WestJet lowers fares by 25 per cent, slashes seat sales
Jun 17, 2010, 4:03 pm
#1
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WestJet lowers fares by 25 per cent, slashes seat sales
http://www.calgaryherald.com/news/We...614/story.html
WestJet Airlines has adopted a new pricing strategy of getting rid of seat sales in favour of offering every-day low prices and chopping a quarter off its highest fares.
The low-cost carrier said Thursday the move will reduce volatility plaguing passengers by providing lower fares across the board, and slashing 25 per cent off full-price fares.
"Feedback from our guests shows that they are frustrated at the unpredictability of fares with seat sales only available up to a few months in advance," said Hugh Dunleavy, vice president of strategy and planning.
"As part of this new strategy, fares at the higher end of the spectrum will be reduced. For those guests who, for one reason or another, have to travel at the last minute or at peak travel times like Christmas, we've significantly reduced those fares to make them more affordable."
WestJet said the new fare structure comes into effect immediately.
WestJet Airlines has adopted a new pricing strategy of getting rid of seat sales in favour of offering every-day low prices and chopping a quarter off its highest fares.
The low-cost carrier said Thursday the move will reduce volatility plaguing passengers by providing lower fares across the board, and slashing 25 per cent off full-price fares.
"Feedback from our guests shows that they are frustrated at the unpredictability of fares with seat sales only available up to a few months in advance," said Hugh Dunleavy, vice president of strategy and planning.
"As part of this new strategy, fares at the higher end of the spectrum will be reduced. For those guests who, for one reason or another, have to travel at the last minute or at peak travel times like Christmas, we've significantly reduced those fares to make them more affordable."
WestJet said the new fare structure comes into effect immediately.
Jun 17, 2010, 4:46 pm
#2
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Here's the press release:
CALGARY, Alberta. June 17, 2010. WestJet today introduced new ‘everyday value fares’ with an enhanced pricing structure which reduces the volatility that has been present in the airline industry by providing lower fares across the entire schedule, 330 days ahead of departure. Guests can purchase with confidence when they’re ready to book rather than have to wait for a seat sale to find a low price.
In addition, WestJet Airlines has taken the extraordinary step of reducing its full price fares by an average of 25% for all flights across its entire 68-city North American and Caribbean network.
“Since the launch of our airline in 1996, WestJet has been the leader in driving prices down and providing value to millions of Canadians,” said Hugh Dunleavy, WestJet Executive Vice-President, Strategy and Planning. “This move today reasserts our value leadership position to our guests.
“Feedback from our guests showed that they were frustrated at the unpredictability of fares with seat sales only available up to a few months in advance,” continued Hugh Dunleavy. “WestJet listened and is responding by providing guests the opportunity to book fair prices across the entire schedule.”
“As part of this new strategy, fares at the higher end of the spectrum will be reduced,” concluded Hugh Dunleavy. “For those guests who, for one reason or another, have to travel at the last minute or at peak travel times such as Christmas, we’ve significantly reduced those fares to make them more affordable. This is what our WestJet Care-antee is all about -- offering great low prices and high value, and most of all, always caring for our guests.”
CALGARY, Alberta. June 17, 2010. WestJet today introduced new ‘everyday value fares’ with an enhanced pricing structure which reduces the volatility that has been present in the airline industry by providing lower fares across the entire schedule, 330 days ahead of departure. Guests can purchase with confidence when they’re ready to book rather than have to wait for a seat sale to find a low price.
In addition, WestJet Airlines has taken the extraordinary step of reducing its full price fares by an average of 25% for all flights across its entire 68-city North American and Caribbean network.
“Since the launch of our airline in 1996, WestJet has been the leader in driving prices down and providing value to millions of Canadians,” said Hugh Dunleavy, WestJet Executive Vice-President, Strategy and Planning. “This move today reasserts our value leadership position to our guests.
“Feedback from our guests showed that they were frustrated at the unpredictability of fares with seat sales only available up to a few months in advance,” continued Hugh Dunleavy. “WestJet listened and is responding by providing guests the opportunity to book fair prices across the entire schedule.”
“As part of this new strategy, fares at the higher end of the spectrum will be reduced,” concluded Hugh Dunleavy. “For those guests who, for one reason or another, have to travel at the last minute or at peak travel times such as Christmas, we’ve significantly reduced those fares to make them more affordable. This is what our WestJet Care-antee is all about -- offering great low prices and high value, and most of all, always caring for our guests.”
Jun 17, 2010, 9:03 pm
#3
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This is an interesting strategy and reminds me somewhat of similar strategies recently taken by other businesses such as Safeway (although they still have sale prices).
