Westjet's New Destinations

[Realitychex]

Rumor has it that the new YZF run is due to not having enough work for the amount of tin as the fleet grows so running into an already over saturated market seems like a desperate move to many.

Rumor made up by you, no doubt.

If I had a nickle for every CAW type who tried to stir the pot by wishfully dreaming that WJ had run out of opportunities, I'd be retired and sitting under a palm tree right now.

Check out WJ's YVR-YYZ frequencies compared to YYC-YYZ frequencies. You think there isn't a bit of low hanging fruit there in the #1 or # 2 market in Canada, depending on the season?

There's lot's of opportunity out there. As other's contract, the opportunities get bigger and bigger and bigger.

If you were a bug on the wall, I think you'd hear the braintrust on the 4th floor at WJ wishing they had another 4-6 deliveries in 2009 to take advantage of what's very likely to occur next year as legacies across the continent continue to contract.

[FICU]

I don't make up rumors.

Why would WJ go into a small market already over serviced by 3 airlines?

At a time that makes no sense to meet passengers connecting to northern routes or out of northern communities?

With no cargo capability?

And only with a seasonal service?

Sounds like they're trying to grab the tourists who go as far as Yellownkife over the summer but how much tourist travel will there be in 2009 with a deep global recession?

This just doesn't seem like a typical savy WJ business move and looks like more of a bullying move to hurt AC/Jazz and force them out of the market.

Looking at the flights on the website it seems that WJ has made another interesting move by using the same flight number as Canadian North's evening flight... 422.

[Realitychex]

Canadian North has been serving the North independently for 10 years. It took them precisely that long to drop fares to levels seen in the south. As for First Air, it took them over 60 years to cut fares.

A bullying move? Give me a break. Folks up north have had to put up with high fares for far too long.

WJ's announcement has already caused fares to tumble to the same levels seen in the rest of Canada. It's not Westjet's fault that their costs allow them to be extremely profitable at the new fare levels when others can't.

Overserviced? I remember people said the same thing about places like YXS, YQU, YMM, YLW etc etc when WJ started. Everyone had big loads, but Canadi>n went all but belly up with their cost structure. I would expect the same thing to happen in this market unless dramatic changes are made by the folks operating -200's on the route.

Funny how traffic doubled when fares were cut in half. It's called price stimulation. The Southwest Effect. You think folks up north wouldn't mind heading south a lot more if it was more affordable? Cut the fares in half and people can take twice as many trips for the same dollar outlay. Ever noticed the amount of capacity Alaska operates to Seattle from Alaska every single day?

WJ will operate the only full size, fully stage 3 aircraft in the market, with all the associated amenities, and the ability to tanker cheap YEG fuel up and back. Their cost structure on this route will be at least 50% lower than any of their competitors. For that reason, get used to fares dropping 50%. Cutting costs 10-20% isn't going to cut it. It'll prolong the inevitable, as it has done in market after market.

The competition is stuck with commuter jets, Cdn North has 27 year old stage 3 exempt -200's, and First Air's are pushing 30 years old, both of which cost about $1,300 an hour just for maintenance and suck gas like there's no tomorrow. Even WJ couldn't make the numbers work on the -200's with $40 oil.

I think the folks up North deserve a little better, don't you? Besides, everyone knows what will happen to fares when WJ completes it's summer flying program. Back to $611 r/t. Explain that to your so called "loyal customers".

Use it or lose it.

[FICU]

No use debating this... but a few points in parting...

Notherners receive a government living allowance to help offset the cost of living and traveling out of the north. Most companies offer travel benefits to employess who re-locate to the north to help them travel south.

The cost of flying north is higher then south not only because of fuel costs but because of the lack of volume so to sustain a viable airline who operates in the north you have to increase the cost of the ticket to make it profitable.

7F and 5T both have chapter 3 noise -200s.

The -200 is still used because of it's combi versatility and 7F and 5T are the ones who move freight to the north... if they didn't operate combis the freight wouldn't get there in a timely manner.

The -200 is still the only gravel certified jet airliner and it's needed in the north.

