The Canadian Transportation Agency (CTA) has approved a group of entrepreneurs’ plan to base an ultra-low-cost airline in Vancouver.
The independent administrative tribunal probed the group’s business plan and financing goals and deemed that everything was solid, said David Solloway, who is Canada Jetlines Ltd.’s chief commercial officer.
“This really was the big hurdle,” he told Business in Vancouver May 14.
“We got a letter last week from the CTA, giving us Stage 1 approval.”
As an ultra-low-cost carrier, Jetlines plans to charge fares that are an average of 40% to 50% less than Air Canada. The catch for Jetlines passengers is that they would face a vast array of fees, including charges for carry-on and checked bags, meals and perks such as in-flight iPads.
Fees also kick in if customers make reservations using credit cards instead of debit cards or if they use the phone for reservations instead of the Internet.
Solloway’s next regulatory step is to get Transport Canada’s approval for an operational certificate although he calls that step more of a process than an approval.
Much of the work to get Transport Canada’s final approval – writing in-flight manuals and safety management system manuals – has already been done, he explained.
In order to make the application to Transport Canada, however, Solloway and other Jetlines investors must first buy at least two planes.
“Hopefully we’ll have them by the end of summer but we’re not going to rush into a bad lease just to get an airplane because this is an important part of executing a proper business plan,” he told BIV. “A good lease can make you successful and a bad lease can make the airline unsuccessful.”
Solloway’s aim is to lease two Airbus A319s, which seat up to 138 passengers, from the same airline. That way, both planes are more likely to have identical cockpit, engine and galleys. The intent is then to buy leases on another 14 A319s by 2017.
Flights would operate across Western Canada, including Vancouver, Prince George and Prince Rupert.
Transport Canada has told Solloway that processing of Jetlines’ application will likely take between four and six months.
That means that, if approved, the airline would be on track to launch flights in spring 2015.
“We’ll probably decide to do a spring start rather than a winter one,” Solloway said. “Based on the winter we had this year, the worst thing you can do is launch and then have airplane delays.”
Solloway’s group raised an initial $4 million in financing last year. It is now in a $5 million financing round and has had sustained interest, Solloway said.
The group needs about $48 million to get the airline up and running but is aiming for $100 million so it can do some rapid expansion. Jetlines has so far hired 31 people for executive positions. At launch, it will need about 130 full-time employees, Solloway said.
