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Leading Edge: Conduits for change

Yet for many passengers looking for an inexpensive, no nonsense flying option, a ULCC will get you from point A to B in a no nonsense, very basic fashion – done, simple.

The ULCC model has been quite successful for many international airlines – Ryanair, Spirit, AirAsia and EasyJet come to mind – but it has yet to take off here in the Great White North. Canada Jetlines, Fly Naked and NewLeaf have all jumped into the ULCC game here in Canada in the past few years.

NewLeaf may have promise, but it has run into several problems, including bungling its launch and earlier this year, cancelled flights from Calgary and Edmonton to Phoenix, leaving passengers out in the cold. NewLeaf called the situation a classic case of “the big guy squishing the little guy” in reference to its route competition with another Canadian airline that changed its route schedule to match NewLeaf’s own.

And while NewLeaf aims to, well, turn over a new leaf, Canada Jetlines is in the process of executing its business plan to become Canada’s first true ULCC airline. The company maintains it will use “a proven and profitable commercial aviation ULCC model to create new passengers with low airfares.” Jetlines will operate flights throughout Canada and provide non-stop service from Canada to the U.S., Mexico and the Caribbean, starting with six Boeing 737 aircraft in its first year of operations. It has received an exemption from the Canadian government that will permit it to conduct domestic air services while having up to 49 per cent foreign voting interests.

Now there’s a new player joining the ULCC game: Calgary-based WestJet announced in late April that it plans to launch its own ULCC later this year with an initial fleet of 10 high-density Boeing 737-800s. The plan is subject to an agreement with its pilots and other regulatory approvals. Clive Beddoe, co-founder of WestJet and chair of the board of directors, called the decision a natural progression for the airline. “Launching a ULCC will broaden WestJet’s growth opportunities and open new market segments by offering more choice to those Canadians looking for lower fares,” Beddoe said.

Gregg Saretsky, WestJet president and CEO, noted that the public perception of the ULCC model has changed over the past few years and now is the “right time” to make the move over to the low-cost model. “The complete unbundling of services and products in order to lower fares for the price-sensitive traveller has created the ULCC category,” he said.

Not surprisingly, WestJet’s decision was met with skeptism from other ULCC competitors. Jim Scott, CEO of Canada Jetlines, called the announcement further evidence that “millions of Canadians continue to be underserviced by airlines in markets throughout the country.”

Scott continued noting that, “most ‘airlines within airlines’ that have attempted to offer low-cost options for air travellers have failed in North America, including Zip, Ted, Song, Metrojet, Calite, and United Shuttle. The continent is littered with the graves of these lower-cost airlines, precisely because the model doesn’t work when the airline is owned by another airline.”

Heady words indeed. Provided all goes as planned for WestJet, its ULCC model will be up and running by the end of the year. Yes, the conduits for change in the ULCC space are making it interesting for commercial travellers in Canada – more opportunities to be squished in like sardines.