WJ probably now thinks it's the saviour of the north but all it may inevitabley do is drive out the needed service to those who live north of YZF in the long term if companies like 7F and 5T no longer become sustainable at the WJ fare level.

Then will you be offering service to YCB and points north in shiney new NGs?

Have a good summer... you wear the halo well but time will only tell how long the halo will continue to shine.

[complexintentions]

THAT...is one of the best posts I've read. I really hope the northern communities will continue to support the airlines that have been around to serve them for years, not just the WestJets that come in to skim the cream off the profitable runs by leveraging their lower cost base. Opportunism been sold as altruism, yuck....

[Rotten Apple #1]

FICU, perhaps Jazz should pull out to give the Northern outfits a better chance to prosper?

Or we could get back into re-regulating the marketplace, like that's gonna happen.

WJ will do what corporations do which is to build capital. If the residents of Yellowknife wish, they can choose to fly with other carriers.

However it's marketed, it's about the money, period. There's no altruistic motives in it.

That said, if it doesn't work, we'll be out of there in a heartbeat.

Now back to the philisophical/philanthropic discussion underway.

[shankdown]

When I worked up north, I heard some stat about how the population of Yellowknife doubles in the summer. I'm not sure how accurate that stat is, but I'm sure it's gotta be close. WestJet's service will be seasonal through the summer months, when the population there swells. I'm not sure if they're going to be really profitable on that specific run, but the fact is, those people aren't all coming in from Edmonton. They're coming in from all over, and WJ probably wants to profit from getting them from wherever they are in the country to Yellowknife, and then again, when they take them home. That's better than letting AC have that domestic traffic through the summertime, just because they offer service there. I think it's a smart move.

SD

[Troubleshot]

When I worked up north, I heard some stat about how the population of Yellowknife doubles in the summer. I'm not sure how accurate that stat is, but I'm sure it's gotta be close. WestJet's service will be seasonal through the summer months, when the population there swells. I'm not sure if they're going to be really profitable on that specific run, but the fact is, those people aren't all coming in from Edmonton. They're coming in from all over, and WJ probably wants to profit from getting them from wherever they are in the country to Yellowknife, and then again, when they take them home. That's better than letting AC have that domestic traffic through the summertime, just because they offer service there. I think it's a smart move.

SD

I am really seeing both sides of this one...but I agree with you in that if WestJet can help the overall big picture (route network) then it is indeed a good move. Personally if I need to get from Halifax to Yellowknife I would rather the one carrier, and since WestJet is my airline of choice...well you get the picture. If I only need to get from Edmonton to Yellowknife and I can save a 100 bucks or more on any of the other airlines I would probably take the cheaper carrier...Maybe.

[johnkruk]

Its nice to see both First Air and Canadian North plan on ripping off there customers right till the bitter end, they keep there fairs the same till the day Westjet gets to Yellowknife then they match them, if they are sustianable on this fair that they are offering why can they not offer it now? Do they think people will support them when Westjet gets there when they know the only reason the price is what it is , is because Westjet is there, and that these airlines cannot survive offering these fairs. Maybe First Air and Canadian North should look at staying in the North only if they cannot compete with Westjet.

[FICU]

if they are sustianable on this fair that they are offering why can they not offer it now?

For the type of airline and volume of passengers that 5T and 7T serve those fares aren't sustainable.

Since WJ is now the saviour of the north I know the people of Churchill will be anxiously awaiting an announcement that WJ is going to fly YWG-YYQ with $100 fares since the operators currently serving that market are raping the people of YYQ with $600+ fares.

Don't the people of YYQ deserve the same compassion from WJ too?

[KAFUFO]

Maybe First Air and Canadian North should look at staying in the North only if they cannot compete with Westjet.

