WestJet to “Blanket-Bomb” Rival With Ultra-Low Fares

Kelowna, B.C.-based Flair Airlines, an ultra-low-cost carrier, has announced a new CEO to replace founder and former president Jim Rogers. The new CEO is Jetlines co-founder and former pilot Jim Scott, according to airlines-shakes-up-ownership-appoints-new-ceo-and-sets-a-million-passengers-target-this-year”>The Financial Post.

Scott’s priority is to lower costs at Flair. According to the report, Scott hopes to decrease costs by 20 cents per mile while improving Flair’s cost per available seat mile (CASM), a measure used to show how much it costs an airline to fly a passenger.

Flair plans to achieve his goal by negotiating with vendors on issues such as fuel and flying crew members around on other airlines. At the same time, Scott is facing upcoming competition from WestJet and Jetlines, the company Scott co-founded, as those airlines are getting to launch their own ULCC’s in the summer.

Swoop, WestJet’s, ULCC entry is preparing to be ready to start selling tickets in February for flights starting in June. Furthermore, Swoop is hoping to eliminate competition from Flair and others that are looking to move into the market.

Although Scott says the airline is prepared to face any competition, Raymond James analyst Ben Cherniavsky says differently. According to Cherniavsky, Swoop is better prepared to overcome competition thanks to deep pockets, lots of experience, and other factors.

Swoop, which is expected to begin selling tickets in February and begin flying in June, will “make it very difficult for any ULCC to stay in the air or get off the ground, said Cherniavsky.

“[Flair Airlines] lack[s] the costs, aircraft type, and balance sheet to compete… By taking advantage of its established position, deep pockets, and strong understanding of the market, the company can quickly move in… blanket-bomb Canada with ultra-low fares and capitalize on the first-mover advantage,” he said.

“Effectively, we believe this will neutralize any new entrant and put a nail in the competitors like Flair.”

Scott, for his part, is confident that Flair’s head start on the market gives them time to be prepared for the competition. He says that the airline hopes to attract even more millennial travelers, which already make up 70 percent of the customer base, by introducing new technology advancements and Smartphone features. In addition, the airline plans to hit the one-million passenger milestone in 2018 and add more planes to its fleet growing from seven Boeing 737-400 aircraft, outfitted with 156-seats each, in 2018 and adding two Boeing 737-800 jets at a later date.

 

[Image: Flair Airlines]