A WestJet 737 (C-GQWJ) heads back west from YOW. Photo by Ayush Yash Shrestha
Every day hundreds of WestJet pilots face a critical choice. At decision speed (last moment at which an aircraft can stop its take-off) they must decide and commit to a course of action. As a corporation WestJet is approaching a series of critical decision points of its own and it’s time for their executives to choose and commit. The question is will they be able to handle these decisions with as much skill and lucidity as their pilots?
Fleet commonality: strength or weakness?
The single biggest factor propelling WestJet towards this critical decision is their fleet. WestJet operates a homogeneous fleet comprised entirely of 737 aircraft – albeit with three variants in the mix (-600,-700 and -800). While this approach does not provide a tremendous amount of operational flexibility the benefits are clear; lower maintenance costs, lower training costs, lower certification costs and a valuable bargaining chip come fleet renewal time. The problem however is that WestJet may well be running out of city pairs between which the 737 is viable.
Due to Canada’s low population density and sparse urban centers, domestic opportunities are limited and probably close to saturation both in terms of frequency and capacity. That essentially leaves the United States, the Caribbean and Mexico.
Current WestJet route map
A glance at their route map suggests that there are still many opportunities between Canada and the US. Large commercial centers such as Chicago, Houston, Philadelphia and Dallas remain untapped. However, getting into those markets is going to be extremely difficult. The Star Alliance has a firm grip on the first three and Dallas is dominated by OneWorld. Given how established the alliance carriers are in these markets and the number of frequencies they offer it will be a costly and risky exercise to enter and compete – one that may very well end in a bloodbath.
I’m not saying that there are no further possibilities to and from the US, there are, but all are challenging – there is no low hanging fruit left. Similar challenges exist for other destinations within the 737′s operating range outside of the US. Most sun destinations favored by Canadian tourists are already well served – at least in peak season – by Canadian operators; hardly solid ground for significant expansion. This forces the question, is a 737-only fleet still the right fit? Is it time to add a second, smaller aircraft type to address secondary markets or perhaps a bigger aircraft type to deliver capacity to proven markets or even go long haul? While both of these possibilities hold some merit I think WestJet will take the softly, softly approach of making small adjustments throughout their network while trying to drive new traffic to their hubs through codeshares.
New technology, new possibilities.
Despite some teething problems and short term pain the process of transitioning to the SabreSonic reservation system is complete. This leaves WestJet free to start code sharing at will and their memorandum of understanding with Air France/KLM seems to indicate that codeshares are the way forward. Let’s just hope that these are implemented more effectively and with more urgency than has been the case with the great Southwest “codeshare.” It is important to understand that cozying up to Air France/KLM is not necessarily an indication that full SkyTeam ascension is in order. OneWorld offers more enticing possibilities: deeper and broader global coverage as well as more direct flights to Canada from points of interest. Given that Canada has a significant (and growing) immigrant population the value of this reach should not be underestimated. With all of that said it is important to stay in touch with reality, after all this is a real life business not a game of Risk – an alliance membership is not going to allow WestJet to take over the world. In all likelihood WestJet will pick and choose codeshare partners with a view to getting more people to enter Canada through their gateways of choice while remaining alliance-agnostic.
Victims of their own success.
In terms of domestic market share, WestJet is gaining ground on AC. Fast. Their domestic market share at the end of December 09 was revealed to be approximately 38% (up 2% from 08) versus Air Canada’s 55% (down 2% from 08). WestJet have stated that they believe they can replace Air Canada as the largest domestic operation within the next five years. While this is a possibility I would say that it is going to be incredibly difficult without serving smaller communities – communities that cannot currently be served profitably with a 737 of any flavor. Back to the single aircraft type problem we go, perhaps this will see the birth of a subsidiary – WestJet Jazz perhaps?
Despite a well oiled, on-the-ball PR and Marketing arm WestJet is not the media darling it once was. This just comes with the territory. The bigger you get the more detractors you attract. Throw in some corporate espionage stories and some bad blood with former employees and the “we care” corporate facade suddenly takes a back seat. Certainly in eastern Canada WestJet is no longer viewed as the little airline that could. That moniker has now been passed on to Porter, who recently pushed WestJet out of the number two spot in the Toronto-Ottawa-Montreal triangle. No prizes for guessing who sits at number one.
If WestJet play their cards right we may see some serious upheaval and reshaping of the Canadian aviation scene. Now if only the federal government would make running an airline in this country less of a financial nightmare, things could get really interesting.
