SpaceshipDC10
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'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 8:53 pm

But of all the bumps, twists and turns that WestJet encountered this year, there was one in particular that convinced Sims it was time to pause the ride. In July, WestJet posted its first quarterly loss in 13 years — an outcome that Sims said proved beyond a doubt that the company, which had gone through several years of rapid expansion, was no longer living within its means.
(...)
For some time, analysts had been warning that WestJet may have bitten off more than it can chew by launching a new ultra-low-cost carrier, Swoop, while simultaneously planning for a major international expansion using new Boeing 787 Dreamliner aircraft. However, the company itself consistently defended its plans.
(...)
“By the time that we come to fly to places like Asia, like Latin America, we’ll have had a year’s operating track record of that aircraft and we’ll be 100 per cent confident that we understand it,” he said.

In other words, in a year from now WS should announce its expansion with the Dreamliner beyond London, Paris and Dublin. We'll first see how they deal with the brand new bird.

https://calgaryherald.com/business/loca ... at-westjet
 
AsiaTravel
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:00 pm

I got to admit that I am not entirely convinced by a 4 weekly seasonal between Calgary and CDG. I am ready to be proven wrong however.

This whole situation seems like a déjà vu with Virgin Australia and Qantas on the other side of the globe.
 
edmountain
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:10 pm

https://calgaryherald.com/business/local-business/weve-just-grown-too-big-too-fast-ceo-ed-sims-taps-the-brakes-at-westjet

"Sims said he firmly believes the Calgary market is under-served internationally."


The success of their strategy hinges upon the accuracy of this belief. Based on AC and BA recently scaling back in Calgary it would seem unlikely to be true.
 
Noise
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:13 pm

Ah Canada, not quite big enough to support two full-fledge national carriers, yet too big to be dominated solely by Air Canada.

If is relying upon YYC for their international expansion, they're in trouble.
 
kavok
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:31 pm

Noise wrote:
Ah Canada, not quite big enough to support two full-fledge national carriers, yet too big to be dominated solely by Air Canada.

If is relying upon YYC for their international expansion, they're in trouble.



I have always questioned WS strategy on eastern Canada, particularly with YYZ vs YUL. To me, a similar comparison is comparing the operations of DL vs AA in the USA Midwest.

Just like ORD is the largest market and true international gateway in the Midwest, so is YYZ in eastern Canada. And both have a massive *A airline that dominates that respective airport in UA/AC.

With that being the case, WS could either follow AAs ORD strategy, and be the second fiddle in the massive YYZ market..., or they could instead follow DLs DTW/MSP strategy and instead focus on the other large (but not dominant) market in the region at YUL.

There are much more experienced people than me making these decisions, but working to be #1 at YUL would seem to be a more profitable strategy than fighting for scraps at the much larger but ultra competitive YYZ.
 
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VTKillarney
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:39 pm

A lot of players have jumped into YUL with expanded international service. WS is late to the party.

Air Transat is also a pretty formidable foe in YUL.
 
alexdelzotto1
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:45 pm

We can all agree that WS presence at YUL is pathetic!!

No wonder AC dominates at YUL. What's worrying is they can't even make YUL-YVR work year round or FLL (probably the single largest US market).
 
Noise
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:47 pm

Too late for WS at YUL (or anyone else, for that matter)...AC has expanded very substantially at YUL since the beginning of this decade.
 
wave46
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 9:51 pm

kavok wrote:

I have always questioned WS strategy on eastern Canada, particularly with YYZ vs YUL. To me, a similar comparison is comparing the operations of DL vs AA in the USA Midwest.

Just like ORD is the largest market and true international gateway in the Midwest, so is YYZ in eastern Canada. And both have a massive *A airline that dominates that respective airport in UA/AC.

With that being the case, WS could either follow AAs ORD strategy, and be the second fiddle in the massive YYZ market..., or they could instead follow DLs DTW/MSP strategy and instead focus on the other large (but not dominant) market in the region at YUL.

There are much more experienced people than me making these decisions, but working to be #1 at YUL would seem to be a more profitable strategy than fighting for scraps at the much larger but ultra competitive YYZ.


YUL is a huge market for Air Canada, probably proportionally bigger than in YYZ.

Westjet has a very weak brand image in Quebec. They'll be fighting uphill the whole way. They're running out of low-hanging fruit though, so it might not be the silliest idea.

