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'Seasonality' proving a challenge for Swoop Airlines, CEO says

News provided by Vancouver Sun – link to full story and updates

‘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

cpt121-the-canadian-press.jpg?quality=80 A Swoop airplane is seen in this undated handout photo. HANDOUT, WESTJET

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.

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The simple fact is the ULCC = ULExpenses.

You still have to pay employees, fuel, and all of the must have stuff but so does everyone else.  So where do you cut.  Well one place is to have EXACTLY the number of aircraft required to fly the schedule with barely enough downtime to service the aircraft.

This poses a huge problem for the likes of Swoop, especially in Canada.  All airlines are challenged by IROPS and in Canada the winter is IROP city.  The likes of Swoops Parent, Westjet and Air Canada is that they have spare aircraft in the mix.  Aircraft that are sitting there ready to fly when called to action.  This allows the, usually broken, aircraft to be repaired without affecting the schedule (much).  Swoop, Sunwing and others do not carry the expense of having an operational spare.  It is expensive, there is no doubt about it.  However how costly is bad press? how about paying each passenger $800 for a long delay or cancellation?  Hotels? Food?  That all adds up pretty quick for just one incident.  This winter season alone in the press I have  seen 3 or 4 incidents.  Do the math on that.  Say the restitution to the passengers comes to an even $1000 under the new rules.  multiply that by 180 passengers and you $180,000.  That is hovering around the Lease Payment on a 737 give or take.

But here we are... Stranding passengers in foreign countries for days without hope of rescue.

I personally will not book a vacation or flight on any of them.  I will stick with the legacy carriers.

 

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1 hour ago, deicer said:

And the fact they have new management with very little experience, they don't have the memory of how to deal with issues such as this.  Therefore old mistakes are revisited.

The best management in the business cannot respond to a plane out of service without a plane to pick up the slack.

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1 hour ago, boestar said:

The best management in the business cannot respond to a plane out of service without a plane to pick up the slack.

You are correct.  Nothing can stop a plane from being out of service.

However, having management with a bit of experience helps to mitigate the effects by knowing how to rebook, accomodate, communicate, etc.....

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12 hours ago, boestar said:

Say the restitution to the passengers comes to an even $1000 under the new rules.  multiply that by 180 passengers and you $180,000. 

Swoop is classified as a 'small airline' with respect to compensation delay payments. Even at 50% of the quoted cost it's a pretty good bite out of thin margins.

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8 hours ago, Airband said:

Swoop is classified as a 'small airline' with respect to compensation delay payments. Even at 50% of the quoted cost it's a pretty good bite out of thin margins.

If they survive and keep adding more aircraft that will change. 

Quote

How do passengers know which are large and small carriers?

For this regime, large airlines are airlines that have transported at least two million passengers worldwide in each of the two preceding years, as well as those operating a flight or carrying passengers on large airlines' behalf through a commercial agreement. All other airlines are small.

Each airline will be required to communicate to passengers whether they fall into the category of large or small airline.

Quote

Swoop celebrated its two-millionth traveller

 
Swoop Logo | www.FlySwoop.com (CNW Group/Swoop)

N

Swoop celebrated its two-millionth traveller

 
Swoop Logo | www.FlySwoop.com (CNW Group/Swoop)

NEWS PROVIDED BY

In less than two years, Canada's ultra-low-cost carrier embraced a milestone achievement 

CALGARY, Jan. 6, 2020 /CNW/ - Over the weekend, Swoop, Canada's ultra-low-fare airline and subsidiary of WestJet Airlines Ltd., proudly announced that it has carried two million travellers since its first flight took off in June 2018. To commemorate this milestone achievement, Swoop presented an unsuspecting guest with a round-trip flight to anywhere Swoop flies. The lucky traveller, Travis Pickering, was surprised by Swoop on-board a flight from Edmonton International Airport (EIA) to McCarran International Airport with his wife and two children.

 

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