WestJet Airlines Ltd. plans to buy four wide-bodied airplanes, marking the first step in what is likely to become an assault on Air Canada’s domination of international air traffic.
The carrier said Monday it will buy used aircraft to replace leased Boeing 757s on Alberta to Hawaii flights starting as early as the fall of 2015 and then use them on other routes in the summer of 2016 as the airline looks to expand overseas.
“There is room and there is a need for an operator with our type of value proposition and approach to market [to serve] markets in Europe and frankly other markets in the world,” Bob Cummings, WestJet’s executive vice-president of sales, marketing and guest experience, said in an interview from Calgary.
That doesn’t mean full-blown competition yet with Air Canada on flights to Europe, Asia and South America, but analysts believe WestJet plans to follow up the used plane purchase with an order for new wide-bodied jets that will arrive later this decade and allow the airline to expand internationally.
Air Canada has responded to competition from WestJet and other airlines by starting its own low-cost carrier called Rouge, which is aimed mainly at leisure travellers. It has also increased its marketing to business travellers and boosted its international offerings.
“We’ve already seen WestJet get very competitive and create some problems for Air Canada in the domestic market … and the next phase is going to be the overseas market,” said industry analyst Ben Cherniavsky of Raymond James Ltd.
WestJet’s first transatlantic flights began last month with Boeing 737 service between St. John’s and Dublin.
That experience has shown WestJet that is has opportunities in Europe and elsewhere, Mr. Cummings said.
“We wouldn’t be entering this line of business if we didn’t think it would succeed over the longer term,” he said.
The Dublin experience has helped WestJet develop marketing expertise and build relationships with other carriers, he added.
He would not identify what planes WestJet will purchase, but analysts expect the airline to buy used Boeing 767s, in keeping with its existing fleet, which consists of 737s and Bombardier Inc. turboprop Q400 planes.
He also would not say what kind of seating configuration would be offered on the used planes WestJet will buy, such as whether it will offer business class for the first time.
“What we don’t want is for people to get on the plane and for it to feel old and for it to be an inferior in-cabin experience,” he said.
An expansion of WestJet’s international offerings beyond its Calgary and Edmonton to Hawaii flights and St. John’s-Dublin offerings would require a larger wide-bodied fleet.
“If they’re going to go big in the international game, at some point they’re going to have to place an order for [new] aircraft,” said Ernest Arvai, a partner with aviation consulting firm AirInsight.
Because WestJet operates Boeing jets now, it likely would lean toward buying Boeing 787s if it were to place an order for new planes, Mr. Arvai said.
WestJet has eaten into Air Canada’s domestic market share in part by using lower costs to offer cheaper fares.
That will be more difficult on international flights, Mr. Cummings acknowledged, because fuel represents about 50 per cent of costs, versus about 30 per cent of the costs on domestic flights.
But if WestJet can translate its lower costs into lower fares it will have an advantage, especially in leisure travel, Mr. Cherniavsky noted.
A fare that is $500 cheaper than existing fares will save a family of four $2,000, which is significant for leisure passengers, he said.Report Typo/Error