Westjet 2010 and beyond

[tonysoprano]

Baby hops,,er crawls, err wazit burps?....no, no, steps, I think. Ya that's it, baby steps, man.
Go Sens Go.

[yycflyguy]

Our main focus will continue to be expanding into the US and Carribean. Look for three more Carribean destinations to be announced for this winter... as scheduled service.

It's inevitable that WJ will go bigger. Canada, the US, and the Carribean is only so big and we're eventually going to want to branch out further.

Westjet does not fly to the Caribbean. The Bahamas are in the Atlantic. Time to bust out that map that goes further east than Winnipeg...

[flyinphil]

While we are being children, how about a little geography lesson.

The Caribbean Islands are not named for inclusion within the Caribbean Sea. They are classified "Caribbean" as the are within the Caribbean Basin.


The Bahamas are part of the Caribbean Basin.

[WJ700]

So another way to look at this is that WestJet does have major room for transborder expansion. Kinda' like what every airline anayst is saying too.

It will be impossible for WJ to fully compete with AC on transborder unless they start partnering up with some US carriers. AC has USair and United to feed the AC transborder.... WJ has no one. Sure it works out fine for WJ flying to nice sunny destinations(Florida, SOCAL) to fly canadians down for vacation, that market is only so big. Americans will continue to choose AC as their primary transborder carrier because of the connections they have set up in the US.
WJ needs to find a partner to be able to enter this market. Im sure American, Delta, NWA would jump at the oppritunity.... but I highly doubt that they would let WJ do the transborder flying, they would simpy use WJ as a connecter in Canada and handle the transborder themselves

With WestJet posting the double digit margins and the likes of BA, SWA, and JBlue all visitng the head office asking 'how'? I think WestJet plans to stick to its organic growth plans one route at a time. Hawaii just went to 11 flights per week for this coming Novemeber, I'll bet it hits 14 per week within a year; it's only a matter of time and how fast they can get airplanes. OneWorld has been begging and WestJet has been setting the terms. With another 10 airplanes showing up over this summer... where do you think they'll go next winter. Times are good, and when an airline is consistantly posting double digit margins, they're not making too many mistakes in the WestJet Headshed.

[invertedattitude]

While we are being children, how about a little geography lesson.

The Caribbean Islands are not named for inclusion within the Caribbean Sea. They are classified "Caribbean" as the are within the Caribbean Basin.


The Bahamas are part of the Caribbean Basin.

Good, well in 3 hours and fifteen minutes, im off to the Caribbean then

[wingtip]

Good, well in 3 hours and fifteen minutes, im off to the Caribbean then

Avcanada's average IQ will plummet in your absence.

[linebacker35]

With WestJet posting the double digit margins and the likes of BA, SWA, and JBlue all visitng the head office asking 'how'? I think WestJet plans to stick to its organic growth plans one route at a time. Hawaii just went to 11 flights per week for this coming Novemeber, I'll bet it hits 14 per week within a year; it's only a matter of time and how fast they can get airplanes. OneWorld has been begging and WestJet has been setting the terms. With another 10 airplanes showing up over this summer... where do you think they'll go next winter. Times are good, and when an airline is consistantly posting double digit margins, they're not making too many mistakes in the WestJet Headshed.

Im sure that grandfarther of Low Cost Carriers and arguably the most profitable airline of all time Southwest looks on Westjet with envy
Are you forgeting that WJ was the one that looked to Southwest requested their help and coppied their business plan? If you havnt noticed almost every major LCC has looked to SW.....

Like I said before I have no doubt that WJ will continue to grow in sun destination transborder, to fly canadians on vacation. But WJ has virtualy no "true" transborder service, the vacation destination market can only grow so much more there are only so many canadians that want to go get a tan. You even said it "comming November" "next winter" , exactly my point Westjet transborder is heavily seasonal vacation travel....

