HIGH STAKES
WestJet CEO Gregg Saretsky discusses fuel surcharges, European expansion and the Porter Airlines rumours,
WestJet Airlines CEO Gregg Saretsky sat down with the Star Wednesday. We asked him about the fuel surcharge, WestJet’s European expansion plans and rumours that Porter Airlines is for sale. WestJet is marking its 20th year in business. Here’s a condensed version of the conversation:
With a dramatic fall in oil prices, why aren’t fares falling?
People need to understand we buy fuel in U.S. dollars (and) our aircraft maintenance and our new planes are all priced in U.S. dollars. That’s the disconnect: Consumers say, ‘Oil prices are low, and I get the savings when I go to the pump to fill up my car. Why aren’t we seeing the same discounts on airfares?’ We have to make a profit and a lot of our input costs aren’t going down. There are some bargains to be had with our seat sales. We are discounting. We are enticing travellers through discounted airfares.
Although Porter Airlines has denied rumours it’s for sale, if it was, would WestJet be interested?
We are not interested. Porter has taken almost all the slots (at the island airport). Much of what Porter is doing at the island airport is better served by ourselves through Pearson. When we go into Timmins, Sudbury, Windsor — the traffic will carry through Pearson, going to the Caribbean, Mexico, western Canada. There are probably a handful of markets that are suited to the downtown business community — places like New York, Boston, maybe Chicago, Ottawa and Montreal. But would you buy an airline that has 27 planes, serving 27 markets, or something like, to get access to the five you think could actually be accretive? It’s a pretty big stretch.
Did you seek slots at the island airport?
Only when runway expansion was on the table. If the runway was being expanded then we could operate jets there ourselves. We would be very interested in that.
WestJet is expanding with wide-body 767 service to London’s Gatwick Airport this year. Why?
The London bookings are very encouraging. For us, it portends a plank for future growth, not only in other European geographies but elsewhere around the globe. But as we did in the past, we will do here, cautiously, carefully and conservatively. It has to make money or we won’t expand it. It’s a good way to put our toe in the water, and test our ability to make money in these long-haul markets. We are hiring for flight attendants, and requiring second languages. We are looking for Mandarin, Cantonese, Portuguese, Italian, German, Spanish and French. We are building the capability to do whatever.
Did WestJet ever consider Bombardier’s CSeries jet?
They have tried to sell it to us and we have had high-level conversations about why it doesn’t fit with our mission. But, it’s a great plane.
Ottawa is considering helping Bombardier. Should it?
As a proud Canadian, this is the last vestige of our aerospace industry. I would hate to see the aerospace sector go down. Are they close to securing a big order in the Middle East or in a developing market like Russia? If they are, then the feds should step in because they probably need a bridge to get there. If the order truly is no greater than the 250 they have, and there are no real prospects for anything more, it’s the decision the feds have to make.
With falling demand in Alberta are you shrinking your fleet?
We have an agreement with Boeing to defer three deliveries. We are going to return three leased aircraft in 2016 and all six in 2017. We have 24 Bombardier Q400s, with nine more coming this year, and three more in 2017. We have engaged Bombardier about potentially deferring some of those deliveries, but we are contractually committed. It would cause more hardship on them than us.