No more one-price-fits-all at WestJet
CALGARY (The Globe and Mail, April 30, 2008) - WestJet Airlines Ltd. plans to scrap its one-price-fits-all system and move toward a multifare structure, giving upgrades to passengers who opt to pay for more in-flight amenities.
"What we see now is the ability to charge for value-added services," WestJet chief executive officer Sean Durfy said in an interview as he prepared for his airline's annual meeting yesterday in Calgary. "But we don't want to nickel-and-dime."
Mr. Durfy didn't give a time frame for the shift, but some of the changes hinge on the airline phasing in a new computer reservation system by the end of 2009.
Travellers who pay a higher category of ticket price, for instance, could receive a window seat, a sandwich, a movie on an individual screen and greater flexibility on changing flights without penalty.
Industry analysts note that Calgary-based WestJet began 12 years ago as a no-frills carrier, and has been gradually adding perks. As a result, WestJet doesn't face the same level of consumer backlash as Air Canada does because the larger airline has been cancelling or charging for what used to be free services, analysts say.
Bob Cummings, WestJet executive vice-president of guest experience and marketing, said the airline continues to study "value for price paid" by consumers as it assesses the best way for WestJet to improve its fare system.
Mr. Durfy and Mr. Cummings are looking to a future that is clouded by high oil prices, but in the first quarter, the airline's expansion strategy into U.S. and Caribbean markets proved to be fruitful.
WestJet said yesterday that its first-quarter profit jumped 76 per cent to $52.5-million - a record for what is traditionally a slow period, but with Easter falling in March this year, that boosted holiday travel.
High jet fuel prices threaten to slow WestJet's momentum, so it is considering raising fares and/or introducing a fuel surcharge.
When the loonie soared against its U.S. counterpart last year, WestJet enjoyed a currency exchange hedge even as oil prices rose, but with the Canadian dollar stabilizing, rapidly increasing fuel prices are hurting the airline more than ever, Mr. Durfy said during a conference call yesterday.
Winter storms took their toll on WestJet's operations in the latest quarter, with 69 per cent of its flights arriving within 15 minutes of the scheduled landing, compared with its "on-time performance" of 75.3 per cent in the same period of 2007.
Still, Mr. Durfy said he was pleased that the carrier completed 98.1 per cent of its scheduled routes in the first quarter, down just slightly from 98.4 per cent a year earlier. WJA (TSX) rose 44 cents to $17.12.