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‘It’s almost like your holiday home — it’s a bit expensive, you lock it up six months of the year and it’s not used’
JULIA MASTROIANNI January 23, 2020
The Canadian market is still proving to be a challenge for ultra-low cost carriers, even as airlines such as WestJet affiliate Swoop Airlines try to gain a foothold in the market.
“I’ve never seen seasonality like in Canada. In summertime it’s a beautiful country, everyone loves going domestically around Canada, and in winter everyone grows feathers and goes south to the sun,” Steven Greenway, Swoop’s CEO, said at a media event Thursday in Toronto.
“We try to look for something perennial that we can operate all-year round,” he said. “If you don’t do that, it’s almost like your holiday home — it’s a bit expensive, you lock it up six months of the year and it’s not used.”
Greenway, who worked in the travel industry in Asia before joining Swoop soon after the airline launched in 2018, also noted that the geography of Canada poses a challenge for the airline. “The geographical expanse and sparseness of the country, with 35 million people…, it’s very unique to Canada,” he said. Longer flights mean lower productivity in a day, Greenway said.
On top of the scheduling challenges, Greenway also said Canadians are sometimes hesitant to consider airlines such as Swoop because there are so few ultra-low cost carriers (ULCC) in Canada. Currently, Flair Airlines, a Kelowna, B.C.-based airline, is the only other ULCC in Canada.
Canada has a history of low cost and ULCCs gone wrong, including JetsGo, Tango and Zoom. ULCCs operate by including only the seat in the price of their tickets, and then charging extra for everything from assigned seating to checked or carry-on bags.
Swoop’s plan has been to “stimulate the market” with extremely discounted seats, including a loonie seat sale where the base cost for a seat was only a dollar before taxes, fees and extras. “We’re putting fares out there that are so attractive that people say, ‘There’s no way I’m going to miss out on this,’” Greenway said.
We try to look for something perennial that we can operate all-year round.Steven Greenway, CEO, Swoop Airlines
Swoop is currently under investigation by the Competition Bureau of Canada regarding accusations of “predatory pricing,” which involves selling seats at less than it costs the company to fly in order to drive out competition on the same routes.
Greenway didn’t comment on the investigation, but he said sales such as the loonie seat sale are a marketing technique to get Canadians interested in trying out Swoop. “Once they get to actually experience the airport, they say it’s actually a really good experience, it’s comparable or better than what they’re used to or it’s a price point they can afford, and that word of mouth then generates more demand,” he said.
Greenway knows he isn’t making money on those heavily discounted seats, but said that those sales are necessary if they want to introduce more Canadians to ULCCs.
He has noticed that U.S. travellers have started to make their way over the border to fly with Swoop, counteracting the five million Canadians a year crossing the border to the U.S. to fly out from there due to cheaper costs, according to the Conference Board of Canada.
So far, ULCCs haven’t grown much in popularity. Canada Jetlines, another ULCC hopeful, postponed its first flight in December and laid off staff, blaming Swoop for anti-competitive pricing. Enerjet, a charter carrier with sights set on a transition to an ULCC, planned to launch in 2019 but has yet to officially enter the market.
Swoop currently operates a fleet of nine aircraft and flies to 23 destinations, many in Canada and some in the U.S., Mexico and the Carribean. Swoop is independently operated under WestJet, which was acquired by Onex Corp. in December in a $5 billion deal that turned WestJet into a privately owned company.
Swoop is looking to expand to a 10th aircraft, and an 11th as a “spare” for emergencies, but Greenway said they’ve been held back by the halted production of Boeing 737 Max aircraft.
“There are really only two suppliers of large, narrow-bodied aircraft in the world, so if you take one supplier out, the market gets quite distorted,” Greenway said.
Though Swoop only operates Boeing 737 Next Generation aircraft, the version before the 737 Max, the search for its next aircraft has been affected by the limited market.