Jet Naked. Another ULCC for Canada – how will Air Canada and WestJet respond?

Canada is emerging as a breeding ground for proposed ultra low-cost carriers as a second ULCC startup, this one commanded by WestJet's co-founder, aims to capitalise on the frills for a fee model, joining another aspiring ULCC, Canada Jetlines.

Jet Naked is the latest ultra low-cost airline that wants to establish itself in Canada, the name perhaps a nod to the no-frills experience it aims to engender (and perhaps the sort of ready-made marketing campaigns it will embark on). It is not surprising that Canada has become a hotbed for the ULCC model as WestJet's cost and model have migrated upward, creating what some see as an opportunity for a true no-frills airline to target passengers priced out of air travel. This mirrors Australia's experience as LCC Virgin Blue went up market and aggressive LCC Tiger Airways entered; the difference there though was that Virgin's main target, Qantas, already had its own LCC subsidiary, thus sandwiching the smaller airline. Virgin has since bought a controlling share in the renamed Tigerair, to balance the market forces.

There are considerable similarities between the Australian and Canadian markets, along with some big differences - like being situated next to the world's biggest aviation market. But, like Qantas and (now-renamed) Virgin Australia, neither Air Canada nor WestJet can afford to look the other way.