Canada ULCCs: airlines jockey for position, facing powerful incumbents

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Canada recently marked a milestone with the launch of WestJet’s new ULCC subsidiary Swoop. Instead of battling start-up ultra low cost new entrants with its mainline tool chest, WestJet opted to create a new subsidiary with ULCC costs and fare levels.

It’s a risk for an airline that is broadening its reach further into the corporate market, and readying for new long haul service with Boeing 787 widebodies. But WestJet believes a lower cost iteration is necessary to capture the passengers other new entrants are attempting to attract within the Canadian domestic and transborder markets.

As Swoop settles into its first few weeks of operations, there are also other movements in Canada’s ULCC space. Flair, a small player in the market, is moving its headquarters from Kelowna to Edmonton, and also plans an expansion from the airport in the near future.

At the same time, Jetlines has a new CEO, has pushed its launch date back and has obtained used Airbus A320s for its launch, while its Max order remains intact, for now. But there’s some ambiguity about the long term viability of the airline’s Boeing order for five new generation narrowbodies.

Each of Canada’s three aspiring ultra low cost airlines is working to exploit stimulation opportunities and entice the more infrequent traveller who has no real brand loyalty. The next six months to a year should prove to be more of the more interesting times in the recent history of Canadian aviation.  And the country’s largest airline, Air Canada, is not resting on its laurels while upstart ULCC competitors jockey for position.

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