WestJet flies into Air Canada space
New 767s will make flights to United Kingdom
WestJet Airlines Ltd. will begin flying to London, U.K., next spring, going head-tohead with Air Canada in a market the latter has dominated for decades.
The Calgary-based airline released few details of its plans Tuesday except to say that London’s Gatwick Airport will be the first transatlantic destination for its new, longer-range Boeing 767-300 aircraft.
WestJet has not yet decided which Canadian cities it will fly out of, but an executive hinted that it’s looking at smaller markets.
“If you go from some smaller centres — let’s say the fourth through the seventh or eighth largest cities in Canada — you would get a big stimulation factor from having a nonstop flight to London,” Bob Cummings, WestJet’s executive vice-president for commercial operations, said in an interview. “We’ve always had good success with the smaller centres.”
Cummings also said travellers should expect lower fares — at least at first.
“I encourage consumers to wait and they will be pleasantly surprised by how affordable it is when we introduce service, in particular the introductory fares we put in the market,” he said.
WestJet’s new fleet of four 767s, the first of which will be delivered “within a couple weeks,” can fly significantly farther than its 737s and will allow the airline to expand deeper into Europe if it chooses.
Calgary-based aviation consultant Rick Erickson called the foray “bold,” but said Air Canada doesn’t have much to worry about from its competitor.
“Air Canada is a much bigger player than WestJet can ever hope to be because they’ve been at it for 50 to 60 years,” Erickson said in an interview. “WestJet is a long, long ways behind.”
Air Canada offers 11 flights a day to London Heathrow from eight Canadian cities.
Expansion into such a mature, competitive market comes with “lots of execution risk,” said Ben Cherniavsky, analyst at Raymond James.
“In the near term, these threats to Air Canada’s incumbent position always elicit a fierce response, which lowers returns for the industry at large,” Cherniavsky wrote in an analysis.
“In short, this just adds to the capacity imbalance that we believe is plaguing the Canadian market.”
However, he believes WestJet will ultimately succeed thanks to its “superior balance sheet and profit margins.”
“This is another market-share battle that we expect the airline will win over time, as it has in almost every market that it has contested,” Cherniavsky said.
To date, WestJet has only dipped a cautious toe into the transatlantic market with flights from St. John’s to Dublin and Halifax to Glasgow, both of which can be served by the shorter-range 737.
Robert Kokonis, president and managing director of aviation consultancy AirTrav Inc., said he expects the airline to continue with its prudent approach, possibly evaluating other “Main Street Europe” markets like Paris and Frankfurt next.
“WestJet’s been taking on long-haul (routes) on a piecemeal, incremental basis, moving a step forward on the chess board and seeing the response of the market,” Kokonis said.
“(Their success) all depends whether the WestJet brand is capable of capturing sufficient market share at an adequate price. I believe they’ve got as good a chance as anybody.”
“Air Canada is a much bigger player than WestJet can ever hope to be because they’ve been at it for 50 to 60 years.
RICK ERICKSON
AVIATION CONSULTANT