Air Canada, the country’s largest airline, is not taking lightly the recent announcement by WestJet—it is Canada’s second-largest carrier—that the latter is launching a new ultra-low-cost airline by later this year or in early 2018.
Two weeks ago, Calgary-based WestJet, which was founded in 1996 and grew from a charter and regional carrier to an airline that now serves 100 destinations in Canada, the U.S., Europe, Mexico, Central America and the Caribbean, announced that it would launch the new airline which, it hopes, will replicate the success of similar air carriers in Europe. There, WOW airlines, Norwegian and airberlin have fueled a large increase in lift capacity in 2017.† And another European entry into the fold is scheduled for next month when LEVEL airlines, a unit of IAG, which operates British Airways, Iberia and Aer Lingus, begins service from its base in Barcelona.
In the ultra-low-cost model, the cost of a flight’s components are unbundled; the consumer pays one price for a seat, with add-ons charged for seat location, checked baggage, carry-on baggage, food, beverages, and other items for which there was no charge or were considered amenities that were included in the cost of an airline ticket.
Bring it on! Air Canada, which is headquartered in Montreal, does not seem daunted by the prospect of having to compete with WestJet in the ultra-low-cost segment. It already has a low-cost subsidiary, Rouge, which launched in 2013 with flights to Europe and the Caribbean.
The airline’s top officials say that it is in a better position than it has been in more 10 years to respond to WestJet’s move. “We actually have many more tools at our disposal, which gives us a much better feeling and confidence that we are well-positioned to respond to whatever gets put in front of us,” Ben Smith, Air Canada’s president of passenger airlines, told CBC News.
And Air Canada’s chief executive, Calin Rovinescu, said that the carrier will have no problem with WestJet’s plans to expand its main service on international routes by adding at least 10 Boeing 787 Dreamliners beginning in 2019, telling business analysts in a May 5 conference call: “The addition of incremental competition is something that at this stage is not troubling to us.”
Also in the skies over Canada is New Leaf Airlines, which launched in 2015. Based in Winnipeg, it has a small fleet of aircraft that primarily serve destinations in the western part of the country.
Already on Board: Even though the new airline does not yet have a name, it has in place two key officers in it leadership team. WestJet has appointed one of its own, Bob Cummings, as executive vice president of the new venture. Cummings will have accountability for all aspects of this new venture, including planning, branding, pricing, product development and operationalization. He has been with WestJet since 2005, with almost 11 years at the executive vice president level with a variety of responsibilities.
WestJet has also appointed Ed Sims as executive vice-president, commercial, with responsibility for all aspects of the commercial function within WestJet including sales, marketing, product, network planning, revenue management, corporate development, airline partnerships and WestJet Vacations. Sims will join WestJet on May 29, 2017. Sims’ career spans more than 30 years in the tourism and aviation industries, encompassing airlines and tour operators, as well as air traffic control. He has worked in the European and Australasian markets, holding senior commercial and general leadership positions within: Tui, Thomas Cook, Virgin Groups and Air New Zealand where he headed up the international wide-body business. His most recent role was as CEO of Airways, New Zealand’s air navigation service provider.
† See “European Low-Cost Carriers Driving Increase in Lift Capacity between Europe and USA” in the March 9, 2017 issue of the Inbound Report. (http://www.inboundreport.com/2017/03/07/european-low-cost-carriers-driving-increase-in-lift-capacity-between-europe-and-usa/)