Swoop President Charles Duncan pulls back the curtain on the launch of service from Toronto

The opportunities – and threats – of making the ultra low-cost model work at Canada’s largest airport

There’s a photo on Charles Duncan’s LinkedIn feed that resembles any one of thousands of pictures taken daily at airports around the world. It’s of planes sitting on the tarmac, at the gate, waiting for passengers. Front and centre is the brash pink livery of Swoop Airlines, Westjet’s ultra low cost division. And this photo somehow conveys the feeling of a proud parent looking down on his creation.

It was taken October 25, the night before Swoop was set to launch operations from into Canada’s largest airport – Toronto International. Airline management were meeting on the 8th floor of the Sheraton Hotel attached to Pearson’s Terminal 3. And Duncan – Swoop’s President – paused to snap the photo out the window.

“It was Saturday night before the Sunday launch,” Duncan recalled in an interview. Key staff were having a small reception on the eighth floor of the Sheraton Gateway Hotel to mark the milestone. “It was wonderful. And it was a neat moment because I had the whole team gathered for the most part. We had some pizza, we had some snacks, we watched a movie.

“That was the view from the room looking down,” he said.

It was a bold move for Swoop to launch service from Toronto. For two-and-a-half years, the airline had called Hamilton its Southern Ontario home. Before the pandemic, Hamilton was consistently Swoop’s largest or second-largest base. It also kept the discount brand out of Pearson, Westjet’s second-largest hub.

Going where the market dictates

But back in 2018 when they launched Swoop as a backstop against low-cost competition, Westjet executives vowed not to cannibalize services at the airline’s three hubs in Calgary, Toronto, and Vancouver.

“The original going-in assumption for us in June of 2018 was that by flying into the Hamilton airport, that would be our GTA airport, our singular presence in Southern Ontario,” said Duncan. “I wish it could be frankly. I mean, we love the Hamilton airport.”

But market realities were starting to impose themselves, as they so often do.

“But the realization, and this has taken us a few years to find out, is that the Hamilton Airport does not draw from a very large catchment area,” he said. “You have roughly 800,000 people in Hamilton. And if you’re in Waterloo or Milton or some of those immediately surrounding areas, they consider coming to Hamilton. But by and large outside of that immediate area surrounding Hamilton, people prefer Pearson.”

The pandemic hasn’t helped. Almost overnight, demand to fly anywhere – let alone secondary airports – collapsed. Passenger traffic at Hamilton was down 60% through the first nine months of the year. And that was before Swoop moved its operations. The industry’s decimation has left executives at every airline facing tough choices.

“Hamilton’s great,” said Duncan. “But there’s a much larger opportunity in terms of the biggest airport in the country in Toronto-Pearson. And just as important, we’re focusing on the most price-sensitive traveller out there who’s looking for a really good deal. And there’s just a lot more of them looking to fly from Pearson than there are from Hamilton.”

Swoop’s unusually fast launch from Toronto

At Westjet that choice to move most of Swoop’s operations to Canada’s largest airport happened over the summer, for launch in the fall. If that seems a bit fast, you’re right.

“When we first approached the GTAA (the agency that runs Toronto-Pearson), their comment was it typically takes seven months for a new carrier, from the first point at which the airport hears from that airline to when they start service,” said Duncan.

Duncan said Swoop filed its application for slots at Toronto-Pearson August 14 for service to start a scant 10 weeks later. Normally slots are filed six months ahead of time. “This was the top priority so everything else has taken a second seat, if you will,” said Duncan.

There was a daunting list of tasks to get done. Among them:

• Getting computers up and running
• Finding a ground handler
• Arranging aircraft fuelling
• Signing de-icing contracts
• Arranging staff parking
• Leasing office space
• Arranging security passes

And those are just the big tasks, any one of which could have delayed or derailed Swoop’s ambitions.

