Hot Air 6: What’s next for WestJet? [1/2]

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Canadian Complexity:  On the verge of becoming that which they sought to defeat, WestJet has managed to avoid the pitfalls which claimed Canadian Airlines. However, with long-haul expansion on the horizon, any misstep could spiral out of control. (Photo: John Jamieson, July 26th, 2015, YVR)

Following a financial year which saw WestJet record net earnings in excess of $280 Million (CAD), Canada’s second-largest carrier goes into the new financial year on the back of its 51st consecutive profitable quarter. With the launch of Swoop and WestJet Link on the horizon, WestJet is on the verge of being classified as a legacy carrier. When they take delivery of the Boeing 787-9 Dreamliner in 2019 and announce their long-haul expansion plans, they will truly fill the void left by Canadian Airlines.

Despite their notable successes, WestJet cannot become complacent. The Canadian market continues to be volatile and since launching Encore in 2013, WestJet has continued adding complexity to its original “low-cost carrier” structure. In their days as an LCC, WestJet followed the example set by Alaska Airlines and JetBlue by expanding their international network through code-sharing and interline partnerships. Going forward as a global carrier, it’s likely WestJet will either lean towards a particular alliance or begin developing joint ventures with strategic partners.

Currently, according to their website, WestJet has code-share or interline partnerships with 43 different airlines, some dating back as early as 2005. Over the past 10 years, as WestJet broke out of its “low-cost at all cost” shell, their reputation as a successful hybrid carrier began garnering attention outside of North America.

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Following the announcement of their joint venture with Delta Airlines in 2017, WestJet terminated their code-share partnership with American Airlines; currently, the Fort Worth-based carrier retains interline connections with WJA. (Photo: John Jamieson, January 2nd, 2012, YVR)

Cathay Pacific was the first to take notice. The Hong Kong based airline could foresee the benefits of having a codeshare partner with strong connections out of Vancouver (YVR) and Toronto (YYZ). Having served both destinations for many years without being able to offer onward connections, Cathay chose WestJet because of their strong presence in both markets. The two airlines began talks in 2004 before finalizing the agreement in 2010. Cathay‘s codeshare agreements with WestJet and Air Canada (Circa 2016), have been extremely beneficial for the airline as they’ve historically lacked a Oneworld partner in Canada.

As WestJet built up its codeshare and interline network, a theme began to emerge. Three years after announcing their partnership with Cathay, WestJet was interested in partnering with another notable Chinese carrier. In 2013, the Chinese conglomerate HNA announced their intentions to serve Calgary from their hub in Beijing. Hainan Airlines, the largest carrier in the HNA group, was rapidly growing in China and had seen the success other Chinese carriers were having on their flights to Canada. While they have now expanded into Vancouver (2018), Hainan clearly saw the benefit of flying into an airport with regular, and efficient, connections across Canada. Calgary, as WestJet‘s main hub and corporate headquarters, has become an important destination for the Chinese carrier.

Before touching on WestJet‘s new joint venture with Delta Airlines, here is a quick summary of their current codeshare and interline portfolio.

  • WestJet currently code-shares with 16 international carriers: 8 from the Sky Team alliance, 4 from the Oneworld alliance, and 4 that are currently unaligned. Perhaps unsurprisingly, WestJet does not have any codeshare partnerships with any Star Alliance carriers.
  • However, while they do not share their code with any Star Alliance carriers, they do have interline partnerships with 4 airlines from Star: Air China, Air New Zealand, Lot Polish Airlines, and rather interestingly Air Canada‘s close partner, United Airlines.
  • While there are certainly important differences between code-sharing and interlining (this should help), it remains interesting that WestJet has looked at Star Alliance carriers for their network connections.
  • Having categorized the carriers, it is evident that based on WestJet‘s current airline partnerships they have targeted the following regions for future growth.
    • Asia: demonstrated by their 10 code-share partnerships and 8 interline agreements.
    • Europe: with 2 code-share partnerships and 8 interline agreements.
    • North America: through 2 code-share partnerships and 6 interline agreements.

Without knowing the plans for WestJet‘s future long-haul services, we can only speculate on future partnerships; however, based on their current partnerships, WestJet has positioned itself nicely for growth in a number of developing markets worldwide.

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In a few weeks, we’ll conclude our look at WestJet with an emphasis on their joint venture plans and alliance opportunities. (Photo: John Jamieson, August 3rd, 2013, PDX)

 

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