Westjet's days of easy growth are coming to an end. They're going to have to spend big (see: Dreamliners/intercontinental travel) and grind it out to earn their next phase of growth. Luckily, Delta has a stake in them so they can leverage Delta's international experience and resources to help them.
 
winginit
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 10:02 pm

edmountain wrote:
https://calgaryherald.com/business/local-business/weve-just-grown-too-big-too-fast-ceo-ed-sims-taps-the-brakes-at-westjet

"Sims said he firmly believes the Calgary market is under-served internationally."


The success of their strategy hinges upon the accuracy of this belief. Based on AC and BA recently scaling back in Calgary it would seem unlikely to be true.


Noise wrote:
If is relying upon YYC for their international expansion, they're in trouble.


:checkmark: :checkmark:

Is it not safe to say that Alberta hasn't really diversified their economy in a way that makes continued air service expansion sustainable? I recall reading that as recently as 2016 Alberta lost something like 100,000 jobs because of the collapse of WTI. Doesn't sound like a firm bedrock for long term aviation success.
 
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SuperTwin
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 11:08 pm

winginit wrote:
edmountain wrote:
https://calgaryherald.com/business/local-business/weve-just-grown-too-big-too-fast-ceo-ed-sims-taps-the-brakes-at-westjet

"Sims said he firmly believes the Calgary market is under-served internationally."


The success of their strategy hinges upon the accuracy of this belief. Based on AC and BA recently scaling back in Calgary it would seem unlikely to be true.


Noise wrote:
If is relying upon YYC for their international expansion, they're in trouble.


:checkmark: :checkmark:

Is it not safe to say that Alberta hasn't really diversified their economy in a way that makes continued air service expansion sustainable? I recall reading that as recently as 2016 Alberta lost something like 100,000 jobs because of the collapse of WTI. Doesn't sound like a firm bedrock for long term aviation success.


... AND the jobs that have since partly offset the initial losses in Alberta don't hold a candle to those that used to exist in terms of income quality.

Things remain flimsy in Alberta.
SuperTwin
 
jimbo737
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Thu Jan 03, 2019 11:59 pm

I'm still giggling at the thought of WS making any effort at trying to dominate YUL, or wasting iron flying YUL - FLL at yields that make LAS look like LHR.
 
whywhyzee
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 12:07 am

kavok wrote:
Noise wrote:
Ah Canada, not quite big enough to support two full-fledge national carriers, yet too big to be dominated solely by Air Canada.

If is relying upon YYC for their international expansion, they're in trouble.



I have always questioned WS strategy on eastern Canada, particularly with YYZ vs YUL. To me, a similar comparison is comparing the operations of DL vs AA in the USA Midwest.

Just like ORD is the largest market and true international gateway in the Midwest, so is YYZ in eastern Canada. And both have a massive *A airline that dominates that respective airport in UA/AC.

With that being the case, WS could either follow AAs ORD strategy, and be the second fiddle in the massive YYZ market..., or they could instead follow DLs DTW/MSP strategy and instead focus on the other large (but not dominant) market in the region at YUL.

There are much more experienced people than me making these decisions, but working to be #1 at YUL would seem to be a more profitable strategy than fighting for scraps at the much larger but ultra competitive YYZ.


I don't know about that, WS has virtually zero YUL presence, and AC has been expanding YUL quite a bit. YYC is theirndominant market, but you cannot ignore YYZ, it is by far the largest Canadian market, remember, the second largest Canadian airport, YVR still only does 25 million pax/year, not really comperable to US hubs. YUL and YYC are significantly smaller still.
 
sixtyseven
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 1:52 am

jimbo737 wrote:
I'm still giggling at the thought of WS making any effort at trying to dominate YUL, or wasting iron flying YUL - FLL at yields that make LAS look like LHR.


Paris tho? Out of Calgary?

That’s a dog.

FLL? Throw 282 seats at it with an airplane that’s pretty much paid for.....

Although it’s old. Which doesn’t jive with your way of thinking.
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Dominion301
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 2:55 am

jimbo737 wrote:
I'm still giggling at the thought of WS making any effort at trying to dominate YUL, or wasting iron flying YUL - FLL at yields that make LAS look like LHR.


