The Canadian airline industry is haunted by the ghosts of failed carriers—JetsGo, Harmony, Canjet, Roots, the list goes on. And those companies never even had to contemplate oil at US$140 a barrel. Yet even as airlines around the world slash capacity and give pink slips to their employees, Calgary-based NewAir & Tours insists it’s on schedule for takeoff later this year.
NewAir is the brainchild of Tim Morgan and other former executives of Westjet Airlines. Though a full business plan hasn’t been made public, the company will offer charter airline service and vacation packages to residents in smaller Canadian cities that are under-serviced by bigger airlines. “We’re in a hot economy where we’re flying,” says Morgan. “The higher the price of oil, the more money that’s being made around here.”
That may be true, but analysts still question the idea of launching a new airline when fuel costs are soaring and consumer confidence, even in the booming Western provinces, is weakening. “The model is good, but I don’t know about the timing,” says Debra Ward, an airline industry expert in Toronto. “It’s never a great time to start a new airline but this is a riskier time than we’ve seen in the last few years.”
If Morgan, who co-founded Westjet, is suffering from any pre-flight jitters, he’s not showing it. He says the biggest problem NewAir has faced is raising money from skittish investors. The company needs to raise between $35 million and $70 million. “Everybody is running scared in the airline business,” he says. Morgan declined to say how much the company has rustled up so far, but indicated NewAir already has “a good portion” of that amount in the bank. Should everything go according to plan, the first flight will lift off in November, destined for sunnier climes, and leaving a gloomy airline industry in its contrails. If not, then NewAir will join those other spirits of airlines past. M
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