Arajet, a Dominican Republic-based discount airline, has announced plans to commence flights between the Dominican Republic to Toronto and Montreal in the upcoming fall season. This announcement comes as the latest addition to the expanding roster of low-cost airlines in the travel market.
Arajet's strategy sets it apart from many of its competitors by focusing on a hub-and-spoke model that connects passengers from various airports via its hub in Santo Domingo, the capital of the Dominican Republic, according to CEO Victor Pacheco.
Hub-and-Spoke Model Emphasized: Arajet's unique approach to air travel places a strong emphasis on connecting passengers from distant airports through its hub in Santo Domingo. Pacheco revealed that more than half of the 10,000-plus Arajet tickets purchased by Canadians are intended for destinations in the Caribbean and Central and South America. These destinations are reachable through connecting flights originating from the Dominican Republic. In an interview, Pacheco explained, "The ULCCs (ultra-low-cost carriers) are mainly point-to-point airlines. We're betting on connections. Without that, it would be challenging to compete with Canadian carriers."
Competition and Congestion in Canadian Skies: While no other airlines currently operate direct flights between Santo Domingo and Canada, Air Canada, United Airlines, and American Airlines regularly touch down there. At the same time, rapidly expanding discount carriers vie for Canadian travelers with affordable flights to various sunny destinations.
Flair Airlines aims to expand its fleet from 21 to 26 planes by the end of next year, and Lynx Air plans to increase its current nine aircraft to 17. Despite Lynx Air's inaugural flight taking off in April 2022 and Flair's launch in late 2017, Canada's skies have become increasingly congested.
Canada Jetlines also serves several sun destinations, and although not a budget carrier, Porter Airlines intends to grow its fleet from 46 to 79 by 2025. Pacheco expressed optimism, stating, "I think the pie is growing. Competitors do react to us; they lower prices as well. And that means that now more people have access to travel even with them."
Opportunity Arises Amid Pandemic Disruptions: Ironically, the travel market opened up during the COVID-19 pandemic, noted Pacheco. He explained that a window of opportunity emerged when international travel halted, facilitated by the grounding of the Boeing 737 Max 8 and a surplus of available aircraft. Airlines, leasing companies, and manufacturers sought to offload planes in 2020. Pacheco underscored that the availability of the Boeing 737 Max 8 was a key factor, attracting not only Arajet but also other small carriers like Flair and Lynx, which rely heavily on this 189-seat narrow-body aircraft.
Strong Backing and Expansion Plans: Backed by majority investor Bain Capital, Arajet, with its fleet of 10 aircraft, is set to launch direct routes to Santo Domingo from Toronto on October 24 and from Montreal on November 7. One-way fares start at $98.
Bain Capital's substantial financial support and its majority stake in Virgin Australia, along with a minority stake in Icelandair, provide Arajet with the financial stability to purchase aircraft directly from Boeing, rather than relying solely on leases, as is common among startup ultra-low-cost carriers. Arajet has already ordered 20 planes from Boeing, with an option for an additional 15, in addition to the existing 10 in its fleet. Currently, Arajet serves 22 destinations in 15 countries.