Speaking of giggles, I wonder what kind of stellar yields WS are pulling in by not operating YUL and YOW to YEG nonstop this winter versus Swoop daily on YHM-YEG? Or how about not flying YUL and YOW to YVR nonstop year-round vs tomorrow operating not one, but two YHM-YXX nonstops? Clearly there’s way more O&D demand to Greater Vancouver out of Hamilton than out of Montreal or Ottawa. :banghead:

Hey how’s this for the ultimate joke that still gives me giggles: during this past November’s CFL Ottawa vs Hamilton Eastern Final IN OTTAWA, WS was promoting Swoop like crazy at the game, including giving one “lucky” winner two tickets to anywhere Swoop flies. What a great prize for someone from Ottawa to win a six hour drive to Hamilton to cash in! :rotfl:

Of course WS will never dominate AC at YUL, but you have to fly non-YYZ domestic transcon routes year-round if you want to be seen as having any sort of credibility in Eastern Canada, especially given WS’ repeated desire to capture a substantial share of biz pax.

Similarly, while AC are the biggest at YOW, there’s a place where WS really could easily grow to be close to on par with AC, especially now with the MAX in the fleet. It’s a place where they could have a focus city with 25% connections as a secondary alternative to YYZ. It amazes me that WS next summer will have four transatlantic flights from YHZ, yet have zero from YOW, a place with 3 times the population of YHZ and a place where there’s an enormous opportunity to capture some of the huge amount of leakage YOW has on a transatlantic basis out of YUL, none of which belongs to WS as-is. If WS have seen enough success on YHZ-CDG to bring it back for a second season, you’d think someone at WS might think “if CDG works for us out of YHZ, maybe a summer seasonal MAX to CDG will work out of Ottawa where there’s 60 times the francophone population of Halifax and 40 times the francophone population of Calgary.”...but then again, WS don’t exactly go out of their way to cater to/attract francophones.

Quite frankly, YHZ is literally the only airport in Eastern Canada east of YYZ that WS have paid any sustained serious attention to in the past 5 years and where their service offerings provide an actual credible alternative to AC. Their short-lived Quebec expansion was a joke.
Last edited by Dominion301 on Fri Jan 04, 2019 3:19 am, edited 7 times in total.
 
Prost
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 3:03 am

Where was the BOD?
 
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SumChristianus
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 3:05 am

So someone finally admits that this happens!

Well, If I was running an airline I'd want to grow too... so

WS is the new Virgin Australia, and probably is set to share their mediocre financials - and relationship with DL :stirthepot:
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 4:04 am

jimbo737 wrote:
I'm still giggling at the thought of WS making any effort at trying to dominate YUL, or wasting iron flying YUL - FLL at yields that make LAS look like LHR.


Jimbo let's make a couple of gentlemen bets.
1.) ACs FLL network makes more profit than WS/Swoop entire network out of Western Canada to Vegas
2.) FLL-East is as high yielding as LAS-West
 
ACDC8
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 4:43 am

WS can expand all they want in YUL, they'll fail. Quebecers dislike things from Alberta, well, except their equalization payments :rotfl:
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Noise
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 5:05 am

ACDC8 wrote:
WS can expand all they want in YUL, they'll fail. Quebecers dislike things from Alberta, well, except their equalization payments :rotfl:


:bigthumbsup:
 
heathrow
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 5:39 am

ACDC8 wrote:
WS can expand all they want in YUL, they'll fail. Quebecers dislike things from Alberta, well, except their equalization payments :rotfl:

Whoa there Billy Bob, no one threatened to take away your guns.....
 
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Rajahdhani
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 6:28 am

flyyul wrote:
jimbo737 wrote:
I'm still giggling at the thought of WS making any effort at trying to dominate YUL, or wasting iron flying YUL - FLL at yields that make LAS look like LHR.


Jimbo let's make a couple of gentlemen bets.
1.) ACs FLL network makes more profit than WS/Swoop entire network out of Western Canada to Vegas
2.) FLL-East is as high yielding as LAS-West


Can I add to the giggle - it seems that everyone here has 'forgotten' completely of - AirTransat.

I mean, behind perhaps Mainline AC, AC Rouge (which was practically tailored maid for YUL's needs, yields, and caters well in French), AirTransat, and even Sunwing - have impressive offerings, far magnitudes larger than what WestJet currently operates.

At the height of season - WestJet operates as many cities as does AA (including AA's Envoy offerings to almost every hub in range), and offers one less that Cubana!

What does that say about WestJet's presence at YUL, surely alot of opportunities to consider - but I fail to see how this market is any way easier to 'crack' than YYZ would be.
 
Marara
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 7:19 am

SumChristianus wrote:
So someone finally admits that this happens!

