An employee works on a B737-400 aircraft in the Nolinor hangar as it is being refit for a new airline called OWG, in Mirabel, Quebec, on July 7, 2020.Christinne Muschi/The Globe and Mail
Quebec air cargo and charter operator Nolinor Aviation has unveiled plans to launch a new airline service in the midst of the travel industry’s worst-ever crisis.
Mirabel, Que.-based Nolinor, a specialist in landing on ice and gravel runways in remote northern locations, is making a counterintuitive bet that the timing is right to push south with a new carrier to ferry people from Montreal and Toronto to sun destinations.
Nolinor is launching a new airline called OWG (short for Off We Go) that “will soon take off,” the company said Tuesday in a news release sketching out its intentions. The venture has received authorization from Canada’s Minister of Transport to operate regular international flight service as of July 6, but OWG will wait until circumstances and conditions permit to start selling tickets, a company spokesperson said.
“[We] always see an opportunity when everybody thinks that we are in the darkest time ever,” said OWG president Marco Prud’homme, whose family controls privately held Nolinor. “But now is the perfect time for us because over the last few years, the passenger has been taken for granted,” he said, giving as an example the refusal of certain airlines to refund customers for flights cancelled during the COVID-19 pandemic.
Airliners sit parked around the world as government restrictions on travel continue. Dozens of airlines have received loans and other state aid to help them weather the revenue plunge. Others have been forced into bankruptcy.
Nolinor purchased three Boeing 737-400 jets earlier this year for OWG and is refurbishing their interiors with fewer, lighter seats that will accommodate 158 people a planeload, the company said. The Boeing jets were obtained at a discount given the difficulties currently hitting the industry, Mr. Prud’homme said in an interview. He said OWG is being funded by Nolinor with help from National Bank of Canada and will operate as a business division with its own strategy and purpose.
Nolinor has carved out a steady business over 27 years flying people and cargo across Quebec and elsewhere, developing a particular expertise flying to remote locations. With a fleet of about 10 Boeing aircraft, as well as several smaller planes, it is a go-to charter operator during election campaigns and also counts correctional services, the coast guard and mining companies as clients.
When Boeing’s 737 Max planes were grounded last spring, Sunwing Airlines Inc. tapped Nolinor to operate some of its flights.
With OWG, Mr. Prud’homme sees a chance to build on that experience and diversify Nolinor’s revenue base. He said that while elderly people will likely avoid air travel in the months ahead, many young people are itching for a change of scenery. “It is a very niche market that we’re targeting,” he said.
Details about OWG’s business plan, two years in the making, are thin, but Mr. Prud’homme said he wants to sell only airline tickets and not vacation packages. The aim will be to enhance the flying experience to get travellers excited about air travel again, a feeling of fun he says has been lost amid years of service cuts sectorwide.
But winning back passengers amid a global health crisis will be no easy task, even if and when Canada reopens its borders and lifts its recommendation to avoid non-essential travel. A newly published survey by Leger and the Association for Canadian Studies found that 72 per cent of Canadians say they’re not comfortable flying since a decision by some airlines to relax their own physical-distancing requirements.
Industry experts expressed various levels of skepticism Tuesday about OWG’s chances at success.
Nolinor is an experienced operator, but “the challenge is to fill seats,” said Jacques Roy, a professor at Montreal’s HEC business school. “I believe only young passengers will want to fly. This is the market they’re after.”
The launch of a new passenger airline right now is “surprising to say the least and fraught with massive risks,” said Robert Kokonis, managing director of AirTrav, a Toronto-based aviation consultancy. Routes from Quebec to sun destinations are highly contested between rivals with generally low yields or average fares per passenger miles, he said.
Competition from Air Canada, Transat AT Inc., Sunwing and WestJet Airlines Ltd. will put significant price pressure on OWG, Mr. Kokonis said. OWG’s intention to use older Boeing 737-400 planes will further complicate matters if it can’t squeeze high utilization rates out of them, he said.
“It’s still an unproven product,” John Gradek, a lecturer on aviation management at McGill University, said of OWG. “I call them ghost airlines. You’re not sure whether they’re real or not. Until such time as I get a product and I get the ability to buy a ticket on it, they’re not real. They’re just sitting there in the shadows.”
With files from Canadian Press
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