Long-term planning is out the window as passengers book flights only a few weeks before they’re ready to travel
If you had to pick a time to start a new job running an airline, the middle of a pandemic wouldn’t be it. But that’s the situation in which Charles Duncan found himself in April, adding chief executive of ultra low-cost carrier Swoop to his vice-presidential role at Westjet. But because of the pandemic, Swoop cannot plan more than one month ahead right now.
“The booking to date that we’re getting is entirely within four weeks,” said Charles Duncan, the new President and Chief Executive Officer of Swoop. He sat down virtually last week for a feature interview with Western Aviation News. “In a typical year, we would be selling right now winter travel. We would expect to see load factors in the fall of 20%, we would have already begun selling the fall.
“Right now, there’s zero activity happening for the fall and winter,” he said. “In fact, we’re not seeing activity yet for Labour Day.”
“It makes it certainly a challenge to plan, but it makes sense,” said Mr. Duncan. “I even reflect on my own conversations at home around my own leisure travel. We want to do a summer vacation, my kids are back at sports and doing that but it’s almost like we hope the Atlantic opens up, we’d like to go out to the Maritimes, but if it doesn’t we’ll be coming out to B.C.
“It’s almost a wait and see what happens with the virus and the environment. I think everyone is doing that, people are just waiting till the very last minute.”
The COVID-19 pandemic certainly creates a very different environment than the one faced by his predecessor, whose biggest challenge was managing Swoop’s growth.
Steven Greenway, Swoop’s founding chief executive, announced in April that he would step down after roughly two years on the job. “It’s a personal decision,” Mr. Greenway said in a message to Western Aviation News. “I’m moving back to the UK and will take some R&R before looking at what to do next.”
A veteran of airlines dating back to 1996, Mr. Duncan has a wealth of experience to draw on. He started with Continental Airlines at its Houston headquarters, figuring out ways to maximize revenues on flights from Newark, Cleveland, and Hawaii. Within five years, he was the airline’s commercial director for Asia-Pacific before becoming Continental Micronesia’s last President and Chief Operating Officer before the airline’s merger with United.
In 2017, Mr. Duncan came to Canada, setting up shop in Calgary to run Westjet’s regional Encore operations before becoming the airline’s Executive Vice President for cargo and finally Swoop CEO.
When the pandemic hit North America, Swoop, like so many airlines around the world, was shaken to its core. In March, Swoop pulled all of its flights to sun destinations in Mexico, the Caribbean, and the United States. A month later, further signs the bottom had completely dropped out of the aviation market, when Swoop dropped all but four of its biggest destinations from the schedule.
“Just to keep the lights on, so to speak, just to have essential service,” said Mr. Duncan. “And it service its purpose. We were quite intentional, we know that travel is essential even as the virus was spreading, there’s still people who had to get to and from point A to B for essential travel.”
The airline called it the Swoop Sprint, a single route connecting Abbotsford, Edmonton, Hamilton, and Halifax four times a week in each direction. The airline has since boosted its summer schedule to 54 weekly departures between the same four cities.
“I think all us were a big believer, as painful as a 95% reduction is and challenging to implement, it was better than a complete shutdown for two months, three months, or four months or something then to try to restart service,” he said. in addition to route reductions, Swoop has laid off dozens of employees since the beginning of the pandemic, part of parent company Westjet’s cost-cutting.
The decision to cut routes brought unexpected challenges. As an ultra low-cost carrier, Swoop had been operating only point-to-point service. That way, it avoided the cost of setting up a hub operation with more involved baggage processes and higher staffing levels to cover banks of flights.
So when the airline introduced the possibility of passengers booking through flights from Halifax to Edmonton, for example, it had to develop systems that are common at most airlines, but new to Swoop.
“It brought a lot of challenges for us and it reminded a lot of the, not that we have a lot of ‘old-timers’ at Swoop, but people reflecting back to the 70s and 80s and doing the old milk runs,” said Mr. Duncan. “Just things like seat maps and bags. Someone could board an airplane in Halifax, maybe going all the way to Abbotsford with the two stops in between, and even segregating bags within the cargo hold. Seat maps, making sure the traveller could have a seat all the way through. Little things like that and programming our website to make those sales, all of that sort of stuff was very much back to the future element to it.”