As for one world, I know they want westjet in(tho I highly doubt WJ would be setting the terms with the likes of American or BA), But do you honestly think that American would automaticaly say here take over all our transborder service to Westjet? No they wouldnt, they would use WJ to feed canadian passengers into Vancouver, Calgary, Toronto, Montreal so American can fly the transborder out of those cities!

ps. APA(pilot union for American) would fight to keep WJ out of any partnership(oneworld). They are fighting tooth and nail down in the states to get good contracts, and they really dislike NON UNION low cost carriers that have ruined their contracts.....

[tonysoprano]

With WestJet posting the double digit margins and the likes of BA, SWA, and JBlue all visitng the head office asking 'how'?

Could it be all this success is getting to their heads? Huh? You think? Naaa. These guys are the Gawds of cool. Funny thing is, nobody sees the arrogance unless it's an AC thread. Sorry, I just can't help it.

[Flightlevels]

With WestJet posting the double digit margins and the likes of BA, SWA, and JBlue all visitng the head office asking 'how'? I think WestJet plans to stick to its organic growth plans one route at a time. Hawaii just went to 11 flights per week for this coming Novemeber, I'll bet it hits 14 per week within a year; it's only a matter of time and how fast they can get airplanes. OneWorld has been begging and WestJet has been setting the terms. With another 10 airplanes showing up over this summer... where do you think they'll go next winter. Times are good, and when an airline is consistantly posting double digit margins, they're not making too many mistakes in the WestJet Headshed.

Im sure that grandfarther of Low Cost Carriers and arguably the most profitable airline of all time Southwest looks on Westjet with envy
Are you forgeting that WJ was the one that looked to Southwest requested their help and coppied their business plan? If you havnt noticed almost every major LCC has looked to SW.....

Like I said before I have no doubt that WJ will continue to grow in sun destination transborder, to fly canadians on vacation. But WJ has virtualy no "true" transborder service, the vacation destination market can only grow so much more there are only so many canadians that want to go get a tan. You even said it "comming November" "next winter" , exactly my point Westjet transborder is heavily seasonal vacation travel....

As for one world, I know they want westjet in(tho I highly doubt WJ would be setting the terms with the likes of American or BA), But do you honestly think that American would automaticaly say here take over all our transborder service to Westjet? No they wouldnt, they would use WJ to feed canadian passengers into Vancouver, Calgary, Toronto, Montreal so American can fly the transborder out of those cities!

ps. APA(pilot union for American) would fight to keep WJ out of any partnership(oneworld). They are fighting tooth and nail down in the states to get good contracts, and they really dislike NON UNION low cost carriers that have ruined their contracts.....

we're only 11 yrs old. That's a pretty young airline. Lot's o growth yet. I for one can attest to one world too. American is the least interest of WJ...now how about the likes of Frontier and Jet blue coupled with a res system that can now tap the likes of expedia or orbitz in the states not to mention open skies...ie YYC to LAX then on to Mexico...cool eh?. BA would love the feed to Europe as would Cathay to Asia. exciting times ahead. It's been awsome to work here and a pleasure...love the proactive management too...always looking at opportunities...gulp gulp...lol. I personally have allot to thank the employees and WJ for what I have achieved in life.

[Flightlevels]

With WestJet posting the double digit margins and the likes of BA, SWA, and JBlue all visitng the head office asking 'how'? I think WestJet plans to stick to its organic growth plans one route at a time. Hawaii just went to 11 flights per week for this coming Novemeber, I'll bet it hits 14 per week within a year; it's only a matter of time and how fast they can get airplanes. OneWorld has been begging and WestJet has been setting the terms. With another 10 airplanes showing up over this summer... where do you think they'll go next winter. Times are good, and when an airline is consistantly posting double digit margins, they're not making too many mistakes in the WestJet Headshed.

Im sure that grandfarther of Low Cost Carriers and arguably the most profitable airline of all time Southwest looks on Westjet with envy
Are you forgeting that WJ was the one that looked to Southwest requested their help and coppied their business plan? If you havnt noticed almost every major LCC has looked to SW.....

