"Forgive Clive Beddoe a brief flirtation with attitude.
It's just that his WestJet Airlines basks in the warm glow of profit while rival Air Canada huddles in the dismal chill of bankruptcy protection.
The chairman of low-fare king WestJet is blunt: Air Canada cannot match his airline's cost model and will be a slim shadow of itself tomorrow.
By one measure, WestJet's cost of operating is half that of Air Canada, he tells a McMaster University alumni lunch in Hamilton.
More than that, the traditional hub-and-spoke airport model of the industry just doesn't fly anymore. "That's why I'm pretty harsh on Air Canada today when I say the state they're in is of their own making," says the normally low-key Beddoe. "... How do you screw up a monopoly?" he adds.
And it's "absolute nonsense" to think that even Zip -- Air Canada's so-called discount airline out west, headed by McMaster grad Steve Smith -- can operate as cheaply and efficiently as WestJet. In fact, Air Canada's strategy has been transparent all along. "It's designed to undermine us," he says later in an interview. "It's not designed to bring low fares to Canadians."
WestJet's growth plans will remain steady, he says. The Calgary-based airline expects to grow by 50 per cent this year but won't rush into areas vacated by Air Canada or into trans-border flights, ahead of an 18-month target date.
It won't have in-flight meals, nor is it ready to add a frequent-flyer points system. For now, WestJet will continue pitching the virtues of pretzels and warm smiles. Wardair, he reminded listeners, was a great airline. But its food was costing $96 per passenger.
WestJet may cut flight frequencies between some cities and increase them between others. And it may add new routes sooner, such as between Montreal and Halifax.
"Hamilton probably is going to see most of the benefit of our growth, one way or the other," he says in the interview, both in the revamped frequencies and for trans-border runs.
Beddoe, one of four founding WestJet shareholders, sees Air Canada bailing out of regional routes. That will open up niches for other players, using small planes, such as Dash-8 propeller-driven aircraft.
WestJet's share of the domestic market is now almost 20 per cent. Air Canada's is likely less than 80 per cent now. At the end, Air Canada was losing about $3.8 million a day, said Beddoe.
During his presentation, he spun a handsome tale of WestJet's success. He told of booming revenues and profit plan-rich employees. One plunked down a $286,000 downpayment on a B.C. home.
"We've turned our employees into filthy capitalists is what we've done," he says to laughter in the convention centre room.
In 1996, the first year of operation for WestJet, the airline had revenues of $37 million. Last year, it was $680 million. In its initial year, there were 7,300 takeoffs. Last year, there were 65,000.
Like the U.S. low-cost pioneer, Southwest Airlines, WestJet shuns the hub-and-spoke model of normal airline practice. That model aims to have several connections so that an incoming passenger on one flight can rush to an outgoing flight on another plane.
But that means jets lay over at airports buzzing with connectivity. Longer waits mean crews get paid for sitting there; jets are not making money in the air. The whole idea is "an incredibly inefficient process".
WestJet aims for half-hour turnarounds. It aims to connect no more "than six or seven airplanes at a time". Its newer Boeing aircraft are far more fuel-efficient. The older jets cost $1,000 an hour to maintain. The modern ones cost only $100. By year-end, said Beddoe, the airline will have 44 aircraft, 25 of them new planes.
Beddoe thinks that 75 per cent of WestJet seats will be sold via the Internet within two years. That allows passengers to make their own plans, link up with their preferred connections.
This change spells doom for historic networks, such as the Star Alliance to which Air Canada belongs. Such alliances, he said, "are simply a way to charge you an excess fare."
The success continues for WestJet. Even as Beddoe spoke yesterday, the airline was releasing traffic figures for March. WestJet said its revenue-passenger miles (RPMs) were up almost 50 per cent compared to a year ago. RPMs measure the number of passengers multiplied by the average length of a flight."
Captaingomes From Canada, joined Feb 2001, 6413 posts, RR: 58 Reply 2, posted (10 years 2 months 1 week 4 days 17 hours ago) and read 2598 times:
Clive has done well for himself. He's been a tremendous success. However, he is very cocky, and I hope it doesn't kick him where it hurts sooner or later. We will have to see how Air Canada emerges out of bankruptcy. I am predicting a very strong airline in the new Air Canada Lite.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
Crj 900 From Canada, joined Mar 2001, 584 posts, RR: 1 Reply 3, posted (10 years 2 months 1 week 4 days 15 hours ago) and read 2568 times:
One thing that Clive forgets to mention, the only people at WJ who can plop down 266,000$ on a new home are those who were there from the very beginning. Anything else is pure malarky on his part. On those wages, even with profit sharing you have to have been there from the start with some pretty nice stocks to see that kinda cash. Yes Clive is very smug and it could come back to bite him some day, not to mention the market is cyclical, who's to say that in five years from now, business class won't be a popular thing again? Will Mr. Beddoe give in? or will he stick to his VFR model. Everybody has their day and who says that WJ won't see hard times some day down the road. Never say never is what I believe.