The airline has since reverted to point-to-point service.
“We’re off rock bottom,” said Mr. Duncan with a chuckle. “We’ve improved, but we still have a long way to go.”
As for the future, Mr. Duncan says the key to getting people to fly again will be to make them feel safe in the air through rigorous cleaning and safety procedures.
“The other piece that we think about is that for lots of reasons, I reflect on the high unemployment rate, the fact that people don’t have a lot of disposable income,” he said. “So the people who are going to be travelling and travelling first are likely to not be business travellers. They’re going to be looking for a really good deal, price sensitive. It’s people travelling to visit family, what we call VFR, the family and relative-type travel or close to home leisure travel. “
As a result, he believes that ultra low-cost carriers are well positioned to cater to that price-sensitive market, whenever recovery from the pandemic comes. Executives at arch-rival Flair Airlines, share Swoop’s reasoning.
“So we’re focusing on that. I think we’re well positioned in that part of the market for rebound when it comes,” said Mr. Duncan. “We’re beginning to see it, but it’s modest and minimal at this point.”
Swoop is seeing a few signs of hope. No-show rates – the percentage of people who bought a ticket then decided not to fly – were at a staggering 70% during the worst of the pandemic. Now, those rates are closer to eight or nine per cent.
“The fall and winter, it’s anybody’s guess right now,” said Mr. Duncan. “We’re very much held in a four week window.”
That makes the pandemic particularly challenging for Swoop. The airline earns much of its money flying Canadians to warm destinations where they can escape the harsh winter. Mr. Duncan vows Swoop will return to those markets, he just can’t say when.
“We will get back to it, the bigger challenge is just when” he said. “We’re watching what’s happening in the U.S., border closures as well, following guidance from the federal government.”
Based on his conversations and the results of internal company data, Mr. Duncan is convinced Canadians will want to take winter holidays in the coming year. So Swoop is looking at what insurance might look like during the pandemic in case a passenger has their plans thrown into turmoil by the coronavirus’ evolution.
“We do expect people are going to want to fly south, at least they tell us they will,” he said. “But I think that having flexibility and travel insurance, those are the products that having one destination has an outbreak, you can shift someplace else where you can be more safe, I think will be an important component.
“Ultimately we will get back and demand will rebound.”
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A brief history of Swoop
September 27, 2017
Calgary-based Westjet announces Swoop’s creation as a low-cost subsidiary, as the mainline makes a shift upmarket
June 20, 2018
October 27, 2018
Swoop launches service to sun destinations in the United States. The U.S., Mexico, and Caribbean would become the airline’s hot sellers in the winter months.
Canadian Competition Bureau launches investigation into Westjet and Swoop following airline was selling seats below cost to win market share.
January 8, 2019
Swoop inaugurates service to Mexico.
January 22, 2019
Swoop announces a major domestic expansion for the summer, adding new service to London, Ontario and Kelowna, British Columbia. The airline also announces service from Edmonton to Oakland, California though the route is dropped before a single flight departs.
February 1, 2019
Swoop marks one year since it began selling tickets, boasting 556,673 and 300 employees.
Swoop abandons plans to fly from Edmonton to Oakland, citing poor demand.
May 13, 2019
Onex Corporation drops a bombshell in Canadian aviation, announcing plans to buy Westjet and Swoop in a $5 billion deal.
May 31, 2019
Swoop carries its one millionth passenger.
June 11, 2019
The Canadian Union of Public Employees is certified to represent Swoop flight attendants.
September 27, 2019
Swoop partners with vacation airline Sunwing, marking the ultra low-cost carrier’s first foray into airline cooperation.
March 19, 2020
In response to the COVID-19 pandemic, Swoop drops all of its International service, though it maintains its domestic network.
April 7, 2020
Swoop cuts back to a bare-bones domestic service with one cross-country flight linking four cities.
April 20, 2020
Steven Greenway, Swoop’s founding President and Chief Executive Officer, announces his departure and is replaced by Charles Duncan.