Canada's WestJet plans to launch ultra-low-cost carrier

Thu Apr 20, 2017 8:41pm EDT
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By Allison Lampert

MONTREAL (Reuters) - WestJet Airlines Ltd said on Thursday it plans to launch an ultra-low-cost carrier in Canada in a move that would intensify competition with domestic rivals, including Air Canada's lower-priced Rouge service.

Calgary-headquartered WestJet aims to kick off the service late this year with an initial fleet of 10 Boeing Co 737-800s planes.

Bob Cummings, WestJet's executive vice president, commercial, told Reuters the new offering would feature an "a la carte model" of a base fare plus specific fees for services like checked baggage, only taken one step further.

While other low-cost carriers have failed in Canada, WestJet's strategy would work by winning market share from competitors such as Rouge and Sunwing Airlines while cannibalizing some of its own traffic, Cummings said.

"Between taking share from others and, quite frankly, taking some share from us, the math makes sense."

Cummings declined to give specifics about the new fares, but said the cost structure would not be comparable to the deeply discounted fares offered by European ultra-low-cost carriers like Ryan Air.

"We are not likely to be at the Ryan Air end of the spectrum," he said in a phone interview.

WestJet, which started life as a low-cost airline, has added premium services in a bid to increase revenue, but is planning the ultra-low-cost structure to service the other end.   Continued...