I wonder how viable this type of strategy will be, especially since their competitors are still going to have seat sales.
For example, if AC has a seat sale and undercuts WS's fares, will WS move to match? If WS moves to match, they'll still be having seat sales, which means this model falls apart...
I wonder how viable this type of strategy will be, especially since their competitors are still going to have seat sales.
For example, if AC has a seat sale and undercuts WS's fares, will WS move to match? If WS moves to match, they'll still be having seat sales, which means this model falls apart...
Jun 18, 2010, 7:49 am
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I wonder how viable this type of strategy will be, especially since their competitors are still going to have seat sales.
For example, if AC has a seat sale and undercuts WS's fares, will WS move to match? If WS moves to match, they'll still be having seat sales, which means this model falls apart...
For example, if AC has a seat sale and undercuts WS's fares, will WS move to match? If WS moves to match, they'll still be having seat sales, which means this model falls apart...
In my mind whether or not this is a viable strategy will not depend on AC - it will depend on the price-conscious consumer. While WS is lowering their highest fares, by implication they are rasing fares for bottom feaders. Will those people simply accept the higher fares or choose to fly less often. If it is the latter, we'llbe seeing a rapid return to seat sales.
Jun 18, 2010, 8:40 am
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Keep in mind that in Canada we face an oligopoly in the airline industry. One player (Westjet) is clearly telegraphing to the other player (AC) that they want to get off of the ultra-low fare "seat sale" treadmill. AC likely wishes to do likewise, so I suspect we'll be seeing far fewer seat sales in the next while.
In my mind whether or not this is a viable strategy will not depend on AC - it will depend on the price-conscious consumer. While WS is lowering their highest fares, by implication they are rasing fares for bottom feaders. Will those people simply accept the higher fares or choose to fly less often. If it is the latter, we'llbe seeing a rapid return to seat sales.
In my mind whether or not this is a viable strategy will not depend on AC - it will depend on the price-conscious consumer. While WS is lowering their highest fares, by implication they are rasing fares for bottom feaders. Will those people simply accept the higher fares or choose to fly less often. If it is the latter, we'llbe seeing a rapid return to seat sales.
It will be interesting to see what happens with the bottom feeders. I was reading the CBC website yesterday on this story. At that time most of the comments were very negative about this approach. I guess time will tell...
Jun 18, 2010, 1:22 pm
#7
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I realize that these people were likely the source of the comments, but hasn't WS's traditional support base been Ma and Pa kettle? I know more and more business people have been flying WS, but does this strategy risk alienating the loyal customers who helped contribute to WS's success (similar to some of the negative feedback that has been heard regarding the FFP)?
Jun 18, 2010, 5:45 pm
#8
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Stereotypes are seldom completely accurate, though AC apologists would like you to believe this view of WS but it's not one I completely believe having seen WS guests on an almost daily basis for years. WS flyers are to me slightly more sophisticated than that and want a good overall travel experience at a decent value and embraced the more friendly WS approach after years of what can be at times inconsistent AC service. Just MHO and it will be interesting to see how these changes are received but I suspect the really loyal Westjetters will still stay loyal.
Jun 19, 2010, 6:06 am
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They also seem to have lowered their regular fares for tickets purchased well in advance, not just their most expensive fares for flights at peak times. What has been a typical "seat sale" fare for ages, now appears as a "regular fare" on their website, and is available year-round rather than just the next few months. This is a reasonable deal for summer and Christmas travel.
Where their new model breaks down is in the off-season, when they have traditionally used cheaper fares to fill planes. The new regular fares are quite a bit more expensive than what has been available in the past. If they aren't offering ultra-cheap fares in the off-season, will people still fly? And since Westjet has been able to make money in the past in the off-season (while their competition has not), is their new model really a good marketing strategy?
Where their new model breaks down is in the off-season, when they have traditionally used cheaper fares to fill planes. The new regular fares are quite a bit more expensive than what has been available in the past. If they aren't offering ultra-cheap fares in the off-season, will people still fly? And since Westjet has been able to make money in the past in the off-season (while their competition has not), is their new model really a good marketing strategy?
Jun 20, 2010, 2:53 pm
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They also seem to have lowered their regular fares for tickets purchased well in advance, not just their most expensive fares for flights at peak times. What has been a typical "seat sale" fare for ages, now appears as a "regular fare" on their website, and is available year-round rather than just the next few months. This is a reasonable deal for summer and Christmas travel.
Where their new model breaks down is in the off-season, when they have traditionally used cheaper fares to fill planes. The new regular fares are quite a bit more expensive than what has been available in the past. If they aren't offering ultra-cheap fares in the off-season, will people still fly? And since Westjet has been able to make money in the past in the off-season (while their competition has not), is their new model really a good marketing strategy?