I imagine when the dust settles you'll see some sort of partnership agreement between 5T or 7F to do the gravel ops up north where WS can't go feed by WS which 5T or 7F can't compete with cost's

[FICU]

I imagine when the dust settles you'll see some sort of partnership agreement between 5T or 7F to do the gravel ops up north where WS can't go feed by WS which 5T or 7F can't compete with cost's

I would think that the smart thing for WJ to do would have been to look at a codeshare agreement with either 7F or 5T for the YZF run. Again, setting up the logisitics(CSAs and ground support) for 1 flight per day on a seasonal service just doesn't seem like a typical WJ decision.

WJ is clearly targeting a single sector market where they know the existing carriers won't be able to compete with $100 fares. So, if 5T and 7F are to be competitive they will probably have to drop the full service they have become famous for, throw more seats into the cabin to match WJs seat pitch and go to the WJ model of pop and cookies. Even then they still might not be able to sustain it.

"No frills" to the north... who would have ever thunk?

[invertedattitude]

Sydney service in a 737.... BIG mistake... it didn't work for an F100, not even at $1 fares they couldn't put buts in the seats.... best of luck... like others on here I agree, not exactly stellar choices to expand their route network...

Love Field would have made a bit more sense????

[johnkruk]

was that JetsGO flying there? that explains it!

[jjj]

I think YZF is just another example of what WS has been doing for many years - chipping away at market share.

This is hardly the first time that WS has been the tiny guy stepping into a really big pond. WS does not have combi capability or gravel cert therefore it will never be able to replace the specialized work that has been done up there for years. However , WS does now have a pretty good network that is expanding all the time organgcally and through codeshare. As far as just moving bodies - WS can do more for the folks up North than the local operators can.

[CBGUY]

Sydney service in a 737.... BIG mistake... it didn't work for an F100, not even at $1 fares they couldn't put buts in the seats.... best of luck... like others on here I agree, not exactly stellar choices to expand their route network...

I flew to Sydney last year on Sunwing's new 737-800, higher capacity than Westjet's same yet was sold out.

[Four1oh]

THAT...is one of the best posts I've read. I really hope the northern communities will continue to support the airlines that have been around to serve them for years, not just the WestJets that come in to skim the cream off the profitable runs by leveraging their lower cost base. Opportunism been sold as altruism, yuck....

If the communities truly supported these airlines all these years, they would have had lower fares years ago. The government tax dollars in some form or another is what supports them.

[twinpratts]

Sydney service in a 737.... BIG mistake... it didn't work for an F100, not even at $1 fares they couldn't put buts in the seats.... best of luck... like others on here I agree, not exactly stellar choices to expand their route network...

It's up to the locals to use it or lose it...

[Realitychex]

I always get a giggle out of the "it's a small market so fares are higher" argument.

It's complete bollocks that originates from inefficient airlines who need high fares too support their high costs. The moment competition appears, hey presto, fares miraculously drop.

That logic would explain why WJ was able to offer the same fares out of YQQ to YYC as YYJ-YYC, or how they were able to co-rate YXX to YVR when YXX was 4x a week, or even service into YYG.

Setting up logistics for one flight a day seasonally? What do you think WJ has been doing into the sun markets as well as a host of domestic markets both now and for the past 12 years?

As for the big fuel costs up north, 737NG's can easily tanker the most inexpensive JetA in Canada the 700 miles YEG to YZF. Can't do that in a -200......

When WJ started, Hollis Harris was quoted as saying "Canadian's prefer good service over low fares". As it turns out, Canadian's prefer good service AND low fares. That's why WJ's grown from 3 to 75+ aircraft.

In the meantime, every single WJ domestic competitor of any consequence since 1996 has collapsed, merged into another airline as a result of imminent failure or gone into bankruptcy protection. You see any pattern here?

At the same time, WJ produces industry leading double digit operating margins, sits on more cash per ASM flown than anyone else in North America and continues to do what it does best. Strangle the triangle.

As for the economy, when times are tuff, do folks shop at Holt Renfrew or Wal Mart?

[invertedattitude]

I really hope all these destinations work out for WJA.

However, that being said, it would seem there are far more lucrative destinations than those posted.

