WestJet Airlines Ltd. and Cathay Pacific Airways Ltd. have signed a partnership deal, one in a series of co-operation pacts that WestJet is targeting with foreign carriers.
Calgary-based WestJet has been looking to forge links with the Hong Kong-based carrier for nearly six years, but they needed to overcome technology hurdles. With WestJet recently upgrading its computer reservations system, the two airlines will be taking their first step in the partnership.
“We signed and are in the process of implementing an inbound interline agreement with Cathay Pacific that should be in place later this month,” WestJet chief executive officer Gregg Saretsky said during a conference call Tuesday.
The “interline” pact calls for co-operation on ticketing and baggage handling, making it easier for a traveller on a Cathay trip into Canada to catch a connecting flight operated by WestJet. The partnership should be rolled out over the next several weeks, said Cathay spokeswoman Jennifer Pearson, who added that the Asian carrier already has an interline agreement in place with Air Canada.
WestJet inked a key partnership deal last year with Air France-KLM, and hopes to form a co-operation arrangement with Delta Air Lines Inc. of Atlanta, after Dallas-based Southwest Airlines Co. terminated a planned U.S.-Canada link with WestJet.
“While Southwest Airlines provided us with notice of termination in mid-April of our code-sharing agreement, we remain committed to pursuing airline partnerships, and plan on signing and implementing partnership agreements with other strategically aligned carriers,” Mr. Saretsky said. “Our plan is to partner with carriers from each of the major geographic regions around the world.”
Mr. Saretsky replaced Sean Durfy as WestJet CEO on April 1. The airline disclosed Tuesday that Mr. Durfy received a $4.1-million severance package, a “special item” that reduced first-quarter profit. Under the departure agreement, Mr. Durfy has left the carrier’s head office, but will make himself available to WestJet if required by current management until Sept. 1, a WestJet spokesman said.
Amid higher fuel prices and increased travel agent commissions, WestJet posted a $13.8-million profit in the first quarter, down 63 per cent from $37.4-million in the same period last year. The latest quarterly profit missed analysts’ expectations, but revenue rose 7 per cent to $619.8-million.
Industry observers say problems with implementing the new computer reservations system disrupted WestJet’s operations last fall, and with the glitches taking weeks to resolve, some irritated consumers switched at least temporarily to Air Canada.
RBC Dominion Securities Inc. analyst Walter Spracklin said WestJet has $1.1-billion in cash on its balance sheet, and management could earmark some of the capital toward reducing debt and acquiring planes.
He said the airline’s new frequent flier program and loyalty credit card could help lure more business travellers in a bid to strengthen revenue per available seat mile, or RASM, a key industry measure of unit revenue.
WestJet, Cathay Pacific sign partnership deal
Moderators: sky's the limit, sepia, Sulako, lilfssister, North Shore, I WAS Birddog
Re: WestJet, Cathay Pacific sign partnership deal
It's not a partnership deal. It's a one way ticket and baggage agreement. One way agreements specifiy that only one carriers documents will be used. In this case, it'll be CX's. Westjet will accept all CX e-tickets and interlined baggage.
One way agreements have been around for years. A number of reasons go behind going this route. One way agreements reduce a carriers exposure to a smaller carrier, should the smaller carrier have financial problems. I'm not suggesting that's the case here. Another reason is the recognition of who will generate more interline flow. Westjet is not recognized as an Asian carrier. Cathay is. Passengers and travel agents are more prone to look to CX for pricing and availability.
The next piece in a one way agreement is a pricing or prorate agreement. Since it's a one way deal, WJ will set pricing to be charged to Cathay. There are industry rules that could apply to determine each carriers revenue shares. More often than not, airlines put special prorate agreements in place for this.
This is good for WJ. Good traffic opportunity for them. Good flow opportunity for CX with better pricing than AC will offer.
One way agreements have been around for years. A number of reasons go behind going this route. One way agreements reduce a carriers exposure to a smaller carrier, should the smaller carrier have financial problems. I'm not suggesting that's the case here. Another reason is the recognition of who will generate more interline flow. Westjet is not recognized as an Asian carrier. Cathay is. Passengers and travel agents are more prone to look to CX for pricing and availability.
The next piece in a one way agreement is a pricing or prorate agreement. Since it's a one way deal, WJ will set pricing to be charged to Cathay. There are industry rules that could apply to determine each carriers revenue shares. More often than not, airlines put special prorate agreements in place for this.
This is good for WJ. Good traffic opportunity for them. Good flow opportunity for CX with better pricing than AC will offer.
bmc
