Monday, June 8, 2015

Here we go again! A new airline in Canada

As if the Canadian skies weren’t crazy enough, we now have a brand new airline (well, actually a small but established airline (Flair Airlines) with a new and marginally catchy name “NewLeaf Travel Company”) starting in Winnipeg.

The lessons of Greyhound, JetsGo and Canada 3000 are learned, says their new CEO, and they are ready to do for the travelling public what no other carrier has successfully done before. Challenge the might of Air Canada and WestJet, and the depth of their pockets.

And money is only the starting point; Air Canada is a public company with a soaring stock price; WestJet's shareholders include the Ontario Pension fund. Neither like competition; they don’t even like each other, although they do use each other to fly their crews around, and start-ups are a menace. They might take business, and this needs to be stopped at all costs.

We will see predatory pricing; we will see additional shots of the travellers’ cocaine, Frequent Flyer Points, and we will see some pretty demanding advertising. We will also, soon enough, hear the cry of the stranded passenger seeking somebody’s assistance to bring them home in the event that NewLeaf Travel fails to deliver.

I would love to see new, low cost carriers survive; however, they regularly do so only in highly populated environments with an average flight-length of about one hour. Charter flights are, of course, a different matter, firstly because the risk is shared with the tour operator, but stand-alone scheduled airs service is not for the faint of heart. It is a high-risk and basically low-yield business.

It is very difficult to wean regular flyers from their preferred carrier/alliance, and the passengers who are driven completely by cost are about as fickle as any market can be; they will be off to an alternative as soon as a piece of bait is tossed their way, and will only look to pay as little as possible. Adding car rentals and hotels is a nice idea, but it took EasyJet and Ryanair, the doyens of this genre of airline,  many years and much investment capital to do so.

And they didn’t start their business life in Winnipeg. We may be a singularly cheap city, but we still remain a long, long way from anywhere. The key to a successful low-cost operation, apart from the obvious lack of legacy costs, pensions, ultra-highly paid executives and so on, is the ability to fly often; with an average on a one-hour flight, one can offer twice as many rotations as one can with an average flight of two hours in the air. This makes a huge difference.

When WestJet first started, they operated on the Vancouver, Calgary, Edmonton, Kelowna routes; all short and all popular. They started a Calgary / Winnipeg route, but soon abandoned it, realising that it took five hours to get the aircraft from Calgary to Winnipeg and back, during which time they could have flown three or even four legs in their familiar environment.

We will, of course, happily allow ourselves to be seduced again; but remember Zoom, Astro (yes, who remember their four months of scheduled service to Winnipeg), Nationair, Roots Air and of course Royal, the reincarnation of JetsGo.


I do wish NewLeaf success; I just don’t want the travel community, and the community at large to have to pick up the pieces.

No comments:

Post a Comment