Canada Jetlines Ltd. of Vancouver recently announced plans to raise $10 million to list on the TSX Venture Exchange, on the heels of an announcement by another low-cost carrier, Jet Naked, which is hoping to raise $30 to $50 million to operate out of Calgary.
The airlines will be treading a well-worn discount runway of dead airlines such as Canada 3000 and JetsGo.
"Those airlines went head-to-head with the full-service airlines," Jetlines president David Solloway told CBC News on Friday. "We don't plan on doing that."
Instead, Jetlines plans to carve out a niche in the ultra low-cost segment, where the airline can keep base fares as much as 40 per cent lower than the incumbents by flying to underserved airports and connections, while charging for extras such as carry-on baggage, beverages and seat selection.
"We call it à la carte," Solloway said.
Jetlines CEO Dave Solloway says the company plans to offer lower base fares but remain profitable. (CBC)
The low-cost carrier, set to launch in the spring of 2015, plans to service primarily airports west of Winnipeg, but also a few select others in Central and Eastern Canada. Solloway says he doesn't want to reveal specific routes until after the appropriate Transport Canada approvals have been granted.
Official data show Canadians took only about one per cent more flights this year, and airfares increased by about 1.5 per cent. But those numbers hide the true demand for cheap travel because they don't include the estimated 5 million Canadians a year who travel to U.S. airports to save money on flights.
Data show that some 960,000 people from B.C. travelled to airports in Washington state last year to travel, Solloway notes.
"Competition is good because low-cost airlines stimulate the market," he said.
Jetlines will be facing competition not only from Jet Naked but from WestJet's new regional carrier, Encore, and Air Canada's recent spin-off, Rouge.
Jetlines still needs $40 million in order to launch. It has hired Euro Pacific Canada to help reach its goal.
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