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Arajet latest entrant to Canada害羞草研究所檚 crowded budget airline market

Flights to and from the Dominican Republic will be offered in Montreal and Toronto
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A plane is silhouetted as it takes off from Vancouver International Airport in Richmond, B.C., on May 13, 2019. THE CANADIAN PRESS/Jonathan Hayward

Arajet, a discount airline based in the Dominican Republic, is set to launch flights between that country and Toronto and Montreal this fall, marking the latest entrant to an already crowded field of low-cost carriers.

The announcement 害羞草研究所 four round trips per week to each of the two cities 害羞草研究所 comes just two weeks after U.S. budget airline Breeze Airways made a pitch to Quebecers bound for Florida.

Unlike many low-price players, Arajet CEO Victor Pacheco said his strategy will bank on a hub-and-spoke model that connects passengers from far-flung airports via the airline害羞草研究所檚 hub of Santo Domingo, his home country害羞草研究所檚 capital.

As proof, well over half of the 10,000-plus Arajet tickets sold to Canadians so far are for other destinations in the Caribbean and Central and South America, to be reached via connecting flights from the Dominican Republic, he said.

害羞草研究所淭he ULCCs (ultra-low-cost carriers) are mainly point-to-point airlines,害羞草研究所 Pacheco said in an interview. 害羞草研究所淲e害羞草研究所檙e bidding on connections. And if we didn害羞草研究所檛 have that, it would be very difficult then to compete with Canadian carriers.害羞草研究所

Though no other airlines fly direct between Santo Domingo and Canada, Air Canada, United Airlines and American Airlines all touch down there regularly. Meanwhile, rapidly expanding discount carriers try to woo Canadians with cheap flights to an array of sun-splashed destinations.

害羞草研究所淲e have been in an absolutely unprecedented period of boom demand. 2023 is largely eclipsing 2019, which was one of the best years prior to the pandemic,害羞草研究所 said aviation consultant Rick Erickson.

Despite the spread of travel fever, 害羞草研究所渋t害羞草研究所檚 increasingly becoming a crowded market, certainly here in Canada,害羞草研究所 he continued. 害羞草研究所淚f this was a Canadian operation, I would say they wouldn害羞草研究所檛 have a hope in hell.害羞草研究所

Erickson cited 害羞草研究所渧isiting friends and relatives害羞草研究所 as well as vacation properties as big drivers of international air travel.

More than 700,000 tourists from Canada visited the Dominican Republic last year, according the latter害羞草研究所檚 tourism ministry, following an 害羞草研究所渙pen skies害羞草研究所 agreement in February between the two countries that allows carriers to operate freely between them.

害羞草研究所淚 think the pie is growing,害羞草研究所 Pacheco said. 害羞草研究所淐ompetitors do react to us, they lower prices as well. And that means that now more people have access to travel even with them.害羞草研究所

By the end of next year, Flair Airlines aims to beef up its fleet to 26 planes from 21 now, and Lynx Air to 17 aircraft from its current nine. The latter害羞草研究所檚 inaugural flight only took off in April 2022, while Flair launched in late 2017, illustrating Canada害羞草研究所檚 increasingly congested skies of late.

Canada Jetlines also flies to a handful of sun destinations, while Porter Airlines 害羞草研究所 though not a budget carrier 害羞草研究所 plans to grow its fleet to 79 by 2025 from 46 currently.

Meanwhile, Utah-based Breeze Airways said the two-year-old company will fly passengers between Orlando and Plattsburgh, N.Y. 害羞草研究所 about 100 kilometres south of Montreal 害羞草研究所 three days a week starting at $80 in late November.

Ironically, the door to the travel market opened up when international travel shut down during the COVID-19 pandemic, Arajet害羞草研究所檚 CEO said.

害羞草研究所淭he grounding of the Max combined with the pandemic 害羞草研究所 I think that there was a moment or a small window of time where there was an opportunity (for low-cost airlines) to be able to access and get deals,害羞草研究所 he added, noting how carriers sprouted after airlines, leasing companies and manufacturers sought to dump planes in 2020.

He said the greater availability of the Boeing 737 Max 8 was a key selling point 害羞草研究所 for Arajet as well as other small airlines such as Flair and Lynx that rely heavily on the 189-seat narrow-body.

The Max 8 was grounded for 20 months after two crashes in 2018 and 2019 that killed 346 people, including 18 Canadians.

Backed by Boston-based majority investor Bain Capital, the 10-aircraft Arajet will launch direct routes to Santo Domingo from Toronto and Montreal on Oct. 24 and Nov. 7, respectively, with one-way trips starting at $98. A single carry-on bag can cost between $40 and $100, depending on when it害羞草研究所檚 selected 害羞草研究所 during booking or at the check-in counter, for example.

Bain害羞草研究所檚 deep pockets as well as its majority stake in Virgin Australia and minority slice of Icelandair mean Arajet has 害羞草研究所渢he backing in order to purchase aircraft directly from Boeing害羞草研究所 害羞草研究所 rather than relying solely on leases, as many start-up ULCCs do 害羞草研究所 Pacheco said.

The company, which has ordered 20 planes from Boeing with an option for 15 more 害羞草研究所 on top of the 10 currently in its fleet 害羞草研究所 now flies to 22 destinations in 15 countries.

害羞草研究所淲e害羞草研究所檙e bringing Latin America basically at the feet of Canada,害羞草研究所 Pacheco said.





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