One of the founders of WestJet Airlines Ltd. is making another foray into Canada, this time with a 72-year-old Portuguese airline that will begin flying to Toronto in June.
David Neeleman, one of the five men who co-founded WestJet in 1996, is using his significant expertise in the airline industry to help revitalize TAP Portugal with new aircraft and flights to North America.
TAP had languished under government ownership for decades when Atlantic Gateway, a joint venture between Neeleman and Portuguese investor Humberto Pedrosa, took a 61 per cent stake in 2015.
Since then, the government has increased its stake to 50 per cent and Atlantic Gateway’s share has fallen to 45 per cent but it is still responsible the airline’s day-to-day management.
TAP, which used to fly to Toronto in the 1990s, will re-enter the market on June 10 with year-round service five days a week to Lisbon. The move comes as both Lisbon and Toronto are working to position themselves as major hubs and will boost tourism in both cities, said Carlos Paneiro, TAP’s vice-president of sales for North and Central America. Fares will be as low as $500 for a round-trip in the off-season.
Neeleman, who also founded JetBlue Airways Corp. and Brazil’s Azul Airlines, said he’s leading a desperately needed refurbishment of TAP’s fleet with an order for 53 new A320 and A330 aircraft from Airbus Group SE.
“The fleet was just very tired,” Neeleman said in an interview. “You flew on it and as a customer you were like, ‘Woah, this looks like the ‘80s.’ They didn’t have the capital to spruce up the product and make it relevant to what was going on all around it in the industry.”
The new aircraft will be used to expand TAP’s capacity in North America, including the possible addition of flights to Montreal, Neeleman said. “I think Montreal would be high on our list as well when we have the planes to do it.”
TAP already flies to 10 cities in Brazil and the North American expansion will allow it to alternate aircraft between North and South America depending on the season, Neeleman said.
“North America will become as important to TAP as Brazil is, with as many cities and as many flights,” he said. Besides Toronto, TAP has already launched flights to Newark, N.J., New York, Boston and Miami.
The expansion comes as airline analysts have raised concerns about the rapidly growing capacity between Canada and Europe, which rose 14 per cent in 2016. Rising capacity puts pressure on airfares, which can in turn lower airlines’ margins.
“Higher industry capacity along with lower fuel prices resulted in materially lower airfares (and lower margins) on transatlantic routes in summer 2016,” National Bank analyst Cameron Doerksen wrote in a recent analysis. However, summer 2017 capacity is expected to climb “a much more reasonable” 5.5 per cent.
Taking a page from Icelandair and Wow Air, both of which offer free stopovers in Reykjavik for tourists travelling between North America and Europe, TAP will offer free stopovers for up to 72 hours in Lisbon for travellers who want to go on to its 60-odd destinations in Europe and Africa. Since the program launched last summer, more than 30,000 U.S. tourists have taken advantage of it.