Well, If I was running an airline I'd want to grow too... so

WS is the new Virgin Australia, and probably is set to share their mediocre financials - and relationship with DL :stirthepot:


Interesting you should say that - have a look who is on their board of directors.....
https://www.westjet.com/en-ca/about-us/board-directors

"Mr. Godfrey is the co-founder and former CEO of Virgin Blue, now Virgin Australia. In the early ‘90s"
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RyanairGuru
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 10:16 am

Marara wrote:
SumChristianus wrote:
So someone finally admits that this happens!

Well, If I was running an airline I'd want to grow too... so

WS is the new Virgin Australia, and probably is set to share their mediocre financials - and relationship with DL :stirthepot:


Interesting you should say that - have a look who is on their board of directors.....
https://www.westjet.com/en-ca/about-us/board-directors

"Mr. Godfrey is the co-founder and former CEO of Virgin Blue, now Virgin Australia. In the early ‘90s"


To be fair Brett Godfrey was, IMHO, a very good CEO at Virgin Blue, and the carrier was consistently profitable during his tenure. It was his successor, John Borgetti, who rebranded the airline Virgin Australia and tried to be something to everyone ... and presided over loss after loss. Even now VA are barely breaking even when QF are posting billion dollar profits.
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SCFlyer
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 10:47 am

RyanairGuru wrote:
To be fair Brett Godfrey was, IMHO, a very good CEO at Virgin Blue, and the carrier was consistently profitable during his tenure. It was his successor, John Borgetti, who rebranded the airline Virgin Australia and tried to be something to everyone ... and presided over loss after loss. Even now VA are barely breaking even when QF are posting billion dollar profits.


Also to add, it was Godfrey that pioneered the Virgin Blue International Long Haul (then known as V Australia).

I remember the uproar back then when Godfrey dumped an official interline ticketing agreement with UA in favour of JVs with DL and VX (to compliment the start up of V Australia from East Coast to LAX) considering every person and their dog wanted DJ to join Star Alliance back in the day.

Although there was some poor decisions under Godfrey's watch (e.g introducing the E170s/E190s or using V Australia's B777s to leisure destinations like HKT and NAN), the Virgin Blue group was largely profitable for most of his tenure.
 
strfyr51
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 11:43 am

So? Are they not doing so well financially? Or only in comparison to any USA based carrier? Canada had CP Air years ago and other Carriers. Like Wardair. Have they all disappeared as well?
 
EChid
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 12:28 pm

I guess the one bone I will throw to WS is this: As with VA, they were stuck between a rock and a hard place. AC was using mainline and Rouge to expand up and down, and growing international services that helped boost domestic services (via connections). AC is dominating the East, and the increasing their presence in the premium market, and all kinds of competitors are biting at WS' heals on the low-end. VA, I believe, was in the same place. So, WS is trying to respond by moving both up and down. They want to prevent AC from eating their lunch in Calgary too and hopefully bully them a bit into eventually giving up some Premium seats at YYZ, AND they're trying to use Swoop to chase out the upstarts before they can get a foothold.

Yes, it's not particularly pretty right now - and it might not ever lead to the result they want...but I'm not convinced that sitting and waiting around while competitors beat you from above and below would have been the right strategy either.
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VTKillarney
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 1:15 pm

Rajahdhani wrote:
flyyul wrote:
Can I add to the giggle - it seems that everyone here has 'forgotten' completely of - Air Transat.

I mentioned them in post #6. But yes, everyone seems to have ignored them.
 
whywhyzee
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 2:45 pm

Fortunately for them, profits will likely return moving forward as they have taken measures to trim excess capacity.

Moving into 2019, a lot rests on the DL codeshare, which should take effect in May. Based on reports, it seems DL will focus more on the YYZ side and WS the YYC side. The feed is one thing, but being part of a system with DL with anti trust gives them the ability to hold a much greater market share without over extending themselves.
 
jimbo737
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 3:22 pm

sixtyseven wrote:
jimbo737 wrote:
I'm still giggling at the thought of WS making any effort at trying to dominate YUL, or wasting iron flying YUL - FLL at yields that make LAS look like LHR.


Paris tho? Out of Calgary?

That’s a dog.

FLL? Throw 282 seats at it with an airplane that’s pretty much paid for.....

Although it’s old. Which doesn’t jive with your way of thinking.


The old "free" airplane argument, eh?