Rindt From Germany, joined May 2000, 930 posts, RR: 14 Reply 4, posted (10 years 2 months 1 week 4 days 15 hours ago) and read 2551 times:
But I think the moral of the story is : stick to doing what you're good at. WestJet has found their niche, and has stuck by it ever since. Air Canada on the other hand, has fallen far off its own game plan by doing everything in its power to undermine WestJet (and CP at the time) at ALL costs. The CP take-over can only be blamed for so much before you realize that had AC stuck to what made it money over the long-run, they wouldn't be in this shit mess. AC is in the midst of a 52-card pick-up, and it's their own damn fault.
What other people think of you is none of your business!
CX829 From , joined Dec 1969, posts, RR: Reply 6, posted (10 years 2 months 1 week 4 days 13 hours ago) and read 2499 times:
I share the same thoughts as Captaingomes. Clive Beddoe is too arrogant to my likings and we all know that there's no "eternity" in the airline industry. WJA employees are being paid peanuts compared to the avg in the Cdn markets. I know a few who takes pride in their job at WJA but at the same time I do know a lot who have decided enough is enough under his regime / pathetic payscales.
Buckfifty From Canada, joined Oct 2001, 1314 posts, RR: 21 Reply 8, posted (10 years 2 months 1 week 4 days 10 hours ago) and read 2466 times:
I just wonder, if all the majors fall out of the sky, who's going to fly international?
The low fare formula, one must admit, is great for domestic services, flying into secondary airports with short turnarounds, pay for your own cheap food, etc. But long haul is a different story, and this formula as it stands cannot work without breaking the rules regarding duty hours, nor flying heavy aircraft into airports which cannot handle them.
Crj 900 From Canada, joined Mar 2001, 584 posts, RR: 1 Reply 9, posted (10 years 2 months 1 week 3 days 20 hours ago) and read 2373 times:
What a paying passenger is willing to accept on a domestic flight is one thing, but his model would not work on an long haul scale. There is no way WJA could jump to international. Then he would have to provide service similar to AC for overseas. I'm not defending AC, considering that I come from CP, yes AC is very arrogant but that in part is due to Milton, but no one has the right to be a smug as CLive is. It's only a matter of time, be it 5mos or 5 years before we're tellin Clive "i told ya so"....MR.Beddoe. if you're out there keep your attitude in check...it makes you look foolish. Yes, I also have to agree that I've had a few friends go there and as soon as an opportunity presented itself they were gone. They had enough of the childish antics of the FAs and the over all juvenile behavior at the company. I guess the old adage "you get what you pay for applies here". At least at Zip there's no games and jokes or lets see which side of the airplane can pass a role of TP faster.
Chock head From Samoa, joined May 2002, 148 posts, RR: 0 Reply 12, posted (10 years 2 months 1 week 3 days 20 hours ago) and read 2342 times:
I do not exactly see how Clive is being overly cocky here. After many years of AC trying to drive his company out of business he is simply stating what a whole bunch of other people have said, the Air Canada business model does not work.
Some of the comments being made above above sure sound like sour grapes. Sure the person who put 286 000 on a new house may have been there from the beginning but the message is that if you max out your stocks in 7 years you can be able to do the same thing. Yeah that really sucks.
I also like the comment about WestJet paying "peanuts" compared to the average in the Canadian markets. Average what? Average of an airline that has gone bankrupt? That business model does not work. Is a check in agent at an airport worth 50 k a year? I don't think so. The AC union types do. People must really hate to work there, thats why according to their annual report they got 49000 applications last year. Sounds like a crappy place to work to me.
I love the comment that at least at Zip there are no games or jokes. No PAX either. People are voting with their $ which airline they want to fly. A miserable flight filled with attitude right from the get go or a flight where everyone from the check in agent to the FA and pilot try to inject some fun into the flight. This formula sucks so bad that it will never work...oh wait a minute, someone better tell Southwest that.
