WestJet announces Whitehorse

[True North]

Tinyvoices, you think my statement was "outlandish"?? You haven't been around long have you?

I've been around forever and I think it's outlandish too.

[Flying Nutcracker]

I wonder how Starbucks feels when Tim Horton's set up shop across the street... Predatory pricing!

[JZA]

Ya I'm pretty sure AC isn't going to be offering WS Ramp services either in YXY ... It adds quite a bit of cost to the operation to have your own dedicated part time staff up there...for what I assume is a once daily flight.

[Tiny Voices]

Was the first time when we announced YZF? I'm looking forward to going to Whitehorse.

Made the same claim in another thread in the general forum.

CID, I'm not saying I "think" your statement is outlandish. I am saying it is outlandish. You're stating that WJ is intentionally pricing fares at a loss in order to inflict damage on Air Norths business or push them out of the market entirely. That is what predatory pricing is. If Air North feels that that is what WJ is doing, they can take their case to the Federal Competition Bureau, and a tribunal will decide if there is merit to the claim and WJ will be appropriately penalized. This is the legal process. You may be outraged at the introductory fares, but you stating that they are predatory doesn't make it fact, and isn't based in law.

I believe what FICU says about WJ not having much of an affect on the business of Air North to be pretty close to the truth. The locals and Territorial Government will continue to support their airline. Those wishing to do business in the Territory or with the Territory will continue to fly with Air North. Canada Post will continue to put mail in the belly of Air North airplanes. WJ business will come mostly from southerners travelling for leisure...their tourism dollars will infuse the local economy...and possibly Yukoners looking to connect further down network with WJ, or purchasing WJ vacation products.

[Redneck_pilot86]

Ya I'm pretty sure AC isn't going to be offering WS Ramp services either in YXY ... It adds quite a bit of cost to the operation to have your own dedicated part time staff up there...for what I assume is a once daily flight.

AC and the European airlines use Air North equipment. Air north has the only tugs/catering trucks/air stairs/etc in Whitehorse.

[CamAero]

From the Boss yesterday:

Air North, Yukon’s Airline

Employee/Shareholder Communication

January 30, 2012

Re: WestJet’s January 29, 2012 Announcement

The recent announcement by WestJet to fly to Whitehorse was not completely unexpected. During recent months we have observed an escalating national competitive battle between WestJet and Air Canada and I suspect that WestJet’s decision to fly to Whitehorse may have more to do with that than it does with any particular interest in our small market. Whitehorse represents about one quarter of one percent of all of the enplanements and deplanements in Canada and we already enjoy more flights and lower airfares than many communities that have much larger populations.

WestJet is a fine airline and while Yukoners may benefit from having easier access to their route network, there is also some potential for negative impact. Air North, Yukon’s Airline is one of only six airlines in all of Canada that provide scheduled air service with jet equipment and Whitehorse is somewhat unique with respect to the number of jobs in our community that relate to our operation.

We currently have 168 full time equivalent (FTE) employees in the Yukon representing 77% of our employee numbers and 82% of our payroll dollars. Our Yukon payroll last year was more than $9 million and our employees now represent almost 1.5% of the private sector Yukon work force. Our south scheduled service by itself now accounts for more than 110 full time permanent Yukon jobs and more than $6.5 million in annual Yukon payroll. These jobs include administration, sales and marketing, catering, maintenance, and flight crew positions. These jobs are here in the Yukon only because Air North is here. I believe that it is important to our community that these jobs not be put at risk. I read recently that the Mayor of Montreal has made a personal appeal to the President of Air Canada to reconsider moving 140 jobs from Montreal to Toronto. If 140 jobs are important to a city of more than 2 million, then what is the value of 168 jobs in a city of 26,000?

For us it’s pretty simple. If we are going to maintain and grow our Yukon employment, then we need to maintain and grow our flying, and if we are going to maintain and grow our flying then we need to maintain and grow our traffic. The new service proposed by WestJet will increase market capacity by more than 25% at a time when market load factors are already averaging less than 70%. Unless the market grows substantially (it grew by just under 7% last year), there are going to be a lot of empty seats flying around this summer and it will eventually become necessary for somebody to cut back. We need to make sure that we are not the carrier that needs to cut back.

