That's gonna hurt WJ stocks and PS!!!WestJet vets ready to spread wings
Charter operation to connect smaller cities of 'Middle Canada' with leisure destinations
BRENT JANG
TRANSPORTATION REPORTER
May 5, 2008
CALGARY -- Former WestJet Airlines Ltd. executive Tim Morgan is ramping up plans for a new Calgary-based tour operation, expanding his map to include Quebec and Atlantic Canada.
Mr. Morgan, a WestJet co-founder who left the airline in 2005, said fledgling NewAir & Tours Group will begin with three planes this fall, focusing on non-stop charter flights between several smaller cities in Western Canada and one or two U.S. leisure destinations.
The NewAir president said the upstart completed its primary phase of financing late last month, and is on track to raise more money in the coming weeks to give it a total of about $50-million. Nearly 150 employees are expected to be hired for this fall's launch, Mr. Morgan said in an interview at his office near Calgary International Airport.
During winter, service will be offered from Western Canada to one or two destinations in Mexico and/or the Caribbean. In summer, NewAir intends to shift its attention to domestic routes, flying between Western Canada and a single eastern destination for a limited time, perhaps rotating between Montreal, Quebec City, Halifax and St. John's.
Mr. Morgan and nine NewAir workers recently moved into a sprawling Calgary building owned by Westerkirk Capital Inc., a private equity firm that invests on behalf of the family of Victoria's Sherry Brydson, who is the niece of the late billionaire Ken Thomson.
Toronto-based Westerkirk is NewAir's largest shareholder, investing $4.5-million. Westerkirk also owns Viking Air Ltd., which is preparing to restart production of the DHC-6 Twin Otter, a rugged 19-seat turboprop that will be assembled next year in the same Calgary complex in which NewAir is a tenant.
Besides Mr. Morgan, there are three other former WestJet executives on NewAir's management team: Alan Mann, Gareth Davies and William Lamberton.
By the end of 2009, NewAir plans to have six planes in its fleet, followed by another six aircraft by the end of 2011, when Atlantic Canada could be a point of origin for trips to sun destinations.
But for now, the goal is to have NewAir take advantage of shifting seasonal demand from travellers in the West, in what Mr. Morgan calls "Middle Canada" - smaller cities often neglected or under-served by WestJet, Air Canada and tour operators.
"With the accelerating increase in travel for leisure reasons, the evidence is overwhelming that many non-served or under-served markets in Canada want and could sustain air service on a seasonal basis," stated NewAir's 55-page confidential business plan sent to investors.
NewAir, the temporary name for the tour operation, expects to reveal its new moniker about two months before its first flight. A list of 30 potential names has been narrowed to a half-dozen.
Three types of narrow-body aircraft are being considered, in a single-class cabin that seats from 110 to 140 people. The business plan calls for McDonnell Douglas MD-87 jets, but MD-90s are also possible, as are Boeing 737s.
"Your knees won't be up to your chin," Mr. Morgan said, pledging to have leg room even as he seeks to control costs.
NewAir's business plan said it will focus on "departing from multiple Canadian originating cities to niche destinations" in what it calls a "reverse starburst."
Stuart MacDonald, who founded Expedia.ca in 2000 and is now president of cruise vacation site tripharbour.ca, said NewAir should be able to weather high fuel prices because of its decision to rely on many revenue streams such as hotels, local tours and airport transfers.
He said NewAir has modelled itself after Allegiant Travel Co., a Las Vegas-based firm that runs a vacation division and low-cost airline, but Mr. Morgan is adapting the U.S. concept for Canada.
"By selling an entire trip, you can make a profit margin on not just the airplane seat," Mr. MacDonald said.
Calgary aviation consultant Rick Erickson said NewAir could serve a dozen Western Canadian cities within three years, with plenty of choices for "secondary airports" in Alberta, including Lethbridge, Grande Prairie and Fort McMurray, as well as B.C. communities such as Kamloops, Kelowna and Prince George.
Mr. Erickson said NewAir will be well-positioned to expand into Atlantic Canada after three years.
"I see significant horsepower here," he said.
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