If you’re not from Canada, you may never have heard of WestJet. And that’s too bad, since WestJet is not only Canada’s second largest domestic carrier but it also has a number of really cheap fares in and out of the US and Mexico, as well as over the Atlantic. WestJet is a traditional low-cost carrier, in the model of Southwest Airlines. You don’t get a ton of frills, but you don’t pay for them, either.
But times are changing, and passengers seem willing to give up any frills in order to get the lowest price, an issue that I discussed yesterday on the hotel side. So yesterday, they announced Swoop, their version of the Ultra-low cost carrier (ULCC).*
This trend is less about a particular airline and more about the airline industry in general. Swoop is not the first ULCC announcement this year. Air France has given us Joon and British Airways has graced us with Level. Each of those fits into the model of squeezing in as many butts into as many seats at as low a price as the airline can manage, and each is a “carrier within a carrier:” a smaller discount carrier wholly owned by a larger airline. That model traditionally has not worked for shareholders, but it’s been great for consumers.
Sadly, or maybe not sadly, commoditization is the future of the airlines. True, airlines add amenities when times are good, but most people don’t want to pay for much more than a seat. “Meeting consumer demand” is not about giving the customer what they want, but rather, what they are actually willing to pay for. It’s the reason that ULCCs are growing double-digits. Most people want first class, but they’re not paying for it. Can’t say I blame them.
But there’s an upside to lower prices: lower prices. Inflation-adjusted airline ticket prices have been coming down since deregulation in the United States, and they will likely continue to decline as the ULCCs grow. More people than ever are able to get in the air. And if you want to pay for more comfort, it’s available. Nothing wrong with our neighbors to the north continuing to drive down ticket prices, as well.
I wish Swoop luck and look forward to when they fly to Boston.
*Beginner’s Hint: A ULCC is a carrier that sells you a seat and nothing else. Want a seat assignment? You pay. Glass of water? You pay. Carry-on bag in the overhead? Another fee. The most prominent US ULCC is Spirit Airways.
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