We can preserve and grow our market share with the continued loyal support of our Yukon customers, employees and shareholders. We are already matching the $99

introductory airfare and we will continue to match as long as it lasts. Based upon WestJet’s published data, each seat is costing them somewhere around $130 full or empty so on a 60% full flight they will need $216 or so to cover costs and $233 or so to achieve the same return as their other routes. Our average fare to Vancouver last year was right around $230 so it’s pretty easy to see why the $99 fare won’t last.

I have a lot of confidence in our Yukon market and I suspect that WestJet might be a bit surprised by the reaction that they get from the Yukon with respect to their new service. I have been happy to hear from Yukoners that they value our product and the role that we play, not only in our local economy, but in our community as well. It’s pretty clear that the Yukon market is not going to have any real impact on the bottom line for either WestJet or Air Canada but getting caught up in the competitive battle between the two mainline carriers could have a very real impact on people in our community along with their families. I think that both mainline carriers need to know that Yukoners are prepared to support their airline and they should also be encouraged to grow their presence in this market through baggage interline, code share and other working relationships that do not jeopardize local jobs.

Joseph Sparling, President

Air North, Yukon’s Airline

[JZA]

AC and the European airlines use Air North equipment. Air north has the only tugs/catering trucks/air stairs/etc in Whitehorse.

...really? Last time I was in YXY AC had it's own stairs, carts, de-ice equipment etc....unless they sold it off since last summer. Some of the equipment still has orange paint underneath since the CP days...though they did get a new de-ice truck a year ago.

[WJ700]

Well written letter by Joe Sparling. I worked a brief contract for him in the mid 90's and have a lot of respect for the company. Great culture, and a solid airline. I don't doubt it will be a challenge for WestJet.

[Redneck_pilot86]

AC and the European airlines use Air North equipment. Air north has the only tugs/catering trucks/air stairs/etc in Whitehorse.

...really? Last time I was in YXY AC had it's own stairs, carts, de-ice equipment etc....unless they sold it off since last summer. Some of the equipment still has orange paint underneath since the CP days...though they did get a new de-ice truck a year ago.

I'll have to pay a little more attention. I know I have seen AN equipment around the RJs, but it could have just been individual scenarios. I'm certain the European trips in the summer use AN. (SwissAir, Condor, etc.)

[KAG]

As much as im excited about the whitehorse announcement (plan on visiting there) I think we should focus on expanding south and leave the north to the northern carriers. Maybe workout a CPA or codeshare. Im all for keeping as many good jobs up north supporting the north.
IMHO anyway.

[CamAero]

As much as im excited about the whitehorse announcement (plan on visiting there) I think we should focus on expanding south and leave the north to the northern carriers. Maybe workout a CPA or codeshare. Im all for keeping as many good jobs up north supporting the north.
IMHO anyway.

I am sure that 4N would like to see that also.

That is what JTS was getting at here:

I think that both mainline carriers need to know that Yukoners are prepared to support their airline and they should also be encouraged to grow their presence in this market through baggage interline, code share and other working relationships that do not jeopardize local jobs.

It would allow W.J. to continue to push their point with AC and they wouldn't have to do it at a loss. It could be a win-win across the board and a very sensible strategy.

Thus far though, the word is that W.J. has been non-receptive to those types of proposals from 4N.

Regrettably, at the moment, 4N has found itself caught up as a third wheel in a battle of the titans.

C.

[Realitychex]

We heard the same story when WestJet went to YZF in 2008.

Has any airline collapsed since WestJet began operations in the North?

No one had a problem with 2 or 3 legacy-type airlines duking it out, but they seemed to have an issue when a low cost airline, and the only one that is consistently profitable and therefore indefinitely sustainable, arrived.

If folks in the Yukon are as loyal as Joe figures they are, he hasn't a worry in the world.

It's counter intuitive. Subscribe to Google Alerts and see how many communities in Canada are lining up waiting for WestJet's proposed turbo prop service to arrive. That additional traffic arriving in YXY = money for the community. That's why the USG underwrites airports. They drive economies.

However, if I'd been Joe, (who I've never met, but heard nothing but good things about), I would have made sure that any B737 I got my hands on was as compatible as possible with WJ's fleet. You always need to have an exit strategy....

