Southwest stands ready to cut ties with WestJet

[Panama Jack]

By Lori Ranson

Following swirling media reports of a potential codeshare deal between Delta Air Lines and WestJet, Southwest has warned a potential codeshare agreement between the two carriers "could be inconsistent" with the agreement it has to codeshare with WestJet.

Southwest and WestJet unveiled their intentions to codeshare in 2008 and were targeting an introduction of the agreement in late 2009 or early 2010. But those plans were delayed largely due to technological projects underway at Southwest to develop the ability to forge codesharing agreements.

Today Southwest executive vice president of strategy and planning Bob Jordan said the "Southwest/WestJet project was on target in accordance with a mutually agreed upon timetable. However, WestJet in recent weeks requested material and significant changes we could not accept".

Just last month former WestJet CEO Sean Durfy, who officially stepped down today, said he and Southwest chief Gary Kelly were "committed to doing this [the codeshare] when Southwest is ready".

Comments made by Durfy's successor Gregg Saretsky to the local Canadian press have sparked speculation about a potential WestJet codeshare with Delta. The two carriers have entered into an agreement entailing Delta transferring five pairs of slots at LaGuardia airport to WestJet as part of a larger slot swap agreement between Delta and US Airways at LaGuardia and Washington National airports. Delta and US Airways are awaiting a decision by US regulators regarding their proposed swap.

Southwest introduced its own service at LaGuardia in June 2009 through the launch of five daily flights to Chicago Midway and three to Baltimore. The carrier has publicly stated its desire to expand at LaGuardia, but was effectively shut of the slot allocations at LaGuardia proposed by Delta and US Airways.

In addition to WestJet, Delta and US Airways are proposing to transfer five slot pairs each to AirTran and Spirit Airlines.

In issuing a tentative approval of an initial request by US Airways to transfer 125 Express slot pairs to Delta at LaGuardia and Delta transferring 42 slot pairs to US Airways at Washington National, US regulators requested the transfer of slots to new entrants or limited incumbents at the two airports.

Southwest, meanwhile, says it has not been notified of WestJet's intent to terminate their codeshare agreement. "If we are so notified in order for WestJet to consummate the deal with Delta, Southwest remains very interested in offering our loyal customers service to Canada via the most efficient means possible".

Source: Air Transport Intelligence News

http://www.flightglobal.com/articles/20 ... stjet.html

[ivanhoe]

Seems to me that it is WestJet that wants to cut ties with Southwest...

Who knows , this could be a ploy by WJ to pressure SW to start taking the "MOU" seriously. Use it or lose it...

[Flying Nutcracker]

Found this interesting "gem" hidden in an interview the other day...

http://www.financialpost.com/news-secto ... id=2731968


When Gregg Saretsky was just out of university, working in the financial sector in the early 1980s, the woman who would eventually become his wife asked him what his ambition in life was. Without missing a beat, the Montreal native, who put himself through university as a flight attendant for Air Canada, told her, "I want to run my own airline."

His wife, Deb, reminded him of that conversation last Monday, 25 years after he returned to the business, when the board of WestJet Airlines Ltd. unexpectedly appointed Mr. Saretsky, 50, its new chief executive less than a year after joining the airline and only five months after becoming its head of operations.

While his rapid rise at Canada's No. 2 carrier is notable for his own career, it's also a pivotal horse-for-the-course transition that WestJet's board hopes will finally allow the carrier to shed the stagnant low-cost model it adopted from Southwest Airlines 14 years ago to become a true global player.

"It's a great opportunity for me, to be in the seat I have, to really help write the next chapter in our story," Mr. Saretsky said in an interview Friday.

Paramount in making WestJet a major player in the North American market will be the successful implementation of several strategic partnerships with international carriers. These so-called code-share deals have been made possible after the rather rocky transition to WestJet's new SabreSonic reservation system in recent months. The problems implementing the new system contributed to the unexpected departure of Sean Durfy as its chief executive effective April 1.

Code-share deals will allow WestJet to seamlessly pass its passengers onto the planes of its international partners, and help fill its domestic flights with other airlines' customers.

WestJet has been laying the groundwork for such a deal with Air France/KLM and China Airlines. Before it fully implements those deals, WestJet appears to be prioritizing a partnership with a U.S. carrier due to the high amount of traffic crossing the border, Mr. Saretsky said.

Fitting WestJet's new ambition, Mr. Saretsky said it is now more likely it will first partner with U.S. legacy carrier Delta Air Lines rather than the expected deal with Southwest Airlines. While WestJet has often strived to be the Canadian version of Southwest, the U.S. low-cost carrier lacks a reservation system capable of code-sharing.

A deal with Delta has been made all the more probable now that WestJet is also lined up to receive five daily slots at New York's LaGuardia airport as an offshoot of a slot swap between Delta and U.S. Airways. The deal is subject to regulatory approval.

The slots would allow WestJet to reinstate its Toronto-New York service after a five-year hiatus, and a deal with Delta could see it expand to Atlanta, Boston, and Washington, D.C., all locations where the Atlanta-based carrier has a strong presence, Mr. Saretsky said.

"[Delta] has an interest. They have a capability. We like the Southwest partnership, but they've signalled to us that they're not going to be ready," Mr. Saretsky said.

"We're going to move on and tee things up with another partner."

Analysts estimate that such code-share arrangements could contribute up to $1-billion in annual revenue for WestJet in the years ahead. They will also be pivotal, in addition to its recently announced loyalty and credit card program, in reaching its goal of capturing 50% of the domestic market by 2013, up from an estimated 37% last year.