Like I said before I have no doubt that WJ will continue to grow in sun destination transborder, to fly canadians on vacation. But WJ has virtualy no "true" transborder service, the vacation destination market can only grow so much more there are only so many canadians that want to go get a tan. You even said it "comming November" "next winter" , exactly my point Westjet transborder is heavily seasonal vacation travel....

As for one world, I know they want westjet in(tho I highly doubt WJ would be setting the terms with the likes of American or BA), But do you honestly think that American would automaticaly say here take over all our transborder service to Westjet? No they wouldnt, they would use WJ to feed canadian passengers into Vancouver, Calgary, Toronto, Montreal so American can fly the transborder out of those cities!

ps. APA(pilot union for American) would fight to keep WJ out of any partnership(oneworld). They are fighting tooth and nail down in the states to get good contracts, and they really dislike NON UNION low cost carriers that have ruined their contracts.....

we're only 11 yrs old. That's a pretty young airline. Lot's o growth yet. I for one can attest to one world too. American is the least interest of WJ...now how about the likes of Frontier and Jet blue coupled with a res system that can now tap the likes of expedia or orbitz in the states not to mention open skies...ie YYC to LAX then on to Mexico...cool eh?. BA would love the feed to Europe as would Cathay to Asia. exciting times ahead. It's been awsome to work here and a pleasure...love the proactive management too...always looking at opportunities...gulp gulp...lol. I personally have allot to thank the employees and WJ for what I have achieved in life.

[tonysoprano]

I agree there's still lots of room for growth for WJ. Especially the transborder market. To that end, there will be lots of competition, not just Jazz/AC. New agreements between nations will mean exciting times for us all. Canadian carriers will have an advantage because we provide a superior product compared to American companies. Still, we will be heavily outnumbered. I think the charter business will be the one to watch. WJ seems to be doing well in that department and still lots of room to grow there.

[Four1oh]

With WestJet posting the double digit margins and the likes of BA, SWA, and JBlue all visitng the head office asking 'how'?

Could it be all this success is getting to their heads? Huh? You think? Naaa. These guys are the Gawds of cool. Funny thing is, nobody sees the arrogance unless it's an AC thread. Sorry, I just can't help it.

I think you're mistaking pride for arrogance.

[tonysoprano]

I think you're mistaking pride for arrogance.

Good one, buddy. I'll have to remember that one.

[linebacker35]

Ive never seen an article about how wonderful Westjet is in USA today. I heard lots of people say that many airlines look to Westjet..... anyone care to back that up?
Well here is proof that AC is a respectable international carrier

http://www.usatoday.com/money/industrie ... usat_N.htm

[Flightlevels]

Linebacker, I don't think the title of the thread is if AC was respectable in the US, so I'm not sure of your point here by the article. going forward from 2010 the business plan has yet to be known. WJ doesn't have the resourses or 70 yrs to build those of AC if you are baiting to go down that road. Your thoughts make me chuckle from my view, but hey it's free speech and you have no clue of our internal workings.

[linebacker35]

Linebacker, I don't think the title of the thread is if AC was respectable in the US, so I'm not sure of your point here by the article. going forward from 2010 the business plan has yet to be known. WJ doesn't have the resourses or 70 yrs to build those of AC if you are baiting to go down that road. Your thoughts make me chuckle from my view, but hey it's free speech and you have no clue of our internal workings.

I was not trying to bait, earlier in this thread WJ700 had said "With WestJet posting the double digit margins and the likes of BA, SWA, and JBlue all visitng the head office asking 'how'? " as well as I have heard other comments in the thread about how everyone looks to WJ..... I was just simply responding to that

[WJ200]

Im sure that grandfarther of Low Cost Carriers and arguably the most profitable airline of all time Southwest looks on Westjet with envy

While posting profit margins of about 4% while fully hedged isn't exactly stellar lately. When 2008/09 rolls around and the fuel hedge disappears, I'm sure you'll see SW visiting WJ and Ryanair wondering how it's done. Just because you copy a model doesn't mean it never changes.

