The spurned merger partner of Canada Jetlines Ltd. is upset at the 11th-hour breakup of a planned corporate marriage and baffled by the fledgling carrier's early release of its anticipated route network that focuses on Vancouver, Winnipeg and Hamilton.
David Brett, the chief executive officer of Inovent Capital Inc., lashed out Tuesday at Jetlines for walking away from a merger that would have resulted in a listing on the TSX Venture Exchange under the name Jetlines.
He also criticized Jetlines' strategy earlier this week to reveal the discount carrier's North American route map, saying the disclosure months in advance of launching summer service tips off competitors such as Air Canada and WestJet Airlines Ltd.
"Honestly, I'm baffled. The new route map is the secret sauce," Mr. Brett said in an interview. "It's like the quarterback's playbook – you do not reveal it to the opposing team. Coaches put their clipboards over their mouths so that no lip readers are stealing the element of surprise. It should be top secret."
Vancouver, Winnipeg and Hamilton will serve as hubs for Jetlines' domestic flights, and those air terminals also will be positioned to attract Canadian consumers who would otherwise drive to U.S. border airports to fly to American sun destinations such as Miami.
Inovent, a capital-pool company based in Vancouver, is threatening a lawsuit as it seeks roughly $500,000 from Jetlines as compensation for the rejected merger, including $120,000 allegedly owed in debt.
Mr. Brett alleges that Jetlines unfairly terminated the proposed merger. "We were walking down the aisle together to be wed and they're talking to other suitors right at that moment," he said. "What's sticking in our craw is we believe in Jetlines. We're robbed of the opportunity that we worked so hard for. It's like they put out a trip wire for us to fall over just before the finish line."
Vancouver-based Jetlines issued a statement, saying it "intends to vigorously defend itself. Jetlines believes that it acted with appropriate care, diligence and skill at all times."
Executives at Jetlines say they still intend to raise up to $50-million in financing, though it will involve other investors keen on launching an ultra low-cost carrier in Canada. The goal is to start service in Western Canada by the end of this summer with two Boeing 737 Classic aircraft and gradually expand to a fleet of 16 jets by mid-2018.
Jetlines president David Solloway said the upstart carrier opted to release its route map early to whet travellers' appetites for what is in store, emphasizing non-stop, point-to-point service. He said the planned flight network shows that Jetlines has learned from the past, when new airlines tried unsuccessfully to battle incumbents on major routes such as Vancouver-Toronto and Toronto-Montreal.
"We have let people taste some of the secret sauce, but we have not given away the recipe," Mr. Solloway said, noting that Jetlines has yet to announce which routes will start first, their frequencies and time slots.
Jetlines will concentrate on underused routes where it thinks Air Canada and WestJet are vulnerable or, in some cases of regional service, woo passengers whose only option now is to board turboprops. Jetlines believes many consumers will switch to jet service, if given the opportunity to shun turboprops.
Robert Kokonis, president of airline consulting firm AirTrav Inc., said he is surprised that Jetlines telegraphed its comprehensive route map to competitors.
For cross-border flights, Jetlines is seeking to offer airfares that will be competitive enough to persuade some Canadian consumers to fly from Vancouver instead of Bellingham, Wash.; from Winnipeg instead of Grand Forks and Fargo in North Dakota; and from Hamilton instead of Buffalo and Niagara Falls, N.Y.
Jetlines' route map does not include Calgary and Toronto.
Analysts caution that Canada's airline industry isn't for the faint of heart. Carriers that have folded in Canada over the past 14 years include Canada 3000, Roots Air, Jetsgo, Harmony and Zoom.
Brent Jang