Mr. Saretsky, unlike his predecessor, has ample experience implementing these complex deals. During his 10 years as the head of marketing at Alaska Airlines, Mr. Saretsky helped usher in deals with American Airlines, Delta, Continental, Qantas, Air France/KLM, British Airways, LAN Chile, and Cathay Pacific, several of which have expressed an interest in code-sharing with WestJet.

In addition to Air France and Delta, WestJet has a memorandum of understanding signed with British Airways, and Cathay Pacific has also expressed interest in a deal.

Fortunately, WestJet is in a position to pick and choose who it partners with because of Air Canada's ties to the Star Alliance.

"If you're not part of the Star Alliance, Air Canada's alliance, you're pretty much shut out of the country," Mr. Saretsky said. "There have been a long list of carriers that have come to us seeking access to the Canadian market."

scdeveau@nationalpost



Read more: http://www.financialpost.com/news-secto ... z0jyHoqwUQ

[ravensrule]

definitely interesting... at this point I think we are closer to Delta than SWA. We have live tv, assigned seating, never over sell our flts. (I realize DL over sells but they have a lot more experience with codeshare than SWA.)

On a side note, I hope codeshare with Delta so when I interline with them I have the chance to get upgraded to business class haha.

[mikeecho]

Low cost carrier is once again mis represented. It's all about how an airline manages their costs, and not how much a passenger needs to pay for a ticket.

WestJet and the BOD are absolutely not looking to "shed" the low cost business model. Quite the opposite in fact with Gregg Saretsky creating a renewed focus on budget and cost control management.

They're just looking to enhance their product, which has long shed the no frills style about a 6-8 years ago with the introduction of inflight tv and the parking of the old 737-200's which crammed people in like cattle.

Gregg is doing nothing new here. This is the natural evolution of WestJet, which has been on the map since the decision to go ahead with code share was made 5 years ago. The delay was due to reservation system restrictions which have been eliminated with the addition of Sabre.

[complexintentions]

The switching to Sabre is about far more than "enhancing the product". As is the 5 year contract signed with Mercator (IT division of Emirates Group) to handle your revenue accounting. (A move that was done far more quietly, but had about as many problems as the res switchover. But rev accounting is an internal function so it was not public news.)

Those are moves to enable a major shift in strategy. That fact that they closely coincide with a sudden, large change in management personnel is hardly coincidence, or surprising.

History always repeats in aviation. Always. WestJet is moving more towards being a legacy carrier, because it is been around long enough to start having a legacy.

[Flightlevels]

Grow or die, but grow slowly learning from others mistakes in the past. I'm sure we will make more too. Greg is changing gears.

[mikeecho]

The switching to Sabre is about far more than "enhancing the product". As is the 5 year contract signed with Mercator (IT division of Emirates Group) to handle your revenue accounting. (A move that was done far more quietly, but had about as many problems as the res switchover. But rev accounting is an internal function so it was not public news.)

Those are moves to enable a major shift in strategy. That fact that they closely coincide with a sudden, large change in management personnel is hardly coincidence, or surprising.

History always repeats in aviation. Always. WestJet is moving more towards being a legacy carrier, because it is been around long enough to start having a legacy.

The business model is still the same. Contain costs, increase revenue and gain market share along the way.

This new strategy is not so new. What you currently see being executed today has been mapped out for the last 5 years and will continue to proceed as planned. The big hold up in IT infrastructure has made it look like WJ was sitting around without a plan, but the reality is much different and this year those strategies will begin to be executed.

Internally, it's been well know from the date the Southwest MOU was signed that WS would be looking to partner with another major US carrier (usually assumed to be AA but looks to be DL now) along with a carrier to cover the Atlantic, Pacific and Asia. Nothing new there, so when WJ announces those agreements this year, it's not because of a major shift in strategy. It's the execution of a long held strategy. Durfy has been talking about this stuff for a while at investors conferences, etc...

What Gregg will do is start to make up for lost time by driving things forward much faster.

[Donald]

Wouldn't be the first time WJ has "changed their mind" about a codeshare deal.

[twinpratts]

the quote in red were the National Post's... not G.S.'s

[W5]

Southwest plans to end WestJet pact

http://www.reuters.com/article/idCAN161 ... 416?rpc=44

[Jastapilot]

When we first announced the codeshare, I was quite excited about the idea, and that slowly changed to something far less than enthusiasm. Now that the deal's done, I'm quite excited about the idea.

[Herc_Driver]

It dragged on too long with WJ waiting for SW to actually "do" something (since 2008).
There was a 1 April 2010 tripwire in the MOU.
Gregg decided to move onto bigger things ..... this simply wasn't happening fast enough for WS.
He has decided he has bigger fish to fry ...... good on Gregg.

[Intentional Left Bank]

Sounds like an awkward start (finish?) to a relationship: http://aviationblog.dallasnews.com/arch ... to-ho.html

[mikeecho]

Sounds like an awkward start (finish?) to a relationship: http://aviationblog.dallasnews.com/arch ... to-ho.html

The whole public discourse regarding the WS/WN deal has been strategically executed in order for WN to save face with their pilot group and help move the deal along.

WN made the mistake of forging a code sharing agreement without the blessing of the pilot group who raised a stink and pinned WN into a corner.

Both carriers made a point of discussing the matter a little more publicly than usual in the last few weeks so WN could be seen as showing some of their traditional bravado which pleases their pilot group (ie. Maybe we'll fly to Canada if it makes sense).

Now WS offers the olive branch to get things back on track.

Since the start, WS has made no secret of the fact that they intended to code share with 2 US carriers. WN knew that all along.

Consider this whole escapade as WS doing the senior execs at WN a big solid.

Over the next 12-18 months, I have no doubt that WS will have code sharing deals with WN and DL.