[bmc]

Interesting comments, Tony, about superior product that I'll touch on later.

For the business traveller, historically affinity program has been the leading criteria for carrier selection, followed by network, schedule, and price. Increasingly over time, you're seeing more and more neck ties on low cost flights, which is challenging the traditional business airline of choice.

If WJ remains true to the LLC model, they'll focus on underserved point to point markets and grow them with price. Going head to head with US carriers into big hubs is a challenge of not crazy. No beyond flow, brand strength or network to compete with.

Personally, I think controlled growth into the USA is on the cards, serving markets that US carriers could not justify deploying equipment. I believe that providing connecting service to CX, BA and JL is wise. Given that they have no alternatives, unless using AS our of SEA, I think WJ can ask for favourable prorates on the YEG-YVR/YYC, YYC-YVR/YYJ and YWG-YEG/YYC/YYZ. No real need to pay the high cost of joining an alliance to get that business.

My roll of the dice doesn't see long haul widebody in the equation. Too much life in the air today to go against. Furthermore, the long haul European routes are mostly seasonal and add questionable value to the network. Furthermore, the inflight product would have to be improved for 9 hour journeys. I can't see it. I can't really see taking a BBJ long range across the pond as desirable against B744, A340 and the A380 when AF puts it on YMQ.

I think WJ is a fine airline doing a fine job. I think they'll do well if they don't get suckered into changing their model.

My $.02

[tonysoprano]

bmc.
As for the superior product comment, I can't refer to any official info other than what I hear from our American customers that I chat with as well as other comments from industry prople. I understand some American carriers don't even provide a hot meal going to europe. Wow.

[bmc]

bmc.
As for the superior product comment, I can't refer to any official info other than what I hear from our American customers that I chat with as well as other comments from industry prople. I understand some American carriers don't even provide a hot meal going to europe. Wow.

You are very accurate in that. US carriers give you a stunned look when you ask if they'll serve breakfast on a 0700am flight. With that in mind, if the US market is accustomed to no food, why incur the expense to offer it yourselves?

[tonysoprano]

bmc.
AC has cut back on meal services. I believe on flts 2-4 hrs it's buy-on-board and more than 4 hrs you get a hot meal. Of course that's economy. Business class always gets fed. The quality has deteriorated so AC must be paying less for these meals. Beyond 2010 I think service will be just as important as equipment and routes. I think both WJ and AC customers still enjoy better service and that might give us the edge down the line.
I recently flew on Lufthansa on a short flt-2 hrs. and I can tell you the meal and service was quite good. Not bad for post 9-11. As a customer, that would be a deciding factor for me as to who I choose to fly with.
Also important will be alliances with other carriers. To that end, I think you already know where AC stands.

[bmc]

Tony

Alliances are an interesting beast. As much as the benefits of sychronized hubs/slots/etc, they are big cost items. Star members recently downsized the FRA office a little bit in the past twelve months. Seems there's less interest in Star projects as they take too long and cost too much.

Smart carriers should focus on their 3rd and 4th freedom markets for intl carriers (or their domestic point to point) first and foremost. Fly it as cheaply as you can. Under utilized airports, high daily utilization of equipment, cheap internet distribution bypassing agents, and agressive pricing. Adding interlining adds extra bodies to process and often reduced yield as it's prorated across multiple sectors.

My first vote is to go it alone and do it well, do it smart. Grow the market stealing share and stealing traffic off the roads. Stick with the low cost plan.

Globally, a successful alliance needs strong North American, European and Asian carriers. Westjet is prime for oneworld and Skyteam. But, it means offering cheap prorates to long haul carriers. While it's attractive, it also displaces higher online yield. Add the cost of membership, marketing programs, etc you gotta think twice about it.