Airplanes are cheap. Flying them, and especially older variants, is extremely expensive, made only somewhat palatable by today's depressed fuel costs.

It amazes me that people actually believe the "free" airplane nonsense. Besides, do you have any idea what WS is paying per month for their equally as old 767's?

Peanuts.

The monthly lease rate doesn't move the dial that moves the dial.

They are so cheap that WS decided to replace them with new aircraft, as was the case when WS got out of the -200's, skipped the entire Classic series and went straight to NG's almost 20 years ago.

Lessons learned.
 
Noise
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 4:27 pm

What's WestJet's plan for YVR?

Is it realistic for WS to use YVR as their Pacific gateway hub?
 
Noise
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 4:31 pm

The problem I see with Canada is that both its main national carriers, AC and WS, are fighting over the same cities/hubs (with the exception of YUL - that fully belongs to AC), which makes supporting two national carriers unsustainable. If it was set up where AC would take YVR, YYZ and YUL and WS would take YYC, YEG, YWG and YOW, for example, then I can see Canada supporting two national carriers. Right now, both AC and WS are fighting over the same passengers and there isn't enough room for the both of them.
 
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longhauler
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 4:54 pm

jimbo737 wrote:
The old "free" airplane argument, eh?

Airplanes are cheap. Flying them, and especially older variants, is extremely expensive, made only somewhat palatable by today's depressed fuel costs.

It amazes me that people actually believe the "free" airplane nonsense. Besides, do you have any idea what WS is paying per month for their equally as old 767's?

Peanuts.

Yup, just like the old "Westjet doesn't know how to compete in the Quebec market, so we're just going to pretend it doesn't exist" argument.

If Westjet is paying "peanuts" for its 767s then it's still paying too much. Man oh man, the seller sure saw Westjet coming with those boats. Air Canada looked at them a year earlier and literally ran from from.

Take flyyul up on his bet. You might just learn something. He knows more about network planning and yield management than you can ever dream!

jimbo737 wrote:

They are so cheap that WS decided to replace them with new aircraft, as was the case when WS got out of the -200's, skipped the entire Classic series and went straight to NG's almost 20 years ago.

Lessons learned.


Yup, we have popcorn and front row seats.

Let's just see, say two years from now, after Westjet bought some hugely expensive airframes to fly on lacklustre routes. The rest of the world is scaling back, preparing for the economic downturn .... Westjet is doing the opposite. There's a reason Air Canada is buying used A330s and deferring 787s. On a shorter route, like say, I don't know, YYC-CDG, the A330 seat mile cost is cheaper! (And that cost calculation was made during higher fuel price times.)

Two years. How long did PWA own it's 767s? It wouldn't be the first time Air Canada bought used Boeing widebody aircraft from a western Canadian airline that didn't know what it was doing.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
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longhauler
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 5:05 pm

But back to the original premise.

I would suggest that Westjet is not "too big, too fast", this growth appears the way they have always done it. Slowly and thoughtfully. I would suggest Westjet is "diversifying too much, too fast".

In the last few years, Westjet has added a second tier, then a third tier commuter airline. Then forayed into the Atlantic market, then into wide body flying, now buying very expensive aircraft to fly those routes. Then added an ULCC airline. Then proposed dedicated Business Class cabins on narrow body aircraft, and adding Business Class, Premium Economy and free meals on its 787s. All while the Business traffic in it's home market, Alberta, is swirling around the toilet.

That's a lot of gamble.

If Westjet had stuck with what it does best and at which it was consistantly profitable, they would be sitting smugly back as we enter the next cycle downturn.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
sixtyseven
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 5:52 pm

jimbo737 wrote:
sixtyseven wrote:
jimbo737 wrote:
I'm still giggling at the thought of WS making any effort at trying to dominate YUL, or wasting iron flying YUL - FLL at yields that make LAS look like LHR.


Paris tho? Out of Calgary?

That’s a dog.

FLL? Throw 282 seats at it with an airplane that’s pretty much paid for.....

Although it’s old. Which doesn’t jive with your way of thinking.


The old "free" airplane argument, eh?

Airplanes are cheap. Flying them, and especially older variants, is extremely expensive, made only somewhat palatable by today's depressed fuel costs.

It amazes me that people actually believe the "free" airplane nonsense. Besides, do you have any idea what WS is paying per month for their equally as old 767's?

Peanuts.

The monthly lease rate doesn't move the dial that moves the dial.

