WestJet to Examine Regional Airline

WestJet to Determine Regional Airline Need

Canada Departures Board
Canada Departures Board

Canada’s low cost carrier, WestJet, made public they are considering the launch of a new, short-haul, regional carrier as soon as 2013 with a fleet of approximately 40, smaller turboprop aircraft.

The big question is whether WestJet could adopt a low cost, fast turn model among a fleet of smaller turbo-props, and how would the new new carrier interact with WestJet?  The issue and discussion of a short-haul carrier has come up before within WestJet, but aside from the maturity of the WestJet brand, is there anything that makes it different this time?

Gregg Saretsky, WestJet President and CEO said, “We are meeting with WestJetters throughout January to get their input on this watershed decision. One of the cornerstones of our success is engaging with employees early on in key decisions and I am confident they will see the strategic value of this initiative. Once our employees have had the opportunity to share their input, we will be in a better position to make a sound decision rooted in employee feedback and engagement.

“As we’ve said on many occasions before, we have regularly evaluated this strategy,” continued Gregg Saretsky. “A short-haul aircraft combined with WestJet’s brand, balance sheet strength and low-cost structure will allow WestJet to profitably accomplish four main goals: Introduce WestJet’s friendly and caring service to many smaller communities who have asked for our service; optimize the size of aircraft to efficiently increase frequency; create new connections between existing WestJet markets; and build additional feed to our current 71-city network so that we can continue to profitably grow and add shareholder value.”

Profit (or minimizing loss) and shareholder value are key elements as to whether WestJet will give this a project a green light at a point in the future.  Growth via a new short-haul airline is certainly viable if WestJet can tap the smaller, undeserved markets or markets with unmet demand, and linking these markets to the WestJet network while maintaining the low cost model of doing business.

Clive Beddoe, WestJet Chairman and principal founder said, “I am excited at the prospect of repeating the entrepreneurial success of WestJet’s beginnings …. This new airline, powered by our low-cost model and strong corporate culture would greatly benefit the guests we serve, their communities and our shareholders. Our single fleet of Boeings will be joined by a sister company operating a single fleet of turboprops to maintain maximum efficiencies for both airlines.”

Saretsky concluded, “This would be the natural evolution of our airline,” and further said, “We have built a powerful brand that has been embraced by the travelling public from the start. Our goal now is to provide more Canadians with more access to lower fares and our friendly and caring guest experience.”

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