WestJet expected to raise fares to offset fuel

Airline passengers should expect to face higher fares later this year to compensate for rising fuel costs that contributed to WestJet Airlines posting its first quarterly loss in 13 years, its chief executive said Tuesday.

“I think this is the way guests now need to think is that airfares will be rising just as they did back in 2010, 2011 when we had the last major fare spike,” Ed Sims said in an interview.

The increases will likely be felt this fall after the negative effects on demand from a threatened pilots strike dissipate.

“We firmly believe that by the time we get to late September, October we’ll start to see more of those fare increases sticking and more guests understanding that we are passing on the cost of the fuel increase.”

Even though the second-quarter results beat analyst expectations, Sims conceded they were “disappointing” and that its 2018 results are “off track.”

“We are now operating in a very different fuel and competitive environment,” he said during a conference call.

The Calgary-based airline said it was forced to offer discounts that partially offset five fare increases this year to stimulate travel and restore passenger confidence.

“To build flow-on benefits like ancillary revenues, we had to be aggressive both to recover those guests who would otherwise have booked away or booked with a competitor but also to compete with this almost unprecedented level of peak season capacity,” Sims added.

The threat of the strike wiped out tens of millions of dollars in profit in the second quarter that pushed the airline to break a 52-quarter streak of profitability, chief financial officer Harry Taylor said in a conference call.

“We start rebuilding from today,” Sims said in an interview. “I think when any sports team breaks their winning streak their first focus is how do you rebuild that streak.”