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At The Gate: A sunny proposition

David Neeleman, the man behind the launch of JetBlue Airways, once remarked that people who invest in aviation are “the biggest suckers in the world,” while former American Airlines president/CEO Robert Crandall called the airline industry “a nasty, rotten business.”

“We offer five-star service at three-star prices. We believe a vacation should start at the airport.” PHOTO: sunwing airlines

Well, the proof is in the pudding. During the past several years in Canada alone, more than 40 carriers have come and gone, including Wardair, Canada 3000, Canadian Airlines International, Intair, Jetsgo, Skyservice, Zip and Zoom.

But that didn’t deter Mark Williams from launching Sunwing Airlines in November 2005, after working for three of the defunct carriers – Wardair, Canadian and most recently, Skyservice, where he was president and chief operating officer. He left before the company went under in March 2010. Given the checkered history of the Canadian aviation sector, why did Williams even bother? After all, he’s often flying the same routes as some of his competitors.

“Starting a stand-alone airline today is not a recipe for success,” he says. “But back in 2005, tour operator Sunwing Vacations was doing well enough that I suggested to them they should start their own airline instead of getting a third party to fly their customers. And working with a tour operator offers tremendous synergies.”

Sunwing Vacations’ in-house airline began with two Boeing 737-800s to operate scheduled and charter flights from Canada to the U.S., Mexico, the Caribbean, Central and South America as well as domestic flights in the summer. In September 2009, Sunwing merged with Signature Vacations and SellOffVacations, Canada’s largest discount travel retailer, and signed a partnership deal with TUI Travel plc, which owns 49 per cent of the company. The remaining 51 per cent is privately held in Canada.

In December 2010, parent company Sunwing Travel Group acquired Caribbean Nexus Tours, one of the leading ground handlers and tour operators in the Dominican Republic and Mexico, giving more destination tour choices and flexibility to the Sunwing Group.

Last year, they arranged a wet lease deal with EuroAtlantic Airways to acquire two Boeing 767-300ERs for flights from Toronto to Lisbon, London, Paris, Rome and Porto as well as Montreal to Paris. Sunwing also operated service to Amsterdam in conjunction with Netherlands-based ArkeFly. Today, Sunwing operates 23 leased aircraft and flies to 44 international destinations from 31 Canadian gateways, with North Bay the latest addition. It also added service to Nassau, La Ceiba in Honduras, Belize, Aruba and Saint-Martin this winter and will add Barcelona and Glasgow this summer, when it will also shift from Charles de Gaulle airport in Paris to Orly.

The airline is offering service to Europe again this summer using the two 767s, because it was pleased with the experience. “It’s a big commitment getting into widebodies,” explains Williams. “We tested the waters last summer and we’re comfortable with the results.” Many of its 737-800s and pilots used in winter are sent to Europe in the summer where they are leased by other operators.

What sets Sunwing apart from the competition? “We offer five-star service at three-star prices,” says Williams. “We believe a vacation should start at the airport. We offer hot meals, free wine, free headsets and hot towels. We don’t try to nickel and dime our customers. We’re trying to emulate the good parts of Wardair.” (which provided good service at lower-than-average prices before being acquired by Canadian in 1989)

Sunwing’s load factors are over 90 per cent and it competes successfully against other Canadian carriers in the popular sun destination market. Hence Air Canada’s desire to start a low-cost model which is meeting resistance from the airline’s unions.

“We carried a million round-trip passengers in fiscal 2010-2011 (ended Sept 30) and we expect to carry 1.25 million passengers in 2011-2012,” Williams predicts. Sunwing is profitable, he says, and made a positive contribution to TUI’s bottom line.

Sunwing has been singled out by both Air Transat and Air Canada for hiring foreign pilots under a federal program at the expense of Canadian pilots.

“Last winter, we operated 19 aircraft. In the summer, we’re down to four. It’s difficult to hire part-time pilots in Canada for three months or less. In 2005, we started with 28 full-time pilots. Today, we’re up to 150.”

Brian Dunn is a Wings writer and columnist.