They are so cheap that WS decided to replace them with new aircraft, as was the case when WS got out of the -200's, skipped the entire Classic series and went straight to NG's almost 20 years ago.

Lessons learned.


Here’s hoping the lessons you’re ABOUT to learn are just that. Lessons, and hope you don’t get schooled.

Sims seems to be a good fit because he reined in the horses that Saretsky had sprinting in all directions. I bet he’d scale back even further but the bullet had already left the barrel.

The premise of Westjet being an engine to kick start the Alberta economy is a pipe dream. That’s like saying a corporate flight department will help turn a companies fortunes around. What needs to happen for you guys not to get killed is the Alberta economy needs to at least hold. If it retracts further these YYC based 787s will find themselves in YYZ or YVR instantly. Which is my prediction anyways. Maybe one will hang around but the rest will be flying where there’s an actual market.

Paris-Calgary smells like a flop to me but what do I know. Maybe it’s so successful Berets will be the new headwear choice at Stampede 2020.

Go get em Owners.
Stand-by for new ATIS message......
 
robsaw
Posts: 431
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 6:05 pm

Noise wrote:
The problem I see with Canada is that both its main national carriers, AC and WS, are fighting over the same cities/hubs (with the exception of YUL - that fully belongs to AC), which makes supporting two national carriers unsustainable. If it was set up where AC would take YVR, YYZ and YUL and WS would take YYC, YEG, YWG and YOW, for example, then I can see Canada supporting two national carriers. Right now, both AC and WS are fighting over the same passengers and there isn't enough room for the both of them.


Grow or die. WS and AC MUST compete in the same major markets because there are only a handful in Canada. Current load factors suggest there is plenty of room for both as long as they don't devolve to the mutually suicidal AC vs CP/CAI competitive stance of the past, which isn't necessary to be sustainable. The behaviour of neither suggests this at the moment. WS became a little too aggressive with multipath approach that they are now dialing-back a bit; exactly what they should be doing.

What is likely unsustainable is the handful of new ULCC entrants trying to go up against SWOOP and ROUGE.
 
Dominion301
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 6:09 pm

longhauler wrote:
But back to the original premise.

I would suggest that Westjet is not "too big, too fast", this growth appears the way they have always done it. Slowly and thoughtfully. I would suggest Westjet is "diversifying too much, too fast".

In the last few years, Westjet has added a second tier, then a third tier commuter airline. Then forayed into the Atlantic market, then into wide body flying, now buying very expensive aircraft to fly those routes. Then added an ULCC airline. Then proposed dedicated Business Class cabins on narrow body aircraft, and adding Business Class, Premium Economy and free meals on its 787s. All while the Business traffic in it's home market, Alberta, is swirling around the toilet.

That's a lot of gamble.

If Westjet had stuck with what it does best and at which it was consistantly profitable, they would be sitting smugly back as we enter the next cycle downturn.


The "diversifying too much, too fast" lens is a good analogy.

It took 17 years for WS to introduce a 2nd fleet type, which they hit a home run on and quite frankly don't have enough of (the lack of YQG-YYZ springs to mind as one of many possible examples where more Q400s would be useful to WS). As was "Plus" that came at about the same time in 2013.

But in recent times it's been, add 767s, create Link, add biz class to replace Plus, create Swoop and get ULCC obsessed, add 787s, add premium economy, etc. All this rapid change no doubt helped hasten arrival of the dreaded UNIONS!

With the arrival of the MAX, WS could have added a lot of transatlantic without the need of adding two new aircraft types in a very short span of time.
 
berari
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 6:44 pm

AsiaTravel wrote:
I got to admit that I am not entirely convinced by a 4 weekly seasonal between Calgary and CDG. I am ready to be proven wrong however.


I am optimistic about this one. They are looking to funnel western traffic via YYC to CDG and DUB. Both are served by other airlines from YVR, and could become attractive at the right fare. It also seems to time well with US West cities it serves.

Something else to note us that a daily Halifax-CDG on a MAX will originate in YYC and the nonstop Dreamliners will be on top of that.
 
cumulushumilis
Posts: 225
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 7:01 pm

There are many that believe the growth will come from a solid yet expansive domestic network. Truthfully the Canadian market is most likely tapped out except for the low end where Flair, Swoop and a few others exist. With the exit of Greyhound from the Canadian landscape that opens a lot of opportunity in long thin markets which the ULCC can thrive on if the air carriers get it right.

