New airline would launch in a tough Canadian air climate: analyst
'He knows what he's trying to do but he's not Richard Branson or Donald Trump'
The future is bleak for any upstart Canadian airline after Halifax-based CanJet announced it's cutting 70 per cent of its flying staff, an airline analyst said Wednesday.
McMaster University marketing professor Marvin Ryder said the news should temper the aspirations of NewLeaf Travel Co., an "ultra-low-cost carrier" that wants to be Canada's answer to Ryanair and Easyjet in Europe.
Ryder said he "sighed a big sigh" when he heard about Jim Young's plan to fly out of Hamilton with NewLeaf Travel Co.
NewLeaf is one of at least two such low-cost carriers hoping to make Hamilton home — the other is Canadian Jetlines, where Young worked for six months before leaving to start NewLeaf.
- CanJet Airlines to lay off most of its staff, as European routes dropped
- Budget airline NewLeaf Travel wants to make Hamilton a hub
It's easy to draw up plans for a new airline, Ryder said, but tougher to fill the flights enough to stay afloat.
"He's got the right model," Ryder said of NewLeaf's Jim Young. "If you are going to do a discount airline, you fly out of smaller airports that have cheaper landing fees, and you go low-cost."
'I don't think there's enough room for two'
But Europe and the U.S. are denser than Canada, where short-haul flights can attract more passengers, and where even second tier airports are not that far from the city centre.
"He's got the right kind of a model but it'll be all in the implementation," Ryder said.
Whether NewLeaf can beat Canadian Jetlines to the punch could be the biggest factor.
"I don't think there's enough room for two," Ryder said. "Whoever gets going first you're going to have a better chance of survival."
Ryder said Hamilton's airport makes sense for a hub, because the airport is at least as convenient as Toronto Pearson is for residents of a large swath of the GTA, and it's dramatically less busy, which could save passengers time.
But the airline's success would be shaky until passengers catch wind of the new offering and change their habits from searching for Air Canada and WestJet flights. For the first few months, Ryder said, "those planes will be lucky if they're a third-full, half full." And the company will have to convince customers that the amount they'll save will be worth planning their trip around.
CanJet pulled the plug on their latest flight offerings after 14 months. They never got the volume they needed, Ryder said.
Ryder didn't discount Young's career in airlines and hospitality, but he questioned whether the team would have enough money to keep the company going during a slow start.
"He knows what he's trying to do but he's not Richard Branson or Donald Trump," Ryder said.