Westjet introduces premium economy
WestJet will offer its passengers more leg room — at an additional cost — with the introduction of new premium economy seating.
The new seating plan — which will also come with priority boarding and complimentary on-board amenities — was revealed Wednesday by CEO Gregg Saretsky during a conference call with analysts.
Starting this month, the Calgary-based carrier will reconfigure its entire fleet of Boeing 737s, adding four new rows of premium seating with 36 inches of “pitch” (an industry term describing the distance from seatback to seatback in an aircraft).
The change will result in a little less space in some other seats as the pitch for regular economy fares is standardized to 31 or 32 inches, “well within North American standards,” Saretsky said. On some of the airline’s planes, such as the 800-series, the average pitch is now 34 inches.
“I don’t expect our guests to feel any impact from that reconfiguration, but we’ll certainly see the revenue benefits,” he said.
Tightening up the seat space will allow the airline to add eight extra seats on its 800-series aircraft, and passengers will still have the same amount of legroom as they currently have on a 600- or 700-series plane, Saretsky said.
David Newhan, an analyst with Cormark Securities Inc., said the move makes sense for WestJet, which will have more seats overall by the time the project is complete. WestJet has indicated all of its planes will be reconfigured by December and pricing will be announced later this year.
“From a capacity point of view, they’re going to be getting more revenue out of the cabins,” Newman said, adding the move also helps WestJet appeal to a corporate clientele. “I think it’s something that’s demanded by their business customers. They’ve had to respond to that market, or they’re going to give up a revenue opportunity.”
WestJet has had a single, economy-class cabin since it was founded in 1996. WestJet spokesperson Jennifer Sanford said the airline is introducing a new seating product, not a new class of service.
‘We will continue to appeal to families and leisure travellers while recognizing that there are many business travellers looking to fly with WestJet who are looking for a few more features and amenities,” Sanford said. ‘We believe this new product will appeal to upscale leisure travelers too.”
Gayle White, owner of Sundial Travel in Calgary, said the move will bring WestJet in line with most charter air services, which already offer premium seats with extra legroom. However, White said she thinks the company is trying so hard to attract business travellers that it’s losing its grip on its niche market.
“WestJet has fallen away from their low-cost carrier (reputation) for a number of years. They’re playing the Air Canada game, rather than playing their own game,” White said.
Also on Wednesday, WestJet announced a second quarter net earnings record of $42.5 million, or $0.31 per diluted share, up from the previous second quarter earnings record of $25.6 million set in 2011. Revenue was up nine per cent from the same time last year, rising to $809.3 million from $742.3 million. The airline also declared an increase to its quarterly dividend from six cents to eight cents a share.
Saretsky said the company remains on track for the launch of its new regional airline in the second half of 2013. The airline will compete with Air Canada in the country’s smaller markets.
The airline has orders for 20 of Bombardier’s Q400 NextGen turboprop aircraft, with seven to be delivered in 2013 and the remainder to be delivered in stages through 2016. WestJet also has options to buy up to 25 additional Q400 aircraft. Saretsky said WestJet has begun to fill the first of 1,800 new jobs for the new regional service and that some destinations should be announced in early 2013. Shares in WestJet closed down 59 cents, or 3.6 per cent, to $15.99 in Wednesday trading on the Toronto Stock Exchange.