BRIAN DUNN / MONTREAL
Former Royal Aviation owner Michel Leblanc has re-entered the aviation business with the launch of Canadian discount carrier Jetsgo. Analysts are questioning the prospects for the start-up, however, as it joins an increasingly crowded Canadian low-cost airline market.
Due for launch on 12 June, Jetsgo will initially employ 200 people and operate three 160-seat Boeing MD-83s, with a fourth to be added later in the year. It is modelled on the successful Canadian low-cost carrier WestJet, which began services with three Boeing 737-200s in 1996. Leblanc says he has secured C$120 million ($78 million) in finance from his own family, a Canadian bank and Boeing.
Destinations to be served include Halifax, Montreal, Toronto, Vancouver, Winnipeg, Stephenville in Newfoundland and Sydney in Nova Scotia, with plans to later expand to the eastern USA, including Florida.
Toronto analyst Avi Dalfen of Research Capital says the discount market in eastern Canada "is getting a lot more crowded". Jetsgo will operate beside Air Canada Tango, Air Canada Jazz and WestJet, with CanJet Airlines of Halifax soon to relaunch services.
Leblanc hopes to undercut low-cost operators such as WestJet and Tango, saying he will have the lowest seat cost per kilometre in Canada and predicting a 75-80% break-even load factor. A one-way fare between Montreal and Toronto will be C$89-149, compared with C$96.50-219 on Tango. Between Toronto and Vancouver, Jetsgo passengers will pay between C$234 and C$319, against C$247.50-603 on WestJet.
Leblanc argues that the situation is different from that which resulted in the failure of Royal Aviation and Canada 3000, which bought Royal before Canada 3000 went bankrupt last November. "The demise of Canada 3000 was not related to its domestic routes. Its European programme was the problem," says Leblanc.
Jetsgo's choice of the MD-83, rather than the 737 normally favoured by low-cost carriers, has also been questioned by analysts. They also point out that Jetsgo will have to grow by taking customers away from Air Canada as well as attracting new flyers. Analyst Jacques Kavafian of Octagon Capital in Toronto says this is not impossible. "With Air Canada having an 84% market share, nobody expects it to maintain that level," he says.
Source: Flight International
