Ashley Nunes is an Atlanta-based researcher in transportation safety, regulatory affairs, and behavioural economics.
Very exciting. That's how WestJet describes its plans to bring ultra low-cost travel to Canada. Its new no-frills service is expected to launch later this year with a fleet of Boeing 737s. WestJet says the new offering "will provide Canadians a pro-competitive, cheap and cheerful flying experience from a company with a proven track record."
Not everyone is smiling though. Some see the move as a race to the bottom. What frills are left to take away from flying, they wonder. Seats? Toilets? Oxygen? Others contend that "no frills" adequately describes the current WestJet experience. One person on social media suggested the airline should – in light of its new venture – be renamed "LessJet." Flying wasn't always like this. Legroom used to be plentiful, alcohol free-flowing, and haute cuisine the norm. These luxuries made getting on an airplane the envy of millions. Few could afford it though. Government kept a tight grip on which airlines could fly, where they could fly and when. This all translated into sky-high prices for passengers.
Deregulation transformed the industry by unleashing the forces of competition, and competition has given passengers what they value most: cheap fares. The result? Ticket prices that have – in real terms – fallen by nearly 50 per cent over the last three decades and millions of Canadians who have reaped the rewards of low-cost connectivity.
What remains unchanged, however, is the high cost of running an airline. Airplanes – like the ones flown by WestJet – run upwards of $100-million each. Add to that figure fuel, labour, maintenance, insurance, depreciation, taxes and fees, and flying becomes exceedingly costly. In fact, the hourly tab for a Boeing 737 runs into the thousands of dollars: hardly a workable prospect if passengers on board are paying rock-bottom fares.
The solution? Pack in more passengers and charge them for extras. More passengers mean more revenue. By one estimate, eight extra seats alone can generate more than $1-million in added earnings for an airline. WestJet aircraft currently seat 168 passengers; they can seat up to 189. Should the airline choose to do so, a financial windfall awaits.
Unbundling fares – the practice of charging passengers for everything from food to drinks to newspapers – is also important. These fees help offset financial losses airlines incur by offering cheap tickets. Such à la carte pricing promotes fairness by only charging passengers for the services they use in exchange for a lower ticket price. Case in point: WestJet's luggage fees.
The airline drew public ire in 2014 when it started levelling a $25 fee for luggage. But carrying those bags is a cost (think fuel, labour and insurance). So who does the airline pass along those costs to? The bags' owners alone? Or should the cost also be borne by the one in four WestJet passengers who fly without any luggage.
Most important is the fact that unbundling fares discourages passenger behaviour that drives up operating costs. Ryanair, Europe's largest carrier, charges passengers for turning up at the airport without printing their boarding pass. That may anger some. But unprepared passengers mean longer lines, more delays and extra attention from costly staff: all of which makes offering cheap fares a difficult endeavour.
WestJet's foray into the world of cramped quarters and à la carte pricing is hardly new. Air Canada did it years ago when it launched low-cost subsidiary, Rouge. Passengers complained back then about being packed in like sardines and being "fleeced" for seemingly mundane amenities. Yet Rouge today is a financial success, credited in helping Air Canada's fortunes soar.
Canadians are clearly willing to put up without some creature comforts in exchange for a cheaper fare. That's exactly what WestJet promises to deliver. If passengers want something better, they are, to quote one airline executive, "more than welcome to pay for it."