Seat sale war over, WestJet saysJetsgo demise has brought back sanity to airlines' discounting strategy: BeddoeBy BRENT JANG
Friday, June 3, 2005 Page B2
TRANSPORTATION REPORTER
TORONTO -- Sanity has returned to Canada's aviation industry as carriers carefully select when to hold seat sales, WestJet Airlines Ltd. chairman Clive Beddoe said yesterday.
This week's announcement by CanJet Airlines to reduce fares for travel in June prompted WestJet and Air Canada to cut ticket prices on certain flights that have lower spring and summer demand than other routes. That's in sharp contrast to the cutthroat, across-the-board discounting strategy of now defunct Jetsgo Corp., which grounded its planes in March after just 2½ years in operation. WestJet and Montreal-based Air Canada say that they reluctantly matched many of Jetsgo's seat sales.
With Jetsgo's demise, however, "at least we have rational competitors, not irrational competitors," Mr. Beddoe said. "It will be much more sane than it was in the past."
Wayne Morrison, director of sales and community relations for Halifax-based CanJet, said the carrier considered extending its one-month seat sale into July, but doesn't think that would be fair to customers who planned well in advance and have already paid for their summer flights at higher but still competitive prices.
Advertisements
Mortgage Rates
Compare national rates by lender: See Chart
As well, the idea of CanJet's seat sale -- held to mark its third anniversary on June 20 -- is to stimulate demand in June, before the summer rush, Mr. Morrison said.
Mr. Beddoe said the days of deeply discounted one-way fares, such as $99 for the Toronto-Calgary route before taxes and other charges, have vanished since March 11, when Montreal-based Jetsgo abruptly halted its flights. The airline declared bankruptcy last month. "Desperate competitors who are struggling to survive always create a problem," he said after speaking to delegates at a Toronto airline conference organized by Insight Information Co.
Mr. Beddoe said he expects Canada's three largest commercial carriers to hold seat sales "on a seasonal basis, on a route-specific basis and a new-market basis."
Brutal fare competition and high fuel prices were the main factors that drove Calgary-based WestJet to post losses in the final quarter of 2004 and first quarter of this year, snapping a streak of 31 consecutive profitable quarters.
But Mr. Beddoe is forecasting a recovery, with revenue rising to more than $1.3-billion this year from $1.07-billion last year.
WestJet will also prosper from a 30-month extension of its deal with Montreal-based Air Transat to fly charter service primarily to Mexico and the Caribbean, he added.
While WestJet doesn't have any fuel hedges, and most North American carriers have few or no contracts to protect themselves against red-hot oil prices, Southwest Airlines Co. of Dallas is a notable exception.
The airline has hedged 85 per cent of its fuel requirements this year at $26 (U.S.) a barrel, said John Chaussee, the U.S. carrier's director of federal airport security.
Southwest's hedges aren't as attractive in the next several years, but are still the envy of the industry. It has hedged 65 per cent of fuel at $32 a barrel next year, 45 per cent at $31 in 2007, 30 per cent at $33 in 2008 and 25 per cent at $35 in 2009.
Julius Maldutis, president of consulting firm Aviation Dynamics Inc., said it's hard to predict where oil prices are headed, with some industry watchers saying crude could soar beyond $100 a barrel and others envisaging a drop to $30.
Seat sale war over, WestJet says!
Moderators: sky's the limit, sepia, Sulako, lilfssister, North Shore, I WAS Birddog
-
Canus Chinookus
- Rank 7
- Posts: 707
- Joined: Thu Oct 21, 2004 6:30 pm
-
Canus Chinookus
- Rank 7
- Posts: 707
- Joined: Thu Oct 21, 2004 6:30 pm
