Amid fierce competition, WestJet will wind down its Swoop subsidiary by late October as it folds the budget airline's operations under its main banner, the airline said Friday.

The move marks a major shift in Canada's aviation skyscape, arriving five years after Swoop first surfaced as a response to discount rival Flair Airlines' launch in 2017.

It also comes after pilots with WestJet and Swoop ratified a new collective agreement that brings them onto a level pay scale, and also gives them a 24 per cent hour pay bump over four years.

WestJet CEO Alexis von Hoensbroech said he mulled keeping Swoop separate, but that higher wages for its flight crews made the option less feasible.

“We were prepared for both possible outcomes, and then decided that provided the overall deal didn't make sense, we are actually ready to integrate Swoop into the mainline business,” von Hoensbroech said in a phone interview from WestJet's Calgary headquarters.

Each trip by the carrier's 180-plane fleet will offer a portion of ultra-low-cost fares, he said.

“We are actually broadening our ultra-low-cost reach to a much, much broader network than we could have ever covered with Swoop. So therefore we actually see this as an advantage and as an increased footprint for the ultra-low-cost offering in Canada.”

No bookings will be affected, he added.

Swoop's 16 narrow-body 737s will ply its current network through to Oct. 28, when it will cease to fly, WestJet said. Soon after, the pink-daubed planes will be repainted with the blue and turquoise of WestJet's livery.

The company said no layoffs are expected from the integration, with all Swoop employees slated to move to the mainline.

Competition for budget airfares has grown in recent years, particularly in Western Canada, as upstarts Flair Airlines and Lynx Air challenged Swoop - all three are Alberta-based - for market share on key routes.

“The market has become pretty competitive,” von Hoensbroech said, but insisted Swoop's integration strengthens its grip on discount offerings, rather than marking a retreat.

The CEO, who took the helm at WestJet in February 2022, said less than a month ago the airline hadn't turned a quarterly profit since 2019. The drop in bookings prompted by the threat of a strike only added red ink.

“That month was certainly heavily impacted,” von Hoensbroech said Friday. “Going forward we are actually looking at positive numbers and positive margins.”

Bargaining with pilots came down to the wire, with WestJet cancelling more than 230 flights in preparation for job action before an agreement-in-principle was reached hours ahead of the strike deadline on May 19. Ratification of the deal was announced Friday.

“Having this agreement in place will go a long way to solve many of the airline's labour issues, and bring more stability to our operations,” said Bernard Lewall, who heads the Air Line Pilots Association's WestJet contingent, which represents about 1,800 pilots.

The new agreement, taking effect on Canada Day and retroactive to Jan. 1, provides higher compensation, better job security and more flexible schedules, he said in a release.

Founded as a regional upstart in 1996, WestJet has grown to serve 28 per cent of Canada's domestic air travel market as of last month, versus the 47 per cent run by Air Canada, according to aviation data firm Cirium.

Going public in 1999, the airline went private again two decades later after Toronto-based investment manager Onex Corp. acquired it in a $5-billion deal that closed in December 2019, three months before the COVID-19 pandemic kicked off.

This report by The Canadian Press was first published June 9, 2023.