WestJet Rewards - High oil takes toll on WestJet

http://www.theglobeandmail.com/servlet/story/LAC.20080109.AIRLINES09/TPStory/Business

WestJet Airlines Ltd. shares, down 13 per cent so far this year, face continued pressure as investors grow nervous about whether the carrier's expansion strategy will be slowed by oil shocks.

WestJet shares, which traded below $10 in October, 2006, surged to a record high of $23.49 last month. They declined 86 cents to $19.58 yesterday on the Toronto Stock Exchange, falling for the fourth consecutive trading day amid concerns about escalating fuel prices, fare wars and economic uncertainty.

In the long run WestJet's future is very bright. They will gradually erode Air Canada's market share until sometime 5 to 10 years from now they will be the biggest airline in Canada, and sometime 10 to 15 years from now Air Canada will be either marginalized or gone completely.

I say this because from my experience flying both airlines, there is no comparison whatsoever in terms of customer service. From the booking experience whether on-line or on the phone (reservation website works well without glitches, no long waits on the phone, polite reservation agents) to the on-time flights, to the polite and friendly staff, and the clean comfortable aircraft, WestJet blows Air Canada away.

My main concern is that once this happens, WestJet may develop the complacent attitude of its rival. Once you have a monopoly why treat the customers like human beings?

Good customer service does not suggest dominance in the airline industry. Bad customer service does not suggest departure from the airline industry.

In the long run WestJet's future is very bright. They will gradually erode Air Canada's market share until sometime 5 to 10 years from now they will be the biggest airline in Canada, and sometime 10 to 15 years from now Air Canada will be either marginalized or gone completely.

I say this because from my experience flying both airlines, there is no comparison whatsoever in terms of customer service. From the booking experience whether on-line or on the phone (reservation website works well without glitches, no long waits on the phone, polite reservation agents) to the on-time flights, to the polite and friendly staff, and the clean comfortable aircraft, WestJet blows Air Canada away.

My main concern is that once this happens, WestJet may develop the complacent attitude of its rival. Once you have a monopoly why treat the customers like human beings?

Interesting financial analysis.... ;)

Yesterdays Financial Post had an article about AC/WS.
AC ticker symbol was listed as WJA. A sign of things to come?:D

Interesting financial analysis.... ;)

When customers choose to spend their money according to the product and service they receive, in the end result they do the financial analysis with their pocketbooks. I think all the financial analysis in the world reduces to just that.

If this board is still around in 5, 10, and 15 years from now I would be pleased to re-open this thread and see if I am right or wrong about this.

When customers choose to spend their money according to the product and service they receive, in the end result they do the financial analysis with their pocketbooks. I think all the financial analysis in the world reduces to just that.

If this board is still around in 5, 10, and 15 years from now I would be pleased to re-open this thread and see if I am right or wrong about this.

AC load factors indicate that some Canadians disagree with your analysis.

Westjet can't force AC out of the market. Westjet flies 737s. They can't serve overseas routes with them and they can't serve small communities with them.

If they figure out how to profitably fill those two 'minor' gaps, I might then get mildly concerned about AC's future. Oil prices make it a lot riskier to try anything like that since it makes deep fare deals quite painful.

BTW, Wardair and Canadian Airlines had great service too!

BTW, Wardair and Canadian Airlines had great service too!

Yeh, it was unfortunate that both got wiped out due to PWA merger-mania that left CAI with unsupportable debt obligations. Westjet is expanding using much more financially reasonable means. Whether they ever get to the point where they can compete across the board with AC remains to be seen, but it will certainly be many years at least. In the meantime, global economics will probably continue to have the most significant effect on the airline industry, which I believe Westjet can weather better than AC.

Westjet can't force AC out of the market. Westjet flies 737s. They can't serve overseas routes with them and they can't serve small communities with them.

You would be correct if WestJet were somehow forced to maintain their current business plan forever without any change.

When they reach the limits of their growth using their current strategy, they will have a couple of options.

They can branch out into smaller cities that can't support enough passenger volume to fill 737's. Choose a small economical plane to service these smaller cities and use this as a feeder to their 737 routes. This would open up a lot more customers to them, and give their current customers more choices of destination.

They can branch out internationally, either through alliances or by serving international routes themselves. Again choose one larger plane to do these routes.

It is only a matter of time before WestJet becomes the dominant airline in Canada.

In the long run WestJet's future is very bright. They will gradually erode Air Canada's market share until sometime 5 to 10 years from now they will be the biggest airline in Canada, and sometime 10 to 15 years from now Air Canada will be either marginalized or gone completely.

I say this because from my experience flying both airlines, there is no comparison whatsoever in terms of customer service. From the booking experience whether on-line or on the phone (reservation website works well without glitches, no long waits on the phone, polite reservation agents) to the on-time flights, to the polite and friendly staff, and the clean comfortable aircraft, WestJet blows Air Canada away.

My main concern is that once this happens, WestJet may develop the complacent attitude of its rival. Once you have a monopoly why treat the customers like human beings?

That's probably one of the most ridiculous posts I've read in a long time. Every AC aircraft I've been on lately has been clean and comfortable. WS has an easier task with a simpler route network, as they grow they'll be subject to the same problems AC has. And as they expand the Kool-Aid cult will start to unravel. (Do they even have a FA base outside of YYC yet?)

... And as they expand the Kool-Aid cult will start to unravel....

The Kool-Aid cult is actually the first thread above in this Airline part of the Forums. :p

That's probably one of the most ridiculous posts I've read in a long time. Every AC aircraft I've been on lately has been clean and comfortable. WS has an easier task with a simpler route network, as they grow they'll be subject to the same problems AC has. And as they expand the Kool-Aid cult will start to unravel. (Do they even have a FA base outside of YYC yet?)

WS doesn't have any "official" bases outside of YYC, but they do have ports. Ports allow employees to live in a city other than YYC (YVR, for example, has 300+ FA's & pilots) and start/end pairings in that city. I heard that most port pairings are in/out of a port base, but there are times when an employee needs to commute to YYC or somewhere else to start/end a pairing. What this does is give the employee a better standard of living by living in the city they want, commuting less, and starting/ending a day at home. This allows for more efficient pairings and, I think, better availability should someone call in sick.