Within the coming years, Swoop -a brand new Canadian airline- hopes to offer a new and totally different business approach.
Imagine an airline with a unique business model: this company will offer you the lowest price for your airfare, and it does not matter if you like to fly like an Arab prince or a penny saver.
On September 27, WestJet announced the brand name and logo for its ultra-low-cost carrier (ULCC) in Canada. Swoop will start offering service in mid-2018, and according to Bob Cummings, WestJet Executive Vice-President and the executive member responsible for the launch, the name “denotes exactly what we plan to do.”
No-frills Swoop, which is modeled on ultra-low-cost carrier Ryanair Holdings Plc., will squeeze 189 seats onto its 10 Boeing 737-800s, which is 21 more seats than WestJet usually flies on the same aircraft. The airline is simultaneously preparing for the first of 10 new Boeing 787-9 Dreamliners, which arrive in January 2019, to fly to Europe and Asia.
WestJet said Swoop will mostly fly domestically, with a cost base that’s 40% below the mainline carrier — and only 0.1 cent above the average 5.9-cent cost per seat mile of the three U.S. ultra-low-cost airlines.
Of course, WestJet’s big changes weren’t born in an aviation vacuum. The airline is responding to a variety of threats, from new ULCC Canadian rivals planning new services to its bigger rival, Air Canada, making international growth beyond the Great White North a matter of principle.
Air Canada also operates a budget unit called Rouge, which battles for price-sensitive customers, as do Canadian leisure airlines Air Transat and Sunwing Airlines Inc. Air Canada estimated that a Rouge aircraft costs up to 30% less to operate than similar jets in its mainline fleet — the result of additional seats and lower-cost labor agreements.
The jury is out, and the revenues are expected to be low initially. Analysts are not optimistic. BMO Capital Markets analyst Fadi Chamoun said that the “rewards associated with success are two to three years away.”