Sure the formula may not work on overseas flights, that is the whole point . They are not trying to be all things to all people.
The sour grapes brigade, the dinosoars of bygone eras, and the people who hold Air Canada as a sacred cow should all wake up and realize there is a new way of doing business.
If you are going to hate anything...Hate the game, not the player.
Dash8King From Canada, joined Nov 2001, 2742 posts, RR: 12 Reply 13, posted (10 years 2 months 1 week 3 days 20 hours ago) and read 2341 times:
I know many who enjoy the " childish antics" it is a lot better than an F/A who acts like its a chore to give you a drink and gives out one big sigh as if they are doing you a favour. Westjet's F/A's are very upbeat and people appreciate that.
Spyderz From Canada, joined Apr 2001, 651 posts, RR: 0 Reply 14, posted (10 years 2 months 1 week 3 days 19 hours ago) and read 2340 times:
Ya, but could a Westjet-like carrier be successful flying YVR-HKG? While a true low-fare airline wouldn't be able to fly the long international routes, a charter carrier like Transat or HMY could fill that void for lower fare international travel because of the lower cost structure compared to Air Canada. What we see though is relative success by Transat on the major international routes to like London or Franfurt, indicating that while some passengers demand low fares, many others will pay extra to fly an airline providing better service and therefore possibly making us believe that international routes wouldn't fly with the low-cost model. Yes WJ, SouthWest, Jetsgo, and JetBlue fly transcon routes, but they are demanded less since "full-service" carriers provide a greater percentage of flights on the trans-con routes. Air Canada has like 14 daily flights between YVR-YYZ, while WJ and JetsGo have 4 flights. Compare this to a route like YVR-YEG which is entirely low-cost, and there is a negative relationship between travel distance and demand for no-frills service. This leads me to believe that there will always be demand for the full-service model, even if its for flights over say 3 hours. Also, who cares if Clive is cocky, the entire airline industry is. Name one airline that isn't arrogant, since they're not that many.
Captaingomes From Canada, joined Feb 2001, 6413 posts, RR: 58 Reply 18, posted (10 years 2 months 1 week 3 days 19 hours ago) and read 2293 times:
Wardair is widely considered one of the airlines with the best service ever. People to this day still talk about Wardair's service, and they were bought out in 1992 I believe. However, this service of course had a price, and according to Beddoe, that price was $96 per person. I have a hard time believing it was that high. I've always heard an average passenger meal costs an airline roughly $10 per person.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
BOEING747-700 From , joined Dec 1969, posts, RR: Reply 19, posted (10 years 2 months 1 week 3 days 18 hours ago) and read 2259 times:
Wardair did have the best service. I had my first ever 747 Flight with them. The F/As where super nice, the Pilots were very friendly and the entire flight experience was well worth it. I can remember getting my food on real china and having some of the best airline food ever from them. I wish they were still around today, they would be my first choice in Aviation to fly with here in Canada!!
Buckfifty From Canada, joined Oct 2001, 1314 posts, RR: 21 Reply 23, posted (10 years 2 months 1 week 3 days 14 hours ago) and read 2186 times:
WJ is already flying YYZ-YVR. Jetsgo, Jet Blue & Southwest also operate transcons. This suggests that the LCC concept can be extended to 5+ hour flights.
If WJ can be successful on YYZ-YVR, it could easily be successful on YYZ-LHR/LGW which is only 2 hours longer (given the right aircraft of course).
Hmmm...I'm not so sure. Anything longer than eight hours, you're looking at extra crews. Not to mention flying to places with limited slot availability (i.e. European/Asian international airports) may mean longer turnaround times. Parking fees, landing fees on top of that, and host of other support services, make it somewhat daunting, IMO. And don't forget the fleet commonality principle that WJ enjoys right now. That's why in these last twenty odd years, you haven't seen Southwest go international. Just not their cup of tea.
If for example WestJet does fly LGW, I don't think their margins are going to be any better than the ones AC enjoyed.
If AC does go by the wayside, I'm sure someone will pick up the slack in the interim. However, it's gonna cost extra for overseas travel, unless competition picks up again.
Nevermind that. A Westjet monopoly in Canada...who would have reckoned...
