WESTJET SAYS ALOHA TO NEW STRATEGY

HAWAII ROUTE JUST A START

WestJet Airlines Ltd. has taken a tentative first step into the high-margin international travel market dominated by rival Air Canada, announcing yesterday it will add two Hawaiian Islands to its list of leisure destinations.

The Calgary-based airline said it will immediately begin selling tickets for a five-flights-a-week service between Vancouver, Honolulu and Maui that begins Dec. 9. Air Canada and Harmony Airways already offer scheduled service to Hawaii from Canada.

“ It’s a good market for WestJet to enter,” said David Newman, an analyst at National Bank Financial. “It adds to their suite of tropical and leisure destinations.”

The addition of Hawaii to WestJet’s network marks another milestone for the low-cost airline, which began flying in Western Canada in 1996. WestJet, which recently received certification to fly its twin-engine Boeing 737 jets over open water, has since grown to become a national air carrier with a 30% share of the domestic market and an expanding transborder network.

Clive Beddoe, WestJet’s CEO, told delegates at an industry conference in Toronto yesterday that the airline will explore further opportunities in international markets, noting that some of WestJet’s planes are capable of flying to England from Halifax or even Toronto.

“I think it’s something that could happen,” Mr. Beddoe said. “But it would probably be on a more seasonal basis, as opposed to a year-round basis.”

Despite a tough year characterized by soaring jet fuel prices and the negative impact of former discount carrier Jetsgo, Mr. Beddoe said WestJet is on course to post a profit in the third quarter and is in the midst of implementing several key business strategies.

They include a new reservation system which, by early next year, will allow WestJet to form alliances with other air carriers and offer codeshare and interline flights. (Codesharing occurs when two partner airlines sell tickets for the same flight. Interlining is when a passenger’s trip includes connections on aircraft operated by other airlines.)

Noting that as much as 10% to 15% of Air Canada’s traffic comes from its Star Alliance Partners around the world, National Bank’s Mr. Newman said an alliance with a low cost U.S. carrier such as JetBlue Airways or Southwest Airlines, or an international carrier such as Cathay Pacific Airways, could help drive more traffic onto WestJet’s network.

But not everybody is convinced that WestJet’s future lies in overseas flying or partnerships.

Steve Garmaise, an analyst at Genuity Capital, said the absence of a business class service on WestJet’s flights means it probably won’t enjoy the high margins of other air carriers on overseas routes. As well, he cautioned that alliances and other co-operative agreements are often complicated and could erode WestJet’s low cost structure.

Financial Post

csorensen@ nationalpost. com WESTJET AIRLINES LTD.

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