New Flair CEO Stephen Jones wants his airline to have 50 aircraft “in short order.”
“I think COVID plays very well into ultra low-cost carriers.”
New Flair CEO Stephen Jones wants his airline to have 50 aircraft “in short order.” These are words you don’t expect to come out of the mouth of an executive less than a week on the job in the midst of a pandemic.
“Make no mistake,” he said. “The ambition that sits within Flair and its shareholders is to grow the business very quickly. And that obviously requires growing the fleet.”
Jones – the third Flair CEO in two years – sat down for a wide-ranging interview with Western Aviation News and laid out his vision for an airline with renewed ambition.
“I’d like to see us get to 50 aircraft within the next,” he pauses slightly, “I won’t put a number of years on it just yet, but in short order. We need to get to scale. Because that’s also one of the things that helps drive down your costs is economies of scale. So you’ve got to get to 50 aircraft as quickly as possible in my view.”
Fifty aircraft is a long way from the airline’s current fleet; three used Boeing 737-800NGs. “I think you have to see them as a transition. Those aircraft – well, they’re good aircraft – but they’re not the best aircraft that you can get your hands on, and that’s what we need.” A fleet that size would also make Flair the country’s third-largest carrier.
A fantastic opportunity
An engineer by training, Jones is a veteran of the airline industry. After almost nine years at a New Zealand-based paper and energy company, Jones joined Air New Zealand in 2001 as a vice president of investor relations. More recently, Jones was an executive at Wizz Air, an ultra low-cost carrier based in Budapest.
“I’m from New Zealand, I grew up as a sailor and a surfer,” he said.
After a summer spent sailing in Europe, he was brought in unexpectedly in mid-October to replace a retiring Jim Scott.
“I had finished up with Wizz and was really just thinking about what to do next and the opportunity came to join Flair,” said Jones. “And I just think it’s a fantastic opportunity.”
Jones has been on the job a week now. He said the first order of business is meeting staff and letting people get to know him. “I’ve done some bigger group settings and also some one-on-one sessions,” he said. He’s doing it all at a distance – COVID means he can’t immigrate to Canada just yet. He’s hoping to move by the beginning of December.
He said what he’s found is that people inside the airline are enthusiastic, despite the harsh conditions COVID has imposed on the industry. But now they need to know where they’re going.
“I think what the opportunity for me is to point towards the future a little bit more and say ‘this is what it will take for us to be a 50-aircraft airline.’ And here’s what that’s going to look like. And here’s the way we need to build that.
“It’s probably got the purpose but not the roadmap,” he said.
The market is there
As the new Flair CEO, Stephen Jones’ ambition may seem misplaced given the current market. Air Canada and Westjet, the country’s dominant carriers, have cut dozens of routes and laid off tens of thousands of workers. In May, things got so lean at Flair that the airline was down to just 32 weekly flights linking four cities. It has since rebounded somewhat but is still clearly leaning on its Western roots – and routes.
“I think the market is there for it,” said Jones. “You’ve got two, sort of, legacy carriers that, you know, are imposing quite high fares on the Canadian public. It’s a big country so air travel is important. It’s got a decent-sized population, it’s not huge, but it’s a good-size population so I think there’s an underserved market that will be discovered by getting low fares into the market on a sustainable basis.”
The reality is, however, people just aren’t flying as a result of the pandemic.
“Clearly COVID has changed everything in the industry and all the carriers have had to adapt,” said Jones. “But the best-positioned in that world, in my view, are the ultra low-cost carriers because they have the lowest cost. If revenues are disappearing from the industry, then the people with high costs are going to feel the most pain.”
There may be something to the theory. This week, in a dramatic departure from past practice, Westjet low-cost subsidiary Swoop will launch flights from Toronto. Betting that lower airfares will spur travel demand, Westjet is shifting limited capacity to Swoop between some cities.
“I think COVID plays very well into ultra low-cost carriers,” said Jones. “Because it allows them to continue to grow in the face of others retreating. And so I think it’s a terrible thing to happen to the industry and to the world, but in a relative sense – and this is what matters most because all industry players are losing ground – but it’s the relative positions that you come out of this in that’s more important than the absolute, I think.”
Cost is everything
None of this means Jones is ready to expand Flair as-is. While he says the bones of a ULCC are there, Flair isn’t a true ULCC – not yet.
“It’s a young business and it’s got a lot of the bones of a low-cost carrier but there’s still a number of distractions in the business that we need to clear out of the way,” he said.