The other opportunity is grab a portion of that high yield premium passenger market that big red has a firm stranglehold on. Thus WS’ introduction of lay flat seating on 787 and 2X2 premium on the Jet fleet is an attempt to grab some of that market.

It is often said that roughly 70-80 percent of a flights net yield contributes directly to the bottom line, and the remaining 20-30 is basically a loss leader. On the per flight RASM curve it’s the classic drop at the top of the apex. There are a certain amount of seats on the flight that will not make money period, most likely being connecting traffic, or low yield . It’s Network Planning and Revenue Management’s role to optimize that revenue and reduce the bleeding.

The O and D markets in the Montreal region are horrendously low yield except for the lucrative premium traveler. You have big players that can swap out metal in an instant such as in the triangle all the way from a Q400 to a 777. A contraction in those markets makes sense for a smaller carrier.

WS has realized the middle of the market passenger is not where the opportunity lies, its either end with Swoop at the lower end and the premium cabin experience at the higher end. Deploying 3 787s out of YYC is an opportunity to lower risk by flying to get the product right. It’s about moving forward with slow and measured growth, instead of flooding a market with capacity and hoping that something sticks.

WS is goal is not about being the dominant Canadian carrier size wise. It’s about being a carrier/carrier that makes money, has a value for shareholders and provides a consistent product. Has WS made mistakes? Sure, lots of them, do they continue to make mistakes? Maybe.. Regardless 2019 is going to an interesting year.



By the way, Western Canada – LAS market is high yield if you include the hotel portion of what WS brings in on the Vacation side.
 
wave46
Posts: 178
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 10:05 pm

I think the biggest question Westjet faces is: What does it want to be?

Does it want to be Canadian Airlines 2.0 or Southwest North? Or some sort of hybrid? I think management must provide a clear statement of intent and that's difficult when there's been a big management shakeup in recent time.

Resting in my comfy armchair, I'll be CEO for 15 minutes. The limitations of the Southwest-style model have become apparent for Westjet. The company needed something smaller than the 737 and the Q400 was the perfect mate to increase frequency and service to smaller communities via Encore. Swoop is also necessary - if somewhat naked in its ambition to hold on to the Canadian ULCC market by force - so I applaud that move. The addition of Plus seating to the 737 makes sense too - why not compete for premium traffic in Canada/North America?

Link seems like a weird side distraction. I'm legitimately curious why management thought this was an avenue worth pursuing. I'll wait and see on that one - many large airlines are backing away from tiny markets as the energy put into chasing crumbs is more than the benefit.

The 787 is the big bet. I'm not so sure about it being a good one. With the Canadian market, Westjet has only one competitor. Including the US, it has 4 (one of which a is a partner now) and they don't have nearly the reach into Canada Westjet does in the US. With intercontinental operations you're competing against a gamut of veteran operators, many who have broad worldwide networks. The transition from a small network of destinations to an operator with a decent network is the tightrope balancing act. While the company is in the network development stage, premium/corporate traffic will tend to fly established carriers for a seamless experience and better scheduling. This leaves the leisure market, which is very seasonal, finicky to economic conditions and price-sensitive. It will be managing that transition from a leisure airline to a full-service intercontinental airline (that's why you buy Dreamliners and fit them with business class, right?) that will make or break the operation. If someone from Delta isn't helping Westjet do this, they face a severe struggle.
 
BML87
Posts: 62
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Fri Jan 04, 2019 11:13 pm

I can see AC slowly scale down its YYC operations. They already dropped Tokyo for the winter and Red Deer all together. I can't see two carriers on the YYC to Medicine Hat, Lethbridge and Cranbrook routes, so I'm guessing they'll drop those too. It was also interesting to see AC add YEG to YLW, YYJ, SFO and LAS. All four of those routes are at the detriment of YYC.
 
marcogr12
Posts: 262
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 12:54 am

Would it help Westjet to try its luck at YUL against AC/Rouge with Swoop instead of mainline?
Flying is breathing..no planes no life..
 
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adambrau
Posts: 266
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 2:03 am

cumulushumilis wrote:
The O and D markets in the Montreal region are horrendously low yield except for the lucrative premium traveler. You have big players that can swap out metal in an instant such as in the triangle all the way from a Q400 to a 777. A contraction in those markets makes sense for a smaller carrier.



