Just when you thought things couldn’t get weirder north of the border, WestJet decided to step up. The airline that for years has been known as the successful, friendly mash-up of JetBlue and Southwest has made a decision to try something new. It’s going to take 10 737-800s and pack them full of seats to start its own ultra low cost carrier (ULCC). Excuse me for a moment while I grab some Pepto Bismol.
To be fair, this isn’t the first time WestJet has tried to diversify, but it may be the first time it falls completely on its face. The first big effort was Encore, the regional operation that introduced turboprops to smaller Canadian cites. While this was a big undertaking, it made sense. Canada doesn’t have all that many big cities, so for WestJet to grow, it had to look at new market opportunities that the 737 wouldn’t support. Further, it was complementary to the brand.
The second effort was getting into the long-haul game. When WestJet acquired some old 767s to fly to London, I was concerned. The Atlantic is a crowded market and the competition is fierce. This one has been a rough go with major operational issues slowing the airline down. WestJet plans to grow this part of the business, and I remain unsure. Let’s say the jury is out on this one.
Now for the third effort, we have this ultra low cost carrier idea, and I hope it never comes to fruition. Oh sure, there is the speculation that this isn’t meant to actually happen. It’s could be just a way to keep potential ULCC competitors at bay if they know WestJet is going to come in and try to crush them like a bug. That’s probably the best case scenario that we should all be hoping for.
If WestJet does go forward with this plan, I see nothing but doom and gloom. No, we don’t have details, but there are so many issues here. First and foremost, airlines-within-an-airline don’t work. (Yeah, yeah, go ahead and pitch Jetstar but I’m still not convinced. Even if you could prove it, that’s still a pretty awful track record across the industry.)
Some may point to Air Canada’s Rouge but I fail to see how that’s been successful at helping the airline. Rouge is just a way to carve out lower labor costs on a subset of old aircraft so Air Canada can find a way to fly those aircraft on lower-yielding routes. It’s also a distraction. But let’s not get too much into Rouge. This is about WestJet.
What’s the difference between WestJet and these other attempts? Well, WestJet is trying to be proactive at fighting a looming threat versus one that’s already there, as is usually the case.
While a couple of ULCCs have started up quietly in Canada, it’s been a rough go of it so far. NewLeaf knows the pain of trying to compete with the big boys. When it grew outside Canada and started service to Phoenix/Mesa in Arizona, WestJet followed. NewLeaf blinked and walked away.
That strategy is apparently not enough for WestJet. It thinks it needs its own ULCC if it wants to truly fend off competition. Or at least it says it does. I just have a hard time seeing how WestJet is going to beat a well-built ULCC at its own game. That airline may not exist yet, but it’ll probably come, and then this WestJet ULCC isn’t going to stop it.
What is more likely to stop it is the challenging Canadian market. There are few big routes with really high demand, and the taxes and fees are high. Even a successful ULCC, if one were to exist, is going to have trouble identifying a lot of growth opportunities.
So again, why is WestJet doing this? Employees can’t be happy about this. WestJet has a strong culture, but the stigma surrounding ULCC barebones service is unlikely to make WestJetters (as they’re called) feel warm and fuzzy about this plan. If anything, it will likely put them on guard about the airline eventually deciding it needs to paying people less to work in this operation.
The only plausible reason I’ve seen for this to have ever been announced is just to act as a scarecrow that shoos away any potential entrants who were on the fence. If WestJet actually moves forward with this plan… well then I think we’ve finally seen the airline jump the shark.
