WestJet Airlines Ltd. has launched a new deal creating an Ultralow-cost carrier (ULCC) scheduled to commence operating before the end of the year attracting airline passengers searching for budget flights and folks that find other means of transportation cheaper or more comfortable than flights.
Canada Jetlines Ltd. the second largest airline in Canada has plan to move down-market as a defensive measure against the new deal (ULCC) according to airline analysts report. Both Canada Jetlines Ltd. and Enerjet are trying to raise money to get their own networks up and running.
“We believe this is the best way of handling the price-sensitive end of the market” WestJet executive vice-president Bob Cummings said. “We do believe there’s a massive growing market out there beyond what we have today.”
Mr. Cummings said WestJet will begin with 10 Boeing 737 800 aircraft in a high-density seat configuration but refused to reveal route plans, fares and other operating details.
WestJet reveals low-cost no frills airline: In most cases ultralow-cost carriers usually charge pretty less fares and at the same time stuff you up in a flight with many seats, less space while charging fees for printing tickets, baggage, food and drinks, in-flight entertainment etc. Some mainline airlines include all these in their fare.
In an interview on Thursday Mr. Cummings said that among the targets for the new airline are people who don’t usually fly. With new incredible cheap flight prices coming out soon would help create new customers.
“Since 1995 when we entered the market till date we’ve experienced a drastic growth going through our history. Back then was about 15% of Canadians flew and now we looking at 33 – 34%,”. ULCC service will also be offering cheap flights both within Canada and to the United States. With range of the A 737 which is almost 3,000 miles, makes us to look beyond domestic flights, he said.
One aim is to take advantage of lower U.S. fares because there’s great market out there of about 10 million passengers and half of whom travel to such U.S. borders cities as Bellingham, Washington, Buffalo, N.Y. and Plattsburgh.
Chris Murray, the industry analyst who follows WestJet for AltaCorp Capital Inc., said “ULCC will go a long way attracting people who are very price sensitive: with my family of four traveling to Florida, if we all drive over to Bellingham I can save $1,200”
Mr. Murray added the fact that there is market for people searching to pay for ultra-low fares, as low as $19. Have in mind that you will also have to pay for varies amenities, even up to including boarding the plane earlier than the rest.
Ultralow-cost U.S. carrier, Spirit Airline Inc., based in Miramar, Fla., makes revenue from 60 – 70 separate subsidiary companies for which it charges, he mentioned. Searching through Spirit’s website for a return flight ticket from Buffalo to Fort Lauderdale, Fla., we came across a price for $276.08 (U.S.) with one stop. At WestJet you can find a non-stop flight to Miami from Toronto with a one-stop return flight for around $670 (Canadian).
In a note to clients the National Bank analyst Cameron Doerksen said that the new carriers in startup mode in Canada threaten WestJet’s positioning as the low-fare leader. According to Mr. Doerksen’s note he wrote to clients on Thursday, quotes: “Thus, WestJet’s strategy is targeted at maintaining its share in the price-sensitive leisure segment”.
Canada Jetlines appears to see it all the other way, if it will be able to archive the full benefits of a ULCC by saying that WestJet plan offers nothing more than an ‘airline within an airline’ that will not make any significant changes to the market.
WestJet also has been targeting Air Canada by including flights to Britain on wide-bodied aircraft while moving down-market in competition with the new carriers.
Earlier this year when The Calgary airline got approval from its pilots to add more wide-bodied planes it appeared to be making a bigger international move, but Mr. Murray said he wonders if WestJet is rethinking to expand that further.
Mr. Cummings finally said WestJet is still evaluating further expansion, but for now nothing to announce.
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