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WestJet CEO sees big fare cuts to small airports

Westjet Airlines president and CEO Gregg Saretsky sits in the cockpit of a Q400 regional airliner in Calgary, June 28, 2012. Westjet will begin receiving the Q400 in 2013.


Airfares to many smaller Canadian communities could be cut by a half in a year's time, if WestJet Airlines Ltd.'s chief executive officer has his way.

Gregg Saretsky, who prefers terms such as "rational pricing" rather than price wars, says that he foresees WestJet's new regional carrier WestJet Encore offering fares up to 50 per cent lower for shorter flights once the subsidiary launches in the second half of next year. These would be for flights travelling on average 300 miles (483 kilometres), as opposed to average distances of 1,000 miles for WestJet's main network.

"If you've ever tried to buy tickets for a short-haul journey in Canada, you've had to open your wallet and dig deep. Short-haul fares in Canada are very, very high," he told analysts in Toronto Tuesday.

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Encore will likely cut directly into territory serviced by rival Air Canada Express, something Air Canada executives have long anticipated. President Calin Rovinescu said this month that "our competition will continually look to bring their fares down." Air Canada has begun responding, for instance, by targeting business fliers with increased regional flights to communities in the oil patch.

On Tuesday, Mr. Saretsky noted the price of purchasing a last-minute ticket from Montreal to Quebec City. "If you buy [a ticket] this afternoon to fly tonight, it's $530. You can fly on WestJet from Toronto and Vancouver for less."

Sherbrooke and Sagueney in Quebec and Castlegar in B.C. are among the smaller regional airports hoping to attract Encore. WestJet hasn't unveiled details on where Encore will fly, only saying that it will begin in either eastern or western Canada before expanding nationally.

For the business model to succeed, Mr. Saretsky is hoping that reduced airfares will entice travellers to fly more often.

"When we lower the fares, it's not carrying the same people at lower fares. It's lowering the fares so that we can make the market expand," he told analysts. "I see all kinds of communities in Canada where people would love to travel more."

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