Superdawg From Canada, joined Jan 2000, 347 posts, RR: 1 Reply 24, posted (10 years 2 months 1 week 3 days 7 hours ago) and read 2160 times:
What Clive doesn't mention is that Westjet's original model based on Short Haul flights is now hurting. Not because of bad business practise but because of our idiotic government and all the fees they charge. This is why Westjet has cut many short haul routes in frequency and have begun focusing on longer routes where all the government fees aren't as big of percentage on the total airfare (it's all perception to the customer). This is also why WJ's RPM's have increased so much without profits actually matching.
So while our government takes $262 Million in forms of Airport taxes (not the taxes charged to Airlines which is another story) which increase Airport fees, and doesn't put any of the money back into the air transport system we will continue to see Canadian airlines having some sort of problems. This is just one example of our flawed system.
25 Donder10: What is the governmen't fetish with raising airport fees and associated taxes all the time?Needless to say,they will not let their results of their ta
26 Crj 900: You will not get any arguement from me that CSAs should be getting paid 50K because they certainly shouldn't. With respect to LCC model working Longha
27 Dash8King: You must know some pretty dry people if they don't like to joke around.
28 AirCanadaMan: 96$ a meal is a fair assesment of Wardairs meals, easily. Served on Royal Dalton China (every dish, cup and saucer) and some nice silverware. (Dont fo
29 Canadi>nBoy: "Wardair is widely considered one of the airlines with the best service ever. People to this day still talk about Wardair's service, and they were bou
30 Marcus: Wow........$96 for a meal and all the logistics behind it......that's more than the price of some roundtrip flights! Still......by what people have po
31 Captaingomes: I guess I will have to accept the $96 cost of serving passenger meals on Wardair! I didn't think it was possible, but thanks for the clarifications. D
32 Canadi>nBoy: I have heard nothing but complaints from both friends, clients and FA pals at TS and SV who position on WJ about the on-board comedy show performed by
33 Chock head: On that last WestJet FA story I call "Bullshit" Perhaps the Pax were tired? Or was it a bunch of grump FA from charter airlines who had just flown all
34 Chock head: While I personally subscribe to the theory that arguing over an internet message board is like winning in the Special Olympics, I think that you are g
35 Canadi>nBoy: "Calling me an asshole is probably uncalled for but whatever, I have been called worse by tired old queens who love bitching about anything." Well, I'
36 Crj 900: U know , lets keep it to the original topic. It was wrong of me to say things about WJA's Fas, let's be honest here, what do I care anyways...I never
37 Chock head: Canadi>nBoy LOL, no hard feelings I hope.
38 Dash8King: First of all about him seeming cocky and arrogant in the article what do you expect? Do you want him to shed a tear for them? Start a "save Air Canada
39 Captaingomes: Whoa Dash8, easy! Clive, like many other entrepreneurs at times seems cocky. (I'm glad the term I used first in this thread seemed to stick.) He is ve
40 Crj 900: Most of the unemployed airline people do like Clive( potential employer). As for Clive's claim to 5000 apps from AC employees....BS KID (Dash8king) !
41 Dash8King: I have never read an article in Canadian Business (magazine) where the CEO does not come off as Cocky. Westjet is going to use all the free advertisin
42 Avt007: I have heard stories of the onboard entertainment on WJ, and for myself, that is a good reason to avoid them. All I want is to get from point A to poi
43 Cmm340: hmm interesting!! just a footnote here. A collegue positioned on Westjet not so long ago(with the rest of his crew), and the f/a proceeded to brief th
44 Dripstick: Just a quick note here. Westjet's sense of humour is enjoyed by a great many people, but is not for everyone. I myself enjoyed it and it serves to bre
45 Palebird: Not knocking Westjet but they do seem to receive preferential treatment from the press. I know of three inflight engine failures in the last year or s
46 Captaingomes: You never really hear of engine failures reaching the media. I would be surprised if the engine failure rate at WJ is worse than the average for airli
47 Palebird: The reason you rarely hear of engine failures is that the tier one airlines(flag carriers, etc) rarely have them as they spend lots of money on mainte
48 Dripstick: BTW - Air Canada operates more B732's than Westjet and generally Westjet's are newer models. Dripstick
49 Canadi>nBoy: Chock head wrote: "Canadi>nBoy, LOL, no hard feelings I hope." No hard feelings at all. And please accept my profuse apology in regards to the potty m
50 Captaingomes: hehehe, the safety demo, I hated it! It was always an event doing the safety demo, for whatever reason. From having another f/a in the back galley doi
51 Canadi>nBoy: Hey Captaingomes, LOL! Funny, when I get together with ex-WG colleagues (both active and former FA's) we always end up talking shop, which bores the h