First they went low. Now they’re going long.
It was just 10 days ago or so that Calgary-based WestJet announced they were going to launch Canada’s first ultra-low-cost air carrier, a move that would see them tangle directly with New Leaf Travel in a sort of Canadian version of Ryanair or Easyjet.
On Tuesday, the airline zagged in the opposite direction, announcing it will buy up to 20 Boeing 787 Dreamliners with an eye on grabbing some of Air Canada’s long-distance routes to Asia, Europe and South America.
It’s a heckuva plan for a company that still positions itself as something of a discount airline, despite prices that often mirror those of Air Canada, the big boy in the Canadian airline sandbox.
“I believe we have all of the foundations that are going to make starting two new initiatives at the same time really quite doable.”
WestJet CEO Gregg Saretsky said in Calgary this week.
Purchasing Boeing 787 Dreamliners will allow WestJet to reach far-flung spots such as Sydney, Australia.
The economic downturn in Alberta is somewhat forcing WestJet’s hand.
“As we grow the ULCC (ultra-low-cost-carrier) and start flying to more places south of the border, or as we expand our international footprint, we’ll have larger pools to tap of people who are buying fares in US dollars or foreign currencies,” Saretsky said.
In a story in the Calgary Herald, Chris Murray of AltaCorp Capital said he thinks there’s a market for an ultra-low-cost carrier in Canada. But he said WestJet’s wide-body international ambitions are troubling.
“My concern is that I’m struggling to understand what the competitive advantage is,” Murray said. “Keep in mind that Air Canada is a very strong operator, and Transat hasn’t lost their way either. So I’m trying to figure out how you compete with Air Canada mainline, Air Canada Rouge, and the international carriers — and do it in a way that differentiates yourself.”
WestJet no doubt will play up its western roots and its folksy, casual image, as well as their super-friendly service. Whether that’s enough to make them stand out is another story.
It sounds like the new low-cost carrier will be run out of smaller Canadian airports, such as Hamilton in Ontario and Abbotsford in the lower mainland of British Columbia.
I haven’t seen any hints of their international priorities, but I’d have to think the booming Chinese market would appeal to them.
Either way, it’s a pretty impressive push to start a low-cost airline and push your international routes at the same time.