[Redneck_pilot86]

That additional traffic arriving in YXY = money for the community. That's why the USG underwrites airports. They drive economies.

The extra 1 flight per day is not going to bring in enough revenue to factor out the lost jobs when Air North has to downsize. I like Westjet, and will do everything I can to not fly Air Canada, but I don't think WJ needs to be in Whitehorse losing money. Open up to sharing program with the AN routes and everyone benefits.

[Jastapilot]

That additional traffic arriving in YXY = money for the community. That's why the USG underwrites airports. They drive economies.

The extra 1 flight per day is not going to bring in enough revenue to factor out the lost jobs when Air North has to downsize. I like Westjet, and will do everything I can to not fly Air Canada, but I don't think WJ needs to be in Whitehorse losing money. Open up to sharing program with the AN routes and everyone benefits.

Westjet doesn't typically stay in a market to lose money. They give the community a chance, then, if no one's interested they leave. EX. Winnipeg, Thompson, Gander, etc. It's an introductory price, it won't last. Joe said it himself in that memo.

Also, if the Westjet management didn't see an opportunity here, we wouldn't be announcing it!

[Donald]

As much as im excited about the whitehorse announcement (plan on visiting there) I think we should focus on expanding south and leave the north to the northern carriers. Maybe workout a CPA or codeshare. Im all for keeping as many good jobs up north supporting the north.
IMHO anyway.

It's too bad that every other WJ'er thinks their company needs to be everything for everyone.

If Air North is not able to compete and ends up laying people off, there will most likely still be WJ'ers that are happy because "they won"...

[Realitychex]

As much as im excited about the whitehorse announcement (plan on visiting there) I think we should focus on expanding south and leave the north to the northern carriers. Maybe workout a CPA or codeshare. Im all for keeping as many good jobs up north supporting the north.
IMHO anyway.

It's too bad that every other WJ'er thinks their company needs to be everything for everyone.

If Air North is not able to compete and ends up laying people off, there will most likely still be WJ'ers that are happy because "they won"...

Here's a news flash.

WJ has had Whitehorse of the radar screen since at least 1998. This development should not come as a surprise to anyone and has little, if anything to do with any supposed larger battles elsewhere.

I am reminded of a comment made by the Mayor of Kelowna about 14 years ago. He said he didn't care if one of either Canadian or Air Canada left the YLW market, but it would be catastrophic if WestJet disappeared. The permanent low fares drove business, tourism and jobs to the market. Compare growth in Penticton to Kelowna for further details.

Ask anyone in the Comox Valley what WJ has done to that community. It's no coincidence that the 8 year real estate boom in Courtenay / Comox corresponds precisely to the month when WJ launched service there. Check the MLS stats for details.

It also may not be a coincidence that one of the largest residential real estate developments in YZF, (Copper Sky and its successor, Niven Heights) got underway about the time WestJet arrived in the marketplace.

Competition is good for business, the economy and ultimately quality of life. If WJ can make a buck operating into YXY, then so be it. If they can't, they'll move on.

As I said earlier, even after all the whining by some of the incumbent YZF carriers in 2008, I haven't seen anyone disappear from the marketplace. Each airline has its own loyal customers and those customers that focus on price will simply choose who ever has the lowest fares.

[Independence]

You really think that Westjet is so all powerful that the economy booms just because they move in? You don't think that perhaps their planners decide to move there because that area is starting to pick up.

As for the comment about about all four carriers doing just fine in Yellowknife....exactly how many have their home base north of 60? None. Air North has that higher operating cost as a reality.

[CamAero]

As for the comment about about all four carriers doing just fine in Yellowknife....exactly how many have their home base north of 60? None. Air North has that higher operating cost as a reality.

That is exactly right, and for that reason the Whitehorse market is not analogous to the Yellowknife situation.

By having their main base at the least populous end of their route system, they limit their potential pool of skilled labour, have to pay higher wages and automatically incur much higher overhead in maintaining infrastructure.

Also, the other airlines serving YZF do not rely solely on that route. For them, it is just a small portion of a substantial route system.

Air North's South Sched is exclusively serving YXY from YYC, YEG & YVR.

