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Report On Business WestJet enters discount carrier battle with new offshoot Swoop

WestJet is hoping to lure budget-conscious Canadians with its new ultralow-cost carrier Swoop.

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WestJet Airlines Ltd. said its new discount carrier will be called Swoop, will start taking bookings in February and begin flying near the end of June, 2018.

Swoop will be based in Calgary near WestJet, but it has a different logo and a different colour scheme and livery on its planes to distinguish it from its parent company.

Swoop will be WestJet's entrant in the ultralow-cost carrier (ULCC) segment of the airline market, where a major battle is set to begin next summer. The first Swoop flights will come around the same time that Canada Jetlines Ltd. is scheduled to take to the skies.

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"I do believe there's really only room for one ULCC in Canada," Bob Cummings, WestJet executive vice-president and executive responsible for starting up Swoop, said Tuesday.

The name Swoop was chosen from 985 suggestions made by employees because it denotes swooping into the market with a new business model.

Two key issues for entrants in the low end of the market are costs and ancillary revenue from baggage fees and other charges to generate revenue that would normally come from fares for regular carriers.

Converting U.S. fares to Canadian dollars, average fares of the three largest U.S.-based ULCC carriers are about 40 per cent of the fares offered by so-called mainline carriers, Mr. Cummings said.

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Ancillary fees create revenue of about $60 a passenger for those airlines, but Swoop likely won't be able to meet that level immediately, he said.

"But having a cost structure – when you get to a scale of say, 10 aircraft – and being in the ballpark of the U.S. carriers and being able to offer those types of fares, that's what we believe is required for leadership," Mr. Cummings said.

Both Canada Jetlines and WestJet believe they will be able to lure budget-conscious Canadians who fly out of Buffalo, N.Y., Bellingham, Wash., Burlington, Vt., and other Canada-U.S. border cities to take advantage of the lower fares offered by the U.S. low-cost carriers.

Depending on the season, that is the equivalent of 50 flights a day, Mr. Cummings said.

"If the ultralow-cost carrier works in concert with the airport on the entire ticket prices, with respect to the aviation fees, with respect to landing, terminal and airport improvement fees … we can repatriate a lot of traffic from these cross-border airports back into Canada," he said.

WestJet has held discussions with airports in Abbotsford, B.C., Hamilton and Waterloo, Ont., as well as airports in several major Canadian cities to determine whether a ULCC model could also work in larger cities.

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Swoop customers are likely to be about 60 per cent leisure travellers and 40 per cent people visiting family and friends, Mr. Cummings said.

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