WestJet’s addition of larger planes will extend its range
WestJet Airlines Ltd. is moving further from its roots as a lowcost carrier, with plans to add wide-body planes to its fleet — a move that will allow it to expand overseas, putting it in closer competition with Air Canada at a time when Canada’s largest airline is flying fuller planes than ever before.
WestJet says it will introduce the larger planes in the fall of 2015. It announced plans to bulk up its fleet with wide-body jets at an investor presentation in late 2012.
The decision marks WestJet’s first foray into flying more than one model of plane (its current fleet of Boeing 737s limits its range). WestJet’s only transatlantic route is St. John’s, N.L., to Dublin, which is about the same flying time as Toronto to Vancouver.
Adding another plane model to an airline’s fleet brings additional costs for maintenance and pilot training, but WestJet executive Bob Cummings said the airline will remain “zealous on our costs.”
The new planes will initially be used to fly between Alberta and Hawaii before WestJet rolls them out on other international routes. WestJet will announce more details, including the aircraft model, by the end of the month.
“In the spring and summer of 2016 we will be deploying into Europe and other opportunities,” Cummings, WestJet’s executive vice-president of sales and marketing, said.
He said demand on the St. John’s-Dublin route has so far “exceeded expectations,” giving the airline confidence it can expand to other European destinations.
It’s a far cry from the early days of WestJet, when a recorded message would ask travellers, “Are you hoping to book a flight to the U.S. of A.? Sorry, WestJet doesn’t fly there.”
Canaccord Genuity analyst David Tyerman said he expects WestJet to take a “prudent approach” to its overseas expansion plans.
“(This) suggests a systematic rollout in regions they have some exposure to. Dublin would seem possible, and the U.K. is obviously close to that,” he said.
The news comes as Air Canada reported a record load factor — the average fullness of planes — of 85.7 per cent for the month of June, up 0.7 percentage points from a year earlier. This was despite 9.8 per cent capacity growth.
Meanwhile, WestJet reported a June load factor of 77.4 per cent, up 0.6 percentage points year over year. This was alongside 4.3 per cent growth in capacity as WestJet continues to roll out its Encore regional service.
“We have not seen such strong year-over-year traffic growth being absorbed so well in some time, which bodes incredibly well for the upcoming summer travel season as well as for winter 2014/2015 bookings,” AltaCorp analyst Chris Murray wrote in a note.
With new capacity, Morningstar senior equity analyst Neal Dihora wonders if airlines have been cutting fares to boost traffic.
“I think the entire industry is experiencing strong traffic. Bookings were strong in North America following the difficult winter, and people were looking to get away,” Dihora said.
But fares have been relatively steady, reports a new BMO index that tracks Canadian airline yields — revenue generated per passenger.