“I think the first thing to do is establish those ULCC principles into the business. It’s a great business, but it’s come from a different past and there’s still some work to do to get it purely on ULCC principles.” Before adopting its current model, Flair started life in 2005 as a charter and cargo carrier.
“The principles of how you run an ultra low-cost carrier are very clear,” said Jones. “It’s not a business that is going to chase revenue at the expense of cost. Cost is everything. Do what you can to get your business as efficient as possible with as little waste as possible and have that translate through. To do that, you have to keep things very simple, whether that’s fleet type, or network planning or your organizational structure. Simplicity is really king. Complexity is expensive.”
Jones said he wants the business to focus on three pillars: commercial performance, customer experience, and productive employees.
“Some low-cost carriers have had tremendous commercial success but their customers hate them and the staff are all on strike,” he said. “Wizz had a much better balance than that. The staff enjoyed the business, the customer experience was good, and the commercial success was outstanding.”
We’re not there yet
What goodwill Flair had built up from its launch as a scheduled carrier evaporated almost overnight in mid-2019. Flair stranded hundreds of passengers when it abruptly cancelled service to the United States, leaving people with shattered holidays and cancelled plans. It took months to quell the public outrage, and there are still flare-ups in which passengers don’t hesitate to let the airline have it.
“At the same point, we need to get the brand to a point that customers love it,” said Jones. “We’re not there yet, either.”
A recent browse of the company’s Facebook page revealed dozens of passengers venting their frustration with Flair’s customer service.
“Terrible customer service,” wrote Facebook user Niki Anderson. “No one responds to emails and does not help customers and issues they have had with their airline.”
Jones points to the company’s technology as a particular source of concern.
“We’re only just in the process of launching a decent app,” he said. “An app is fundamental in today’s world… customers are increasingly comfortable with self-service and the more information and communication you can put in their hands through the app, the better it is.”
A long winter
Satisfying customers, getting the staff on-board, and uncertain commercial performance in a pandemic. It sounds like a herculean task.
“This is going to be a long winter for the northern hemisphere carriers,” he said with a sigh. “Summer was a bit of a fizzle and now it’s winter. So when it comes to cash burn and balance sheets and survivability, this is going to be a helluva test.”
Flair’s shareholders have repeatedly expressed confidence in the business, even if it’s a little rough around the edges.
“Mr. Jones invaluable experience in building and scaling ULCC carriers through a relentless focus on cost will accelerate Flair’s mission to make airfare more egalitarian in Canada,” the company said announcing his appointment.
“I’ve done my due diligence,” said Jones. “We’ve got very strong supportive shareholders and we just need to get our business in order and take advantage of the situation at the moment.
“Obviously they hired me to do a job. And that’s to make this the best ULCC in North America,” he said with a shrug. “Or the world.”
And that brings us back to the aircraft.
“You get on a nice, well-run ULCC and you’re getting into a new aircraft and it just feels good.”
It’s clear in setting his 50-plane ambition, Jones is setting his sights on a fleet of new aircraft. “Up to date aircraft is fundamental to ULCC principles,” he said. “New aircraft have so many attributes that suit a ULCC. Number one, they are most efficient fuel consumption.”
Airbus or Boeing?
“That low maintenance, high reliability also allows you to utilize the planes a lot,” he said. “So you can drive utilization. So you’ve got more hours in the air for the asset that you’ve got. Another key metric of a ULCC is utilization and new aircraft actually allow that to come through.”
So as always happens when the subject of aircraft comes up, Airbus or Boeing?
“I’m indifferent,” he said. “Both Airbus and Boeing have great aircraft. The issues with the Boeing aircraft are well documented. Airbus aircraft are also very good but difficult to get hold of and can be relatively expensive. They’re both great aircraft, so it’s a question of getting the economics right in the deal that you do and the way that you operate them.”
Being the best ULCC, he said, means having the lowest cost per available seat mile, excluding fuel.
“Good enduring businesses have a purpose that is bigger than that,” he said. “And I think the purpose of ULCCs generally and Flair in particular, is to improve people’s lives through access to travel.”
Many have dreamt of breaking Canada’s airline duopoly and gone bankrupt in the process. Think of Greyhound Air, Jetsgo, Roots Air, and Canada 3000 to name a few. Jones doesn’t see the same fate in Flair’s future.
“There are no guarantees, but I’m confident.”
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Categories: Flair Airlines