Description: Westjet Airlines, known for innovation in the industry, is entering the ultra low cost carrier (ULCC) by introducing its subsidiary Swoop. Come June 2018, you will be able to fly this new airline with the hot-pink Swoop logo for only $69 between Hamilton and Winnipeg. Don’t expect any frills though. You will pay for snacks and drinks. And you’ll feel an even tighter squeeze on your legroom as Swoop reduces that space to cram more seats into the aircraft.
Date: February 13, 2018
1) As a student, does the arrival of ULCCs make you rethink your travel plans?
2) What would be some of the key strategic issues an airline would face in starting up a ULCC?
3) In chapter 9 of Wiley’s Financial Accounting: Tools for Business Decision Making, you can read about Westjet’s strategy for acquiring aircraft. According to that chapter opening vignette, Westjet leases about 30% of its aircraft fleet. Why would the airline choose to lease some aircraft and purchase the rest outright? Do you think Swoop will lease its planes or buy them?