Westjet’s regional gamble

Westjet announced Tuesday that it will fly from YVR and YYC to Chicago starting in May.

That works with the airline’s relatively new and still-developing partnership with American Airlines.

Just a day later, the company announced employees had voted 91 per cent in favour of a plan to buy regional turbo-props. It’s looking to either Bombardier or ATR to bid on a contract for an unspecified number of new planes.

Now, I like Westjet. I’ve flown with them many times and find their service to be quite good. But these two developments leave me thinking about a situation from the past.

Canadian Airlines used to fly “wingtip-to-wingtip” with Air Canada. If one had four flights between YEG – YYZ every day, the other matched the schedule, price and in-flight service. They even operated similar planes, although one tended towards Boeing and the other tended towards Airbus. One towards Bombardier, the other towards ATR.

Canadian also had a budding relationship with American. AA even owned a sizable chunk of CAIL stock.

It all came crashing down when CAIL was absorbed into Air Canada in 1999. Westjet grew phenomenally in the scorched earth left behind when that happened.

Now, I realize there are differences: the management isn’t the same, the philosophy is different, Westjet didn’t take on massive amounts of debt by absorbing a competitor (Wardair).

But a part of me wonders if history isn’t starting to repeat itself.

Westjet has made a solid history for its employees and owners by following a simple strategy: build on a solid regional base, use one type of airplane (the Boeing 737), keep costs down, fly the busiest routes, and if you can’t stimulate new markets – drop them.

Now, if Westjet does deviate from that strategy, it will enter even more into Air Canada territory – literally and figuratively – by allowing the airline to fly more often and into smaller communities.

There’s no doubt those communities would benefit from the competition. But this move may not stimulate more demand.

Let me use one example; Edmonton to Yellowknife. There used to be six flights a day on the route, split evenly between Canadian North and First Air – they were the last airlines to offer a free meal on board. Then, both Air Canada and Westjet launched a daily flight. Now, Canadian North is down to two flights a day, and First Air, one. Yes it’s competition, but not necessarily more or better service.

So now Westjet hopes to fly “wingtip to wingtip” against Air Canada, just as others have before it. All things being equal, the better, stronger airline will win this fight.

I just hope Westjet isn’t planning a mistake.

Categories: Westjet