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Calgary-based Enerjet still plans its own launch, despite WestJet's no-frills airline announcement

The local company that has been working for years to launch an ultra-low-cost airline in Canada said it remains committed to its plan, in spite of a surprise announcement from WestJet Thursday that it will launch its own no-frills carrier by the end of the year.

Calgary-based Enerjet, which is pursuing regulatory approvals for a low-priced commercial air service offering routes nation-wide, said it has known all along that WestJet would take action to defend its market position against new low-cost entrants.

“We were wondering how they were going to do that — now we know,” said Enerjet’s chief commercial officer, Darcy Morgan, in an interview. “The best thing we could have is clarity, because this just makes it easier for us to plan.”

Morgan said his company is not scared off by WestJet’s size or the quick time frame in which it has said it will get its low-cost flights in the air. He said Canadians have long been paying too much for flights through Air Canada and WestJet, and are hungering for fresh competition.

“How Canadians buy airfares is about the value statement that they perceive on the day that they buy,” Morgan said. “The entity that can produce its widgets at the lowest unit cost is the one that has the strategic advantage . . . and that is how we plan to compete.”


Canada remains the only G7 nation without a true ultra-low-cost carrier in operation. Winnipeg-based discount airfare company New Leaf Travel styles itself as an ultra-low-cost carrier, but the company isn’t actually an airline — it is a ticket reseller that sells unused seats on a charter service’s planes.

Around the globe, ultra-low-cost carriers — such as Europe’s Ryanair and Easyjet — have become very popular. They offer passengers discounted fares by lowering their own operating costs, often by charging extra for things like food, in-flight entertainment, reserved seating, even carry-on bags.

In making its announcement Thursday, Calgary-based WestJet said its version of a no-frills carrier will start with an initial fleet of 10 Boeing 737-800s that have been reconfigured to hold more seats and passengers. In an interview, WestJet executive vice-president Bob Cummings declined to say where the new airline will fly or what services passengers might have to pay extra for, though he said customers will be able to expect fares that have been discounted “quite a bit” from the company’s mainline carrier.

“We’ve looked at the size of the price sensitive traveller market in Canada . . . and we’re at the point where we’re making the decision to segment our business to serve that end of the market,” Cummings said. “We believe that we’re well suited to do that with our routes — that we will win and own that end of the market.”

Cummings acknowledged that the prospect of fresh competition on the low-fare end of the market — from NewLeaf as well as potential new entrants like Enerjet — played into WestJet’s decision to move quickly to establish a no-frills option for travellers.

That’s definitely part of it, the competitive set,” he said.

WestJet’s decision to launch an ultra-low-cost carrier changes the landscape at the bottom end of the market, said Chris Murray, an analyst with AltaCorp Capital.

“We believe the launch of a flanker brand significantly complicates the plans of other participants seeking to start ULCC’s in Canada and protects WestJet from market erosion in the highly sensitive fare category of travelers,” Murray wrote in a report.

Developing an ultra-low-cost carrier makes way more strategic sense for WestJet than a significant expansion of its wide-body fleet, Murray added. WestJet has promised to provide details soon around a plan that could see the carrier make a major investment in larger jets capable of flying longer distances overseas, but Murray said the company is more likely to find success in the discounted domestic space.

“There was no comment on the company’s widebody strategy (in Thursday’s announcement),” Murray wrote. “While perhaps premature to reach this conclusion we do wonder if the company may be rethinking the economics of the operation.”

Enerjet wasn’t the only potential competitor reacting to WestJet’s surprise news Thursday. B.C.-based Canada Jetlines — which is working on its own goal to become Canada’s first ultra-low-cost carrier — said in a statement that anything WestJet launches will be a subsidiary of its parent carrier, and as such may not be able to achieve the full benefits of a true no-frills airline.

“Today’s announcement offers nothing more than an ‘airline within an airline’ that will not increase competition into the market,” the company said.

NewLeaf Travel — which has flown over 235,000 passengers since the launch of its low-cost model in July 2016 — said it is “flattered” by WestJet’s imitation.

“We will continue to operate efficiently, using innovation to push us to the forefront with the end goal to ensure affordable travel is a possibility for every Canadian,” spokesperson Julie Rempel said in an email.