“You name it,” said Duncan. “The list just goes on and on and on. To say nothing of finalizing a schedule and getting it up for sale.”

Arranging the staffing

While Swoop has moved most of its operations to Pearson, it will maintain some flights from Hamilton.

“The flight attendants have been flying from Hamilton and they have lots of questions around how do we schedule them between Hamilton and Toronto?,” said Duncan.

The two airports are about an hour apart, depending on traffic. But when Swoop surveyed employees, Duncan said most lived somewhere between Hamilton and Toronto. So the airline settled on treating both airports as one.

“We’re calling it a co-base,” he said. “You live somewhere in the greater Toronto area. You get your schedule or roster for the month. There will be a portion of trips that fly from Hamilton and a portion from Toronto. You could fly from either, or both.”

Not everyone is happy about Swoop’s move into Pearson. Westjet pilots staged an information picket on October 25, the day of Swoop’s Pearson launch. They accuse Westjet of outsourcing their jobs by shifting capacity from mainline to ULCC. Swoop pilots, though they’re in the same union, are paid less and have less favourable working conditions.

Market challenge

“I think most people in Toronto have probably never heard of Swoop,” admitted the airline’s President. “That’s probably still the case, but we’ve got work to do there.”

Getting people to recognize Swoop’s pink-hued aircraft in Toronto is what Charles Duncan calls “Probably our biggest challenge as a ULCC.”

In Hamilton, name recognition wasn’t so difficult. The only other airline with consistent scheduled service to Western Canada – Westjet – fell under the same brand. Toronto, which is Air Canada’s largest hub by far, won’t be easy to crack.

“We don’t have deep pockets for a marketing spend and advertising and things,” said Duncan. The airline has turned to social media to get word out, though it’s a crowded market. Duncan expects most of the traffic, in the early days, will come from cities where Swoop already has a presence.

“And so I think in the beginning we’re going to see more people in Edmonton, and Abbotsford and Halifax, those residents flying to Toronto because, frankly, Swoop has an established name and brand in those cities and we’re building on that. Whereas Swoop is brand new in Toronto and also it’s just hard to buy enough marketing to get the name recognition right away.”

He expects traffic will balance out, over time. “You need a healthy presence from both ends for a route to be successful,” he said.

A similar trend was noticed at rival ULCC Flair, which moved its operations to Toronto in 2018. After a slow start, Toronto now anchors much of Flair’s service. Then-CEO Jim Scott told Western Aviation News that the majority of its passengers travelled between Vancouver and Toronto, and were willing to accept a stop along the way if they could save money. That’s how the airline has tried to grow out of the pandemic.

Moving into a high-cost airport

Duncan knows there’s a risk launching service from Toronto – which is seen as a high-cost airport. “Every penny, every dollar matters,” he said.

“The fees for deicing, for the into-plane charges for fuelling are higher, the ground handling is more expensive, the landing fees, even just office rent,” he said of Toronto compared to Hamilton. “It is more expensive.”

Being a more expensive operation invariably translates into more expensive fares. Airports don’t help when they raise Airport Improvement Fees charged to pay for new terminals, runways, and upgrades. Toronto recently announced its AIF will rise to $30 starting in the new year. It’s one of the consequences of having fewer people flying and little to no government funding for aviation, say airport executives.

“We’re promoting low fares, and when airports raise these AIF fees, we’re working at cross-purposes,” said Duncan. “And it’s not helpful for the recovery that we all want to see.

“Our model is built on flying an airplane 14 hours a day,” he said. “And so just having long taxi queues, long waits to deice, the congestion effect at a busy airport, can hinder our ability to push the fleet hard. That’s not an issue today with the low level of flight activity, but it could pop its head up in the future. So we’ll be watching for that.

“My hope is we can be among the first to depart in the morning before the congestion and then come back late at night. Again, following that ULCC playbook. We think we can make Toronto work.

“We’re trying to have our cake and eat it too, to be blunt about it.”