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Canada’s discount airline market is about to get a little more crowded.

Tim Morgan, a former WestJet Airlines Ltd. executive, says he plans to relaunch his Enerjet charter airline as a low-cost carrier by late next year, joining a growing list of no-frills fleets competing for Canadians’ travel dollars.

The venture is backed by Indigo Partners LLC, a Phoenix-based private equity firm that has investments in other discount carriers, Stephen Bronfman’s Claridge Inc. and Montreal’s Mitch Garber.

Mr. Morgan has tried for several years to transform Enerjet into a discount airline, first as Jet Naked and later as FlyToo. The venture had trouble raising money in compliance with foreign ownership rules. However, the federal government this year raised the foreign ownership limit to 49 per cent from 25 per cent in a move designed to expand choices for travelers.

“That’s a great change and we helped drive it,” Mr. Morgan said, adding the ownership structure of the new venture would have met the old rules, and has received the approval of the Canadian Transportation Agency.

Mr. Morgan said by phone from Calgary that the slump in Alberta’s economy that followed a drop in oil prices will spur more and new travelers to seek low fares. “The market will be larger when we’re done,” said Mr. Morgan, a co-founder of Calgary-based WestJet who left in 2005. “The economy in Alberta might be down a little bit, so this will open the door for people to take advantage of it.”

The company said in a statement that its network of destinations will extend into the United States, without elaborating. Mr. Morgan said he is not ready to announce the airline’s name, home base and number or type of planes it will fly. “Where this ends up is going to be determined by how much Canadians fly. We’ll have a few airplanes to start with and we’ll accelerate rapidly.”

Budget airlines operating in Canada include Wow Air, Flair Airlines, Air Canada Rouge and WestJet’s Swoop. Another, Canada Jetlines, says it plans to begin flying by the summer of 2019.

Canada’s competition bureau recently began investigating WestJet and Swoop after a complaint of predatory pricing made by Flair Airlines.

Known in the travel industry as ultra-low-cost carriers, the budget airlines typically cut costs by landing at second-tier airports, selling tickets directly to the public, and charging for in-flight food. Globally, some of the most profitable airlines are budget carriers, including Ryanair and Allegiant.

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