No ultra-low-cost for Canada as Jetlines postpones launch

Canada Jetlines

What was supposed to be the newest entry into the Canadian airline market, Canada Jetlines (JETMF) , has seemingly hit a bump towards its goal to start flying on December 17, 2019. Citing unfair competition from WestJet’s ultra-low-cost subsidiary, Swoop, the company has laid off staff and is postponing the date of its first flight, reports indicate.

Jetlines was unable to meet its goal of acquiring $40 million that is required to start operations and immediately lost two of its key investors, SmartLynx and InHarv ULCC Growth Fund. Both companies exercised their right to terminate their commitments to invest into the Canadian airline.

A SmartLynx representative confirmed to AeroTime that the ACMI operator terminated their investment in Canada Jetlines (JETMF) .

Until the company finds new investors to fund operations, the ultra-low-cost carrier will not pay deposits on its two Airbus A320 aircraft, which Jetlines is supposed to receive in November ahead of their launch date in December 2019. The airline terminated contracts with all employees, except for core team members who are still in the process of talking with investors.

In addition, the Investment Industry Regulatory Organization of Canada (IIROC) has also temporarily suspended the trading of the airline’s shares to “ensure a fair and orderly market”, a standard practice done by the regulator.

Swoop in, swoop out

Fearing a new entrant into the market, the Canadian airline duopoly (Air Canada (ADH2) and WestJet) will react aggressively towards Jetlines’ attempt to enter the market, the newcomer airline has argued citing evidence obtained by itself and experts. Specifically, WestJet’s subsidiary, Swoop, is lowering ticket prices to such lows that are “below avoidable costs” and is increasing capacity “beyond what economic sense might dictate”. On routes where Jetlines and Swoop would compete, the latter is pricing tickets that are lower than operating costs for both airlines, the report suggests.

Based on the aforementioned, Jetlines’ management testified before the Canadian Competition Bureau from January till July 2019. To cement their message of the ultra-low-cost carrier’s fight against the duopoly, the airline staged a protest in the sky on July 24, 2019, and has started a petition to “make Canadian airfares finally fair”.

Meanwhile, Swoop, which celebrated its first birthday on June 20, 2019, has a fairly modest route network and fleet. It operates to 17 destinations throughout North America with eight Boeing 737NG aircraft.

Another startup, called Enerjet, also aims to disrupt the duopoly in Canada. The company, established by a former director and chief operating officer at WestJet, Tim Morgan, together with Indigo Partners, which has stakes in several low-cost carriers, including Wizz Air, and a Canadian investor consortium announced their plans to launch in 2019 on December 20, 2018.

However, Enerjet is yet to announce any concrete news on the launch date. The only updates are the fact that the planned ultra-low-cost carrier is looking for “enthusiastic, hard-working people” to be part of the “change in Canadian air travel”, states the airline’s job site.

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