When I was in Houston for example, I saw more Alberta plates than any other US State plate other than Texas. (Of course an exageration but not far off)

The amount of business travel alone from Alberta-Houston must be enough to sustain seasonal service, not to mention year-round, so long as it was offered Non-stop.

I'm not the first to say it, but I believe it's true, every time an airline gets bigger, they lose focus. While I am glad to see more East Coast service, and it may work three months of the year, adding a market which leads to sustainable year-round growth would make more sense to me.

[Glen Quagmire]

The mindset being displayed here is a little disconcerting. Why would anyone employed by an airline be cheering for lower fares and loss of premium revenue? Revenue from fares is what pays your salary, we should all be hoping that airlines raise fares to the maximum sustainable level. Airlines reducing fares to increase market share does nothing for the long term bottom line of pilots, truthfully it continues to erode pay scales as there is less money to spread around at contract time.

Westjet is not alone in this game as all airlines play around with markets and pricing but it is idiotic for any pilot to be blindly cheering for lower ticket prices. What I would expect from Westjet pilots in this case is to want to go into that market at the same fares as the competition and try to win market share attributable to quality customer service and performance. If the market doesn't open up then you can look at pricing. That would be a rational perspective from a pilots point of view, the corporate point of view is of course entirely different and that is more of what I am hearing from these posts.

[Flightlevels]

Wow,

Not sure why everyone really cares so much about this. Westjet is going in at a fare level that makes money. We have a cost structure in place that supports our fare levels which is about 14% and leads NA. What's the big deal if we try it and if it works...great. If not we'll pull out just like many other places. Hopefully these prices stimulates travel for tourism as well. We have expected revenue targets, and I can assure you it's not because we are running out of places to go.

I think it will be a great summer destination along with the connectivity. Tankering the fuel in will also be a huge advantage. Talking with a cargo guy too and he said we've been approached by several companies to haul, and we've accepted a few, but we just don't have the space for any large contracts.

Cheers!

I'm looking forward to flying in there. BTW Glen, Westjet has never eroded the pilots bottom line.

[Four1oh]

Glen where have you been hiding for the last 12 years or so??

[Realitychex]

Every business has a responsibility to it's shareholders to earn a profit by charging for its service according to it's particular cost structure.

It's not up to WestJet to price it's fares according to Air North or First Air's bloated cost structures.

Westjet will price it's fares based on it's cost structure over a 690 mile stage length, which, at current oil prices, will be about 13 cents a mile, or $90 a seat.

With a 63% load factor with an average one way fare of $164, just $15 over their introductory fare, that should produce a 16.5% operating margin or a profit of about $2,500 a flight. Over the course of the five month program, that should produce a route profit of about $750,000.

Price stimulation will cause traffic into Yellowknife to double. Think in terms of folks with $1,000 to spend on travel being able to take 2 trips a year instead of one.

The northern carriers have chosen to operate routes to the south in obsolete, extremely high cost equipment. That's not WestJet's problem.

If I had to guess, I'd say one will go the way of Aloha Airlines on the YEG-YZF route, operating solely cargo at night. Who wants to lose $2,500 a day on a route?

BTW, I think you'll see WJ in Texas when the codeshare is in place.

[Glen Quagmire]

Realitychex here is a reality check for you

Southwest Airlines Pilots' Assn. President Carl Kuwitzky last week told union members that he "cannot support" the carrier's new codeshare agreements with Mexico's Volaris and Canada's WestJet. In a letter obtained by the Dallas Morning News, he said that the alliances have "the potential to severely affect the career of all pilots on our seniority list.
Kuwitzky claimed that SWAPA pilots "could do some transborder flying and completely control our brand image" and that "overwhelming membership feedback" indicated that the codeshares are a "significant thorn in the side of our members" as SWA cuts capacity (ATWOnline, Oct. 17).

Welcome to the dirty world of codesharing.

I never said WJ pilots erode their bottom line I was just stating that the low cost/low fare model has seriously put a dent into what being a pilot was like just some 10-15 years ago, salary and lifestyle wise. Not that that is any pilots fault its just a reality that we have to accept, but cheering for lower fares is a bit much.