Where their new model breaks down is in the off-season, when they have traditionally used cheaper fares to fill planes. The new regular fares are quite a bit more expensive than what has been available in the past. If they aren't offering ultra-cheap fares in the off-season, will people still fly? And since Westjet has been able to make money in the past in the off-season (while their competition has not), is their new model really a good marketing strategy?
Jun 20, 2010, 5:48 pm
#11
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I predict we'll be back in the semi-continuous seat-sale mode within 6 weeks. They aren't going to be able to convince people that these regular fares are low.
Jun 20, 2010, 11:45 pm
#12
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I know quite a few people who fly WS exclusively because they believe that the fares are lower than the competition. This new model will likely be confusing to such customers. I wouldn't describe these customers as stupid but as set in their ways. They are happy with what they get from Westjet and don't feel the need to look around to comparison shop. As WS sells a great deal of tickets to leisure destinations (much of their international strategy has been like that), the new fare policy may be tricky to make work.
It'll be interesting to see how this develops, but I don't see it as being sustainable for the airline.
It'll be interesting to see how this develops, but I don't see it as being sustainable for the airline.
Jul 20, 2010, 3:29 pm
#13
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Keep in mind that in Canada we face an oligopoly in the airline industry. One player (Westjet) is clearly telegraphing to the other player (AC) that they want to get off of the ultra-low fare "seat sale" treadmill. AC likely wishes to do likewise, so I suspect we'll be seeing far fewer seat sales in the next while.
http://www.thestar.com/business/comp...-size-of-fleet
MONTREAL - THE PROSPECT OF DEEPLY DISCOUNTED DOMESTIC AIRFARES APPEARS TO BE FADING AFTER AIR CANADA ANNOUNCED TUESDAY THAT IT EXPECTS TO FOCUS ON AGGRESSIVELY GROWING ITS INTERNATIONAL CAPACITY TO TAKE ADVANTAGE OF THE IMPROVING ECONOMY.
Aug 5, 2010, 12:45 pm
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http://money.canoe.ca/money/business...05-142444.html
Passengers waiting for a WestJet seat sale may likely wait in vain as the discount carrier is cutting back on the number of special deals.
It’s all part of a strategy to get travellers book in advance rather than last minute.
“The Canadian consumer has been really trained to wait for a fare sale to happen before they book,” Gregg Saretsky, CEO of the Calgary-based carrier, said in a conference call Thursday.
WestJet’s new pricing strategy, introduced in June, “has put fare-sale-type levels” into the market for 330 days (the maximum number of days the carrier’s computer system allows people to pre-book), Saretsky said.
But “fare-sale-type” does not equal fare sale.
What it means is this: The most expensive fares, charged to those who book one day to fly the next, have been cut by an average 25%. Actual seat sales, meanwhile, have been reduced significantly. In other words, the vast number of passengers waiting for a seat sale before booking a flight are increasingly out of luck and have to pay higher prices.
Passengers waiting for a WestJet seat sale may likely wait in vain as the discount carrier is cutting back on the number of special deals.
It’s all part of a strategy to get travellers book in advance rather than last minute.
“The Canadian consumer has been really trained to wait for a fare sale to happen before they book,” Gregg Saretsky, CEO of the Calgary-based carrier, said in a conference call Thursday.
WestJet’s new pricing strategy, introduced in June, “has put fare-sale-type levels” into the market for 330 days (the maximum number of days the carrier’s computer system allows people to pre-book), Saretsky said.
But “fare-sale-type” does not equal fare sale.
What it means is this: The most expensive fares, charged to those who book one day to fly the next, have been cut by an average 25%. Actual seat sales, meanwhile, have been reduced significantly. In other words, the vast number of passengers waiting for a seat sale before booking a flight are increasingly out of luck and have to pay higher prices.
Aug 13, 2010, 7:20 am
#15
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WestJet softens no seat sale stance?
http://money.canoe.ca/money/business...12-152014.html
WestJet’s plan to reduce the number of seat sales for the sake of “everyday low pricing” has frustrated customers, confused industry experts and possibly put the carrier at a competitive disadvantage against its main rival.
That is why, said aviation analyst Rick Erickson, it would be best for the Calgary-based carrier to simply scrap its new pricing strategy.
WestJet’s plan to reduce the number of seat sales for the sake of “everyday low pricing” has frustrated customers, confused industry experts and possibly put the carrier at a competitive disadvantage against its main rival.
That is why, said aviation analyst Rick Erickson, it would be best for the Calgary-based carrier to simply scrap its new pricing strategy.