WestJet sets sights on Air Canada’s busi­ness travel

The Globe and Mail (Ottawa/Quebec Edition) - - REPORT ON BUSINESS - GREG KEENAN

WestJet Air­lines Ltd. is tak­ing its bat­tle against Air Canada 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¢

DAR­RYL DYCK/THE CANA­DIAN PRESS

WestJet is also tar­get­ing the bar­gain-fare seg­ment with its new Swoop ser­vice sched­uled to be­gin in the mid­dle of 2018.

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