V1213

There is a lot of fearing for the worst going on and we haven't even seen the first schedule change or concrete announcement yet.

For the record, the announcement does mention keeping premium offerings and business travellers in the west...
...and that their eastern focus will be about providing connections from the west, so it's not like those routes are necessarily going anywhere...
...as well as labelling Loyalty as critical and something be scaled.
While I have my concerns over aspects of the announcement and what it's not saying, I'm going to wait and see what happens before passing judgment.

I'd guess that some things will start pivoting soonish for the period after October/November, as that's when the Summer schedule basically ends. Hopefully those changes flow through to the long-horizon Summer 2023 schedules, so we have a better view than what's in the system now.

FlyerJ

Maybe so, and I really hope you’re right.

But there’s no question that the announcement indicated a major shift to being a leisure carrier focused on leisure customers. That’s not what they are today, and such a shift has to have consequences on non-leisure parts of the business.

Sure, he said they’ll still keep their premium on-board product. But there was nothing mentioned about trying to gain or grow business fliers or premium customers. Nothing about the importance of that segment. Just essentially saying “we’re not getting rid of it”. Not expanding on it, not making it better or more appealing, not using it as a competitive advantage. Just “we’ll keep it”.

And no mention at all of two of WestJet’s biggest strategic initiatives under the old boss: lounges and Delta. Maybe I’m reading too much into it, but the silence on those two points in a major strategy announcement seems to say a lot.

It was a just a whole lot of “sun and leisure”. You could easily replace the name WestJet in today’s announcement with Eurowings or Transat, and it would still make sense. But if you replaced WestJet with “Delta” or “United” or “Air Canada”, it would read like fiction.

arf04

Not confused at all. The majority of Canadians live in Ontario and Quebec. If you’re not making it work there, you’re not truly a national carrier. The west is great—that’s why I live here (and previously in AB for many years)—but it’s a straight up numbers game. WS seems to be choosing a growth path that means giving up on the triangle. AC is in there not because they’re AC but because it’s still the population centre of Canada and that’s where you need to be. I’d much prefer it if they turned YQR into their main hub

Or maybe you think a strategy built on funnelling passengers from YYZ to YYC to connect them to Europe is viable for any airline?

Upside Down Pyramid

I think this is all about Onex cutting the unprofitable parts and emphasizing the money making parts for a future sale.

They have always said that they don't want to run an airline, but rather make a quick (maybe no so quick given Covid) buck from it.

arf04

It’s very sad, really, if you’re right as we don’t need AC dominating certain segments even more than they do.

Error 601

I'm pretty sure Gerry Schwartz very, very much wants to run an airline.

tracon

7 787s is a tiny fleet in the scheme of things.
Could end up being more of a headache than they're worth.

If business travel is no longer the focus, the LHR slots may leave too?

Upside Down Pyramid

Maybe 25 years ago, but at 80 it's not a long term proposition.

YXUFlyboy

I think you have that half right. A lot of Canadians live in Ontario, with about 38% of Canada's population. Alberta and BC together have more population than Quebec. You are overestimating the importance of the Quebec market to a national carrier, which actually is a unique market.

To be a national carrier you need a strong eastern hub and a strong western hub, with focus cities or reliever hubs. Right now, the WS western hub is YYC with YVR as reliever/secondary and YEG as a focus city. In the east, it's YYZ as eastern hub with YHZ as a focus city.

Despite Montreal's much larger population, YYC has been very closer to YUL's overall passenger count, and exceeded it in both 2020 and 2021. This is largely because YYC is 70% domestic and 30% international, and YUL is 70% international and 30% domestic and domestic traffic recovered faster. But even in 2019, YYC was close to 18M and YUL was about 20M, and YVR was over 24M.

