Airline Tickets | Swoop’s new president warns prices will rise

(Montreal) Rising jet fuel prices must be passed on, at least in part, to passengers even as competition among low-cost airlines increases, the airline’s new president, Swoop, said Monday.

Posted at 1:39 p.m
Updated at 4:58 p.m

Bob Cummings, president of WestJet Group’s ultra-low-cost subsidiary since last week, said in an interview Monday that low-cost carriers are trying to minimize the impact of labor costs and fuel on fares, but that the Market forces still left their mark.

“We always adapt to these market conditions almost in real time as input costs increase. And they really need to be passed on for the company to be financially healthy,” he said on Monday, his first day in office.

“We will do everything we can to minimize this and have affordable prices. »

The aftermath of the Russian invasion of Ukraine, including sanctions and oil import bans, helped push jet fuel prices up 129% year-on-year. It was nearly $153 a barrel on April 8, according to the International Air Transport Association.

Fuel costs will be a major headwind for airlines in the coming quarters, National Bank analyst Cameron Doerksen said in a note to investors released last week.

Mr. Cummings joins Swoop after a three-and-a-half year absence from the company, having previously spent 13 years with WestJet’s management team. He expects bookings this summer to top pre-pandemic levels.

Other hurdles the company faces include the rapid domestic expansion of rivals Flair Airlines and Lynx Air, and testing requirements for COVID-19.

Flair Airlines was limited to just one aircraft a year ago but expects to have 20 Boeing 737s in its fleet by the end of June as the Edmonton-based carrier adds statewide flights.

Calgary-based Lynx Air, formerly known as Enerjet, aims to operate 148 flights a week on more than a dozen routes within Canada by July, according to its chief executive officer.

Meanwhile, Swoop plans to fly to 33 destinations this summer, about half of them in Canada. Five new US destinations have been added: New York, Chicago, San Francisco, Los Angeles and Nashville, Tennessee. These routes will be served by 16 narrow-body Boeing 737 jets, with six expected over the summer.

“With catching up to do […]”We are confident that we can fill these planes,” said Mr. Cummings.

Travel demand among Canadians is growing after two years of lockdown and other COVID-19 restrictions, but more bookings could stagnate if fuel costs are passed on to passengers through higher fares, said John Gradek, director of McGill University’s aviation management program.

“Generally, with such fluctuations in the past, airlines have imposed fuel surcharges on their sales to try to recoup some of those increased fuel costs and of course that is being passed on to consumers. »

However, a competitive environment among low-cost airlines may persuade them to consider other tactics, such as: B. the assumption of part of the fuel costs.

“Which carriers are strong enough for that – do they have the ability to absorb those price points? asked Herr Gradek. “It’s going to increase cash consumption, it’s going to hurt profitability. »

Leave a Comment