Discount Airline King Targets Canada With New No-Frills Carrier

(Bloomberg) -- Bill Franke, who helped pioneer bare-bones airlines in the U.S. and around the world, is expanding into Canada.

Franke’s Indigo Partners will join a Canadian investment group that intends to revamp charter airline Enerjet into a low-cost carrier in the mold of Spirit Airlines Inc. and Ryanair Holdings Plc. The first flights are targeted for around September.

The plan adds to a push by several carriers to bring to Canada a common global business model of cheap fares but abundant fees. The country’s market, dominated by Air Canada and WestJet Airlines Ltd., has been known for high airline operating costs due to airport and security fees.

“We think this is very exciting for Canadians,” said Enerjet Chief Executive Officer Tim Morgan, who will remain head of the revamped carrier. The Calgary-based airline will be renamed.

Network Planning

The carrier’s fleet and route network are being determined, with both domestic and U.S. destinations planned, he said.

“We will look at all airports and where the demand and the passenger traffic takes us, that’s where we will go,” said Morgan, a WestJet co-founder who left that company more than a decade ago.

More than 60 percent of Canada’s 37 million people live within 100 miles of the U.S., and many of them drive across the border to fly. Cheaper flights in the U.S. draw about five million Canadian passengers each year.

Enerjet began flying in late 2008, focused on transporting oilfield workers to northern Alberta. It returned its small fleet of Boeing Co. 737-700 aircraft to lessors late last year.

Indigo, which generally stocks its carriers with Airbus SE A320 family aircraft, did not respond to a question about its Enerjet fleet plans. Last year, Indigo placed an order for 430 Airbus planes, valued at nearly $50 billion.

‘Large Order’

“They do have a very large order and whether any of those aircraft come to us is yet to be announced,” Morgan said.

Franke has established discount airlines around the world, including Spirit and Frontier Airlines in the U.S., Singapore’s Tiger Air, Volaris in Mexico and Hungary’s Wizz Air Holdings Plc.

Beyond Morgan and Phoenix-based Indigo, the Enerjet investment group includes Torquest Partners Inc., a Toronto-based private-equity firm; Claridge Inc., a private firm that manages the investments of Stephen Bronfman, an heir to the Seagram’s distilling fortune; and Stephenson Management Inc., the family investment office for Mitch Garber, a Canadian investor and chairman of Cirque du Soleil.

The consortium didn’t disclose financial terms of the deal.

Another no-frills carrier, Flair Airlines, began serving U.S. destinations such as Las Vegas, Miami and Phoenix last month. It started operating scheduled flights within Canada last year after a decade as a charter airline. Vancouver-based Canada Jetlines Ltd, is trying to begin A320 service as an ultra-low-cost carrier, as such operations are known within the industry.

WestJet Brand

In June, WestJet launched a low-cost brand called Swoop and says it has flown nearly one million passengers since then.

“WestJet anticipated the arrival of further competition in the ULCC segment and is well-prepared for any competitors that may enter the market,” spokeswoman Morgan Bell said in an email.

--With assistance from Frederic Tomesco.

To contact the reporter on this story: Justin Bachman in Dallas at jbachman2@bloomberg.net

To contact the editor responsible for this story: Brendan Case at bcase4@bloomberg.net

©2018 Bloomberg L.P.