Montreal's market is also unique. Quebec travelers value leisure/sun destinations (dominated by Air Transat) and international travel, especially trans-Atlantic (low cost is also dominated by Air Transat). In this market, that's Air Canada for full-service carriers, but also many international carriers service YUL. Trying to start a hub in Air Canada's backyard, with zero brand recognition and Air Transat taking all leisure traffic is just stupid. Quebecers are loyal to Quebec companies. It has never made sense to try to break into this market for WestJet.

Toronto is a different story. Giving up market share here seems like a mistake to me and there seems like there's much higher revenue potential here.

That makes no sense. WestJet's strategy was always to increase TATL options in the west. I still think there's a bigger market in YYZ, but definitely not YUL. But YYZ is saturated and has heavy competition. Western Canada has little connectivity to Europe comparatively. So no, they aren't targeting YYZ travelers to connect via YYC. It's Western Canada and Western US passengers - SEA/PDX/LAX/DEN/SAN/SFO.

aerobod

it is interesting this summer that WestJet is flying more transatlantic flights on 737s from the east than 787s. There is a performance enhancement for the MAX-8 that has just become available that increases the range to 6,690km, so the current YYZ-LGW route becomes viable on a MAX-8. The wording of the announcement from WS implies international flying on wide bodies predominantly from the West, but it doesn’t say anything about stopping European flying from YYZ. The only route that WS currently flies to Europe from YYZ that the new performance enhanced MAX-8 can’t reach is BCN.

The economics of a transatlantic MAX-8 are far better than a widebody, if it can comfortably make the distance without wind related tech stops. I believe the new strategy is more about using the widebodies where they are most efficient and not just on routes to match AC. this may also mean Asian leisure flying from the West. If WS takes the MAX-7 when deliveries start this year, besides LGW being reached comfortably, CDG and AMS are also in range from YYZ

Adam Smith

The Q is definitely not the right aircraft. Unless it's at a significant price discount, who would ever want to fly a DH4 on YYZ-YUL/YOW rather than a real plane on AC? An absolute joke.

The old, public WestJet seemed to have very long-term plans of becoming a truly national competitor and international, full-service airline. They took a long time to make decisions like rolling out a loyalty program and credit card, and ordering widebody aircraft for long-haul routes, and tried to take risk in fairly small amounts. Getting to 51 consecutive quarters of profits isn’t easy in a lot of sectors, and in the airline business is almost unheard of.

But Onex doesn’t care what WS looks like in 20 years or even 10 years. They will likely be trying to monetize it in the 2025-2028 timeframe. Continuing to invest in a slow, cautious build-out of international routes, adding incremental widebodies, etc, probably doesn’t maximize profits in the timeframe that Onex will want to put WS back in the public markets, even if it might generate more value over a decade or more.

Some of the things they’re cutting may not be unprofitable, but may be less profitable (and therefore worse to Onex’s exit valuation) than deploying the resources elsewhere.

No, they’ve always been a leisure carrier focused on leisure customers. They were starting to target business traffic in the years before Onex and COVID. There was finally a premium product, but connectivity with partners was terrible, the hokey attitude still showed up plenty of times, priority boarding was a joke (I regularly watched over half the plane get on during the pre-boarding for families with small children and elderly passengers, when anyone with a kid under 18 or a speck of grey hair felt entitled to get on before those with “Zone 1” boarding passes, and were allowed to do so by WS staff), and the self-serve options on the app and website made it easy to see why AC felt its mediocre efforts in those areas – as compared to the US3 – were sufficient.

Unless WS offered me a non-stop vs a connection on another carrier, I never chose them for business travel. YYC-LAX or YYC-NYC, sure, sometimes the WS flights worked better than AC. But YYC-BOS? Nope, AC had much better frequency, better potential IRROPS handling, etc. YYC-LatAm? Yeah, I actually wanted to try YYC-ATL-BOG/etc on WS/DL, but for a very long time after WS launched that flight, I couldn’t buy it all in the front cabin – buy from WS, sit in the back on the DL legs. Buy from DL, sit in the back on WS. They finally figured it out, but it took maybe two years for that? Meantime, I kept flying AC/UA via IAH, AA via DFW, etc.

