Calgary-based low-cost carrier (LCC) WestJet, Canada’s second largest airline, said it will launch an ultra LCC by the end of 2017.

The new carrier, not yet named, will have an initial fleet of 10 “high-density” Boeing 737-800s, WestJet said in a statement. “The ULCC will provide Canadians with no-frills, lower-cost travel options,” WestJet said. The ULCC will be the second subsidiary carrier WestJet launches this decade; in 2013, it launched an all-Bombardier Q400 regional airline, WestJet Encore.

WestJet intends for the ULCC to start service by the end of this year, subject to an agreement with its pilots and regulatory approval.

In a blog post on WestJet’s website, WestJet CEO Gregg Saretsky explained the rationale for launching a ULCC. “The air travel industry has changed remarkably since the launch of WestJet in 1996,” he wrote. “The concept of a low-cost airline was still relatively new when WestJet took to the skies on Feb. 29, 1996, serving five destinations in Western Canada with three aircraft and 200 employees. Fast forward to where we find ourselves today—there are more than 100 low-cost airlines around the world and there is a relatively new category called ULCCs where airlines offer much lower fares with a completely unbundled product offering and increased seat density. This has allowed the traveling public to select what they would like to add onto their ticket, thus keeping the overall cost of travel lower.”

He noted that WestJet has grown “beyond its low-cost roots,” serving more than 100 destinations globally, and now needs to offer a separate product to capture Canada’s most price sensitive passengers. 

“Launching a ULCC will broaden WestJet’s growth opportunities and open new market segments by offering more choice to those Canadians looking for lower fares,” WestJet co-founder and board chairman Clive Beddoe said in a statement.

Aaron Karp aaron.karp@penton.com