WestJet launch­ing no-frills air­line

Times Colonist - - Business -

CAL­GARY — WestJet Air­lines will launch a new dis­count car­rier this year in a bid to of­fer trav­ellers a no-frills, low-cost op­tion, the com­pany said Thurs­day.

Chief ex­ec­u­tive Gregg Saret­sky said the air­line in­dus­try has changed since the com­pany be­gan fly­ing in 1996.

“The com­plete un­bundling of ser­vices and prod­ucts in or­der to lower fares for the price-sen­si­tive traveller has cre­ated the ULCC [ul­tra-low-cost car­rier] cat­e­gory,” he said in a state­ment.

“Our new air­line will pro­vide Cana­di­ans a pro-com­pet­i­tive, cheap and cheer­ful fly­ing ex­pe­ri­ence from a com­pany with a proven track record.”

Since WestJet started as a dis­count car­rier with three air­craft in Western Canada, air­lines have started charg­ing for such things as checked bag­gage and meals on flights.

But ul­tra-low-cost car­ri­ers take it a step fur­ther. No-frill air­lines typ­i­cally of­fer cheaper tick­ets by adding seats to their planes — which re­duces legroom — and also charge ex­tra for nearly ev­ery­thing, in­clud­ing print­ing your board­ing pass at the air­port, as well as snacks and non-al­co­holic drinks.

WestJet did not re­veal any pric­ing details for its new of­fer­ing or where it plans to fly, but said the yet-to-be-named car­rier will be us­ing “high-den­sity” air­craft.

The air­line also said the new car­rier is sub­ject to agree­ment with its pi­lots and any re­quired reg­u­la­tory ap­provals.

The an­nounce­ment came the same day that the Air Line Pi­lots As­so­ci­a­tion In­ter­na­tional an­nounced that WestJet’s pi­lots filed mem­ber­ship cards with the Canada In­dus­trial Re­la­tions Board seek­ing a vote to form a union, some­thing they re­jected in a 2015 vote.

The as­so­ci­a­tion said it ex­pects a se­cret-bal­lot elec­tion will be held in May af­ter the board ver­i­fies the mem­ber­ship cards.

Al­taCorp Cap­i­tal an­a­lyst Chris Mur­ray said the launch of a so­called flanker brand com­pli­cates the plans of others look­ing to start an ul­tra-low cost car­rier in Canada and pro­tects WestJet from mar­ket ero­sion.

“His­tor­i­cally, other ULCCs, in­clud­ing Spirit Air­lines and Ryanair, have gen­er­ated aboveav­er­age re­turns in their mar­kets and we be­lieve WestJet could see sim­i­lar re­turns,” Mur­ray said.

How­ever, Mur­ray noted sev­eral details re­main un­known, in­clud­ing how the air­line will be struc­tured and its plans for growth.

Na­tional Bank an­a­lyst Cameron Do­erk­sen said the new air­line can be suc­cess­ful only if WestJet is able to ne­go­ti­ate lower labour costs with the crews who will work in the flights.

“We also be­lieve the ULCC may can­ni­bal­ize some cur­rent traf­fic on WestJet’s main­line,” Do­erk­sen said. “Fi­nally, we are con­cerned WestJet has too many new strate­gic ini­tia­tives un­der­way si­mul­ta­ne­ously, in­clud­ing a ma­jor ex­pan­sion of its wide­body in­ter­na­tional routes.”

Air Canada launched its dis­count brand Rouge with flights in 2013 ser­vic­ing Europe and the Caribbean. The ser­vice has grown to add des­ti­na­tions within Canada, Mex­ico, the U.S., South Amer­ica, Cen­tral Amer­ica, Africa and Asia.

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