly flights from Hamilton, Ont. to Abbotsford, B. C., Edmonton, Winnipeg and Halifax; six weekly flights from Abbotsford to Hamilton; and three daily flights between Abbotsford and Edmonton. The airline also announced a headlinegrabbing promotion on Thursday, offering the first 2,000 seats on Swoop for $ 0, but leaving passengers on the hook to pay for taxes and any other additional fees.
Bob Cummings, WestJet’s executive vice- president of strategy overseeing the Swoop launch, said more domestic and southern destinations — such as Mexico and the southern U.S .— will be added to the Swoop lineup in the coming year. He said the focus for the new carrier is on attracting cost- sensitive fliers and those travelling to nearby U.S. cities, like Buffalo, N.Y., and Bel ling ham, Wash., for cheaper flights.
“With respect to WestJet evolving its focus over time to go after a more businesstype traveller, as well as going global with our widebody planes, the model was starting to get stretched a bit too thin with regards to the price- sensitive market,” Cummings said.
“We’ ve analyzed and found that a low- structure, very focused organization can stimulate the market more in Canada as well as go after that cross- border opportunity, which we think is significant.”
Key to the ULCC model, made popular in Europe with carriers such as RyanAir and easyJet and in the U.S. with Spirit Airlines, is offering a low base fare and charging customers extra for everything from priority boarding to seat selection and baggage. For example, while passengers will be able to bring a small personal item aboard, Swoop will charge $ 36.75 for carryon luggage, and $26.25 for a checked bag.
“One of the principals is to keep this as simple as possible. Complexity drives cost and that potentially contributes to higher fees,” Cummings said, adding that he expects ancillary fees on Swoop to be nearly double the $ 19 WestJet earns on flights.
For Swoop, one-way fares, including taxes, fees and charges, will start as low as $ 39 for flights from Abbotsford, B.C., to Edmonton, with the most expensive flights between Hamilton and Abbotsford coming in at $99.
In keeping the Swoop brand separate from the mainline carrier, WestJet passengers will not be able to use their rewards program on the ULCC flights.
While many analysts have expressed skepticism over WestJet’s ability to profit off a ULCC while at the same time looking to expand internationally, Raymond James analyst Ben Cherniavsky said in a note to clients last month that he expects Swoop to be a permanent fixture in the Canadian market and a “respectably profitable operation in its own right.”
“By taking advantage of its established position, deep pockets, and strong understanding of the market, the company can quickly move in ( or swoop in!), blanketbomb Canada with ultra-low fares, and capitalize on firstmover advantage,” he said.
“Effectively, we believe this will neutralize any new entrant and put a nail in the coffin of competitors like Flair (Airlines.)”
Last month, Flair Airlines announced it had hired Jim Scott, former CEO of aspiring startup airline Canada Jetlines Ltd. to lead its operations. Scott said Flair’s focus will be on attracting more millennials.