In a three-prong approach, it is my hope that WJ, the Territorial Government and the Yukon public will be convinced that there needs to be a code-share with Air North and that they (Westjet) otherwise leave the Whitehorse market.

The same option should, (and I'm sure, will), be offered to Air Canada as well. It is a greater unlikelihood that they would accept such a proposal however.

It is not Westjet's normal business model either to entertain such agreements.

With the support of the community though and the certainty that it will be profitable for them, maybe they will come around.

This situation for Air North could be very dire in very short-order.

C.A.

[Independence]

As much as im excited about the whitehorse announcement (plan on visiting there) I think we should focus on expanding south and leave the north to the northern carriers. Maybe workout a CPA or codeshare. Im all for keeping as many good jobs up north supporting the north.
IMHO anyway.

It's too bad that every other WJ'er thinks their company needs to be everything for everyone.

If Air North is not able to compete and ends up laying people off, there will most likely still be WJ'ers that are happy because "they won"...

Here's a news flash.

WJ has had Whitehorse of the radar screen since at least 1998. This development should not come as a surprise to anyone and has little, if anything to do with any supposed larger battles elsewhere.

I am reminded of a comment made by the Mayor of Kelowna about 14 years ago. He said he didn't care if one of either Canadian or Air Canada left the YLW market, but it would be catastrophic if WestJet disappeared. The permanent low fares drove business, tourism and jobs to the market. Compare growth in Penticton to Kelowna for further details.

Ask anyone in the Comox Valley what WJ has done to that community. It's no coincidence that the 8 year real estate boom in Courtenay / Comox corresponds precisely to the month when WJ launched service there. Check the MLS stats for details.

It also may not be a coincidence that one of the largest residential real estate developments in YZF, (Copper Sky and its successor, Niven Heights) got underway about the time WestJet arrived in the marketplace.

Competition is good for business, the economy and ultimately quality of life. If WJ can make a buck operating into YXY, then so be it. If they can't, they'll move on.

As I said earlier, even after all the whining by some of the incumbent YZF carriers in 2008, I haven't seen anyone disappear from the marketplace. Each airline has its own loyal customers and those customers that focus on price will simply choose who ever has the lowest fares.

Brilliant, we should have Westjet service Attawapiskat and Davis Inlet and the resulting boom will solve the poverty issues.

[Realitychex]

You really think that Westjet is so all powerful that the economy booms just because they move in? You don't think that perhaps their planners decide to move there because that area is starting to pick up.

As for the comment about about all four carriers doing just fine in Yellowknife....exactly how many have their home base north of 60? None. Air North has that higher operating cost as a reality.

Let's just say I was pretty familiar with WJ's planners at the time.....

Have you ever wondered why cities in the US have gone as far as to have billboards put up around enterances to Southwest Airlines HQ at Love Field begging for Southwest fly to their particular city?

Check out Penticton's growth vs Kelowna, or Nanaimo or Campbell River vs Comox/Courtenay. Low fares / cheap transportation drive local economies.

The overall economy in Whitehorse will improve as a result of a LCC entering the marketplace.

[Independence]

Because the economy boomed it must has been Westjet??? By that logic, in the last 7 years Whitehorse real estate prices have doubled, unemployment has dropped to about the lowest in Canada and the per-capita income is close to the highest in Canada. I guess that must be as a result of Westjet NOT going to Whitehorse 7 years ago.

If the route that Westjet had chosen was a new direct route (say Toronto) to Whitehorse I could see that there might be a benefit to the economy. As I doubt the westjet price a year from now will be much different from the $200 that is available today, mostly this is just about moving bums from one set of seats to another.

[CAL]

I wonder how Starbucks feels when Tim Horton's set up shop across the street... Predatory pricing!

I think this pretty much sums it up.....best of luck to WJ with the new route

[stickontheice]

It's Canada it's democracy with a free market place. WJ has a right to compete and it will. The people of the Yukon will decide how well.

[Independence]

It's Canada it's democracy with a free market place. WJ has a right to compete and it will. The people of the Yukon will decide how well.

I agree completely. I was taking issue with the statement that this was going to be a big plus to the Whitehorse economy. It may not be if a couple of hundred good jobs end up going south.

[FICU]

On the topic of Westjet north of 60, rumor has it that Westjet and Canadian North have recently signed an interline agreement.