Flying on business, I often valued same-day changes and standby to cut down my travel time. WS touted offering SDC up to 24 hours from the flight. But only at the airport. Only online if you were less than 5 hours out from your original flight. But also more than 2 hours out from the flight you wanted to change. So, the number of routes that had flights within that window was very small. And multiple WS stations told me there was no such thing as standby (not outstations in foreign countries, domestic Canadian airports with a fair amount of service). US airlines, do that kind of stuff in the app. AC for a long time only allowed you to do it at the airport unless you had concierge access, but eventually added a lot of that to the app.

They were making some progress, but doing it very slowly.

There’s probably still plenty of TATL traffic they can take from AC at YYC. AC connects lots of people from YYC and elsewhere in the west to various places in Europe via YYZ/YUL or the YYC-FRA flight that would definitely be inferior to a non-stop from YYC.

But how is AC going to get any US connecting traffic for TATL routes? SEA/LAX/SFO have plenty of their own TATL service, and DEN isn’t horrible on that front. But even if you’re in PDX or SAN without a lot of TATL options, why on Earth would you fly through YYC? The morons who run the airport permanently nuked sterile ITI transit during COVID. And as far as I’ve been able to tell from my few international trips over the last year or so, even INTL-US connections require clearing CBSA before heading to US security and CBP.

AC made a big business of 6th freedom traffic to/from the US during the years before COVID, but key drivers of that were:

• Sterile ITI transit in YYZ, YUL, and YVR
• Decent service to secondary US cities that would usually require a connection somewhere to get most places in Europe/Asia, e.g. IND, BNA, etc
• Dense route network to Europe, meaning competitive routes (e.g. AC was the only North American carrier flying to some places like ZAG, so if you were in, say, NYC, NYC-YYZ-ZAG could be competitive with NYC-European hub-ZAG)
• Good geographic positioning of hubs, e.g. PIT-YYZ-Europe, NYC-YVR-Australia not much different, distance/time-wise, than connecting at a US hub

What does WS offer at YYC? YYC is in a decent geographic location from some western US cities, but there’s no sterile transit, a tiny European network to which to connect, and a lot of WS’s big US destinations from YYC probably don’t have a lot of market for European connections. LAX? Has the world’s largest airport by O/D traffic right there. LAS? Bunch of European airlines fly there. PHX? Big airport, not a lot of TATL service, maybe some value there for those who want to do PHX-YYC-FCO, CDG-YYC-PHX, etc? And so on. But definitely nothing that jumps out.

With WS's lack of international partnerships, the value of LHR over LGW was always suspect. Seems an easy way to cut costs.

pfreet

Not cabotage if Delta flies to YYC from their hubs. Then Westjet to a bunch west coast US cities. Maybe I just annoyed with Delta's unwillingness to fly to SBA, SBP, etc.

angetenar

No airline can be everything for everyone

pfreet

That is why airlines establish partnerships. Such as Delta's partnership with Westjet.

YXUFlyboy

Or even leisure travel. And I'm YYC-based too.

See, I thought that too. But apparently it's functionally sterile - when international flights are using the concourse you can enter from the domestic concourses but to exit, you need to clear customs.

Connections to a few European airports with decent one-way pricing, and a cheap business cabin relative to at least the pre-COVID service. There's a pretty big price discount connecting via YYC vs. originating in YYC.

But it doesn't matter - the only way WS was going to grow to fill 20 789s was to attract a portion of the US market and copy the AC strategy. With only 7 frames, it is easier to copy the Air Transat strategy - fly leisure TATL in summer and fly to Hawaii, Mexico and potentially Caribbean in winter. Throw in some domestic service and basic TATL winter service, and your frames are used.

If the intent on grabbing LHR was to attract business travelers, I can't imagine any of those pax now would take this seriously. I'm betting LHR does not return.