I believe Westjet is in an enviable position to really call the tune on which way to go. They're smart and they'll choose well.

I'll guess we'll have to stay tuned.

Lemme know if you do another two hour LH sector. I'm one hour away from FRA. I know where the good beer is.

[tonysoprano]

bmc.
Yes, I guess times are changing. WJ going it alone might do but I think someone else will hook up with them at some point. Re our Star Alliance, that's interesting news. Maybe there's changes coming.
No FRA this month. I'll have to bid them next month or even some ZRH.
Cheers.

[Huge Hammer]

Globally, a successful alliance needs strong North American, European and Asian carriers. Westjet is prime for oneworld and Skyteam. But, it means offering cheap prorates to long haul carriers. While it's attractive, it also displaces higher online yield.

If WS entered into an agreement on an interline they would not operate it the traditional way.

For exapmle to fly LHR to YLW under a tradiational interline the transatlantic carrier would get the bulk of the ticket price. Under a WS code share the transatlantic (or transpacific) carrier would buy the seat from WS like a net fare. WS gets the same revenue for the YVR-YLW flight, not a portion of the LHR to YLW fare charged to the guest.

[bmc]

If WS entered into an agreement on an interline they would not operate it the traditional way.

For example to fly LHR to YLW under a tradiational interline the transatlantic carrier would get the bulk of the ticket price. Under a WS code share the transatlantic (or transpacific) carrier would buy the seat from WS like a net fare. WS gets the same revenue for the YVR-YLW flight, not a portion of the LHR to YLW fare charged to the guest.

The proration of international fares is based on mielage flown. It's not actual mileage but weighted mileage that gives shorter sectors more mileage. For example, YVR-YYJ might be 42 statute, but the prorated mileage might be 242 miles. In very simple terms, if you flew a passenger 800 miles and I flew them 200, you would get 80% of the revenue and I would get 20%. This is called straight rate proration.

It gets more complicated from there. Short haul sectors can apply a proviso, expressed as a percentage of their local fare to compensate for journeys where the straight rate gives them too little yield. There is a trigger that requires non proviso sectors to get a minimum cents per mile to ensure they don't get fleeced in the transaction.

Now, those are industry rules in a very simplified explanation. Airlines enter into special prorate agreements that are based on fixed amounts associated with a booking class. In the case of Westjet, they might offer BA YVR-YYC at $100 booked in B class, YVR-YEG $125 booked in V class. That kind of thing.

Code share agreements take three different forms when dealing with accessing each others inventory. There is an soft block arrangement where by the operating carrier gives the marketing carrier a block of seats. The marketing carrier puts his code on that flight and manages the inventory as he wants. The operating carrier is paid a flat rate per seat. A couple of weeks before departure, the marketing carrier releases unsold inventory. Then you have a hard block, where a marketing carrier sold a fixed number of seats and he pays for them all, whether sold or unsold. The most common is a freesale agreement where the marketing carrier maps his inventory to the operating carriers inventory.

So, in th case of AC/UA, AC will map their J class to United's F, Y to Y, M to B, etc. When a booking comes in for an AC flight, that is actually operated by UA, the system will look for an AC "V" class seat, which their system has mapped to UA's Q class. If their is a Q seat available, it will take the booking and AC will confirm it as an AC V booking.

Before jumping into code sharing, you really need to understand the market you are serving. If it's a price driven market (as opposed to sched or frequency), passengers don't care about an alliance. They want to pau $399 and could care less if the plane is grean or yellow. If that's the case, why code share. Having 24 BA coded flight between LON and NYC is desirable for that market, so BA is very keen to put their code on AA operated flights.

Airline reservation systems hierarchy for carrier selection is 1) online first, 2) online one stop, 3) online connection 4) interline connection. Airlines want first screen availability. Code sharing helps do that.