WestJet sets sights on Air Canada’s business travel
is taking its battle against into the business traveller market, a segment long dominated by the Calgarybased airline’s larger and older rival.
WestJet commands 37 per cent of the domestic market, but captures just 23 per cent of business travellers, Gregg Saretsky, the airline’s chief executive officer, told a transportation conference Tuesday in Toronto.
“The gap, if you will, between our fair share at 37 and where we are at 23 represents a sizable revenue upside,” Mr. Saretsky said.
The increased focus on business travellers includes WestJet building nine lounges during the next 18 months at airports in Calgary, Vancouver and Toronto that will replace those now operated by third parties. They will be managed by WestJet employees and carry the WestJet brand.
The airline’s latest schedule offers 45 per cent more connecting opportunities at those three airports, which will make WestJet more attractive to business travellers, Mr. Saretsky said.
Starting on Wednesday, the carrier will upgrade its Plus service from premium economy to “something closer to business class, but priced at the premium economy price,” he said.
“We’re building a lot of capacity and taking WestJet slightly upmarket, which comes with some cost headwind to it, but there’s a tremendous revenue upside,” Mr. Saretsky said.
The growth of international services through the purchase of widebodied Boeing 787s will also play into the business-class strategy.
Frequent business travellers want to redeem the rewards they have earned flying around North America in international markets, Mr. Saretsky said.
He made his comments after Air Canada chief financial officer Michael Rousseau described Air Canada’s lounges as one of the larger carrier’s competitive advantages when it comes to attracting international and business travellers.
“We’re not going to underestimate WestJet,” Mr. Rousseau said, adding that Air Canada also gains from being part of the Star Alliance international network and by having premium slot times at international airports.
“People don’t want to arrive in Beijing at 12 o’clock at night,” he said.
WestJet’s move to capture more well-heeled passengers comes at the same time as it tries to attract those seeking bargain fares with its Swoop ultralow-cost carrier (ULCC), which is scheduled to begin operating next year.
Mr. Saretsky said that when ULCC Flair Air announced service to Phoenix, WestJet followed suit, and did the same thing when Flair began offering flights between Winnipeg and Kelowna, B.C.
“We’re not going to let somebody else come in and take a chunk of the market without having to fight us for it,” he said.
The fight will ramp up in the middle of 2018 when Swoop starts service and Canada Jetlines Ltd., another ULCC, begins flights out of Abbotsford, B.C., and Hamilton.
Mr. Saretsky said that, historically, Canada has had room for 2.5 airlines. With one ULCC already operating and two seeking startup money, “that’s about two and a half more than the country can support,” he said. Air Canada (AC) Close: $23.02, up 48¢ WestJet (WJA) Close: $25.72, down 4¢
WestJet is also targeting the bargain-fare segment with its new Swoop service scheduled to begin in the middle of 2018.