Obviously a small sample O/D flights but NYC-YUL fares are as ridiculously high in dollars as the delays are in minutes. I have often seen NYC-SIN fares lower/equal to NYC-YUL. The only difference is that from NYC: SIN is 8000+ miles and YUL is 400 miles. I would guess that NYC - YUL is one one of the most expensive/profitable flights per mile. Being most flights are RJ's almost makes me miss EA 727's back in the day!
France is in the Air
 
Skywatcher
Posts: 811
Joined: Sat Sep 14, 2002 11:19 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 2:21 am

WestJet has become reactionary and un innovative. Who would have thought just a few years ago that WestJet would be the struggling airline in Canada (unionization/failed 767 strategy/retreating in certain markets and so on). I feel that the "take a breather" strategy is not planned but necessary in any event. They'll have to fix many small issues before launching any major new strategies I suppose. If I were the CEO I would;

a) change the name from WestJet
b) fix the Encore mess on the eastern triangle.
c) buy some A220's and ditch the 737-600's.
d) try Swoop at YUL as marcogr12 says. The WestJet brand at YUL is not great.
e) cut costs at YYC/YEG to match the economic realities in the AB economy until it recovers (if ever?).
f) the domestic Canadian market is saturated. They'll have to figure out a better international strategy for the future. I'm thinking western Canada to Asia offers the best opportunities.

Just my 2 cents.
 
Dominion301
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 2:22 am

marcogr12 wrote:
Would it help Westjet to try its luck at YUL against AC/Rouge with Swoop instead of mainline?


They could, but having a French version of the Swoop website would be a good first step. A good second step would be having a few F/As who actually know how to speak French.
 
Skywatcher
Posts: 811
Joined: Sat Sep 14, 2002 11:19 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 2:25 am

adambrau wrote:
cumulushumilis wrote:
The O and D markets in the Montreal region are horrendously low yield except for the lucrative premium traveler. You have big players that can swap out metal in an instant such as in the triangle all the way from a Q400 to a 777. A contraction in those markets makes sense for a smaller carrier.



Obviously a small sample O/D flights but NYC-YUL fares are as ridiculously high in dollars as the delays are in minutes. I have often seen NYC-SIN fares lower/equal to NYC-YUL. The only difference is that from NYC: SIN is 8000+ miles and YUL is 400 miles. I would guess that NYC - YUL is one one of the most expensive/profitable flights per mile. Being most flights are RJ's almost makes me miss EA 727's back in the day!


On what basis is the "horrendously low yield" comment made anyway? Is this based on any facts or is it some sort of pre-existing bias?
 
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September11
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 2:52 am

Southwest can buy WestJet?
Airliners.net of the Future
 
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adambrau
Posts: 266
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Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 3:00 am

Skywatcher wrote:
adambrau wrote:
cumulushumilis wrote:
The O and D markets in the Montreal region are horrendously low yield except for the lucrative premium traveler. You have big players that can swap out metal in an instant such as in the triangle all the way from a Q400 to a 777. A contraction in those markets makes sense for a smaller carrier.



Obviously a small sample O/D flights but NYC-YUL fares are as ridiculously high in dollars as the delays are in minutes. I have often seen NYC-SIN fares lower/equal to NYC-YUL. The only difference is that from NYC: SIN is 8000+ miles and YUL is 400 miles. I would guess that NYC - YUL is one one of the most expensive/profitable flights per mile. Being most flights are RJ's almost makes me miss EA 727's back in the day!


On what basis is the "horrendously low yield" comment made anyway? Is this based on any facts or is it some sort of pre-existing bias?


I don't know is the answer. My one data point (which admittedly means little) - I have family in Montreal and every time I need to fly to YUL on short notice the fares have been $500+ RT.

Seems AC (+UA marketed codeshares) and UA Express (+AC codeshares) own the YUL-NYC route. DL Connection (+codeshares as WS) and AA Eagle offer lesser number of services.

I did a quick check on Orbitz and the fares a week from today (in January) seem low, to be honest, never close to what I find when I actually need to travel!

Seems like Montreal, as an AC (almost fortress-like?) hub would command decent yields. Or at least from me!
France is in the Air
 
Thenoflyzone
Posts: 2855
Joined: Sun Jan 07, 2001 4:42 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 3:05 am

ACDC8 wrote:
WS can expand all they want in YUL, they'll fail. Quebecers dislike things from Alberta, well, except their equalization payments :rotfl:


There is no such thing as an equalization payment. Alberta does not send a lump of money to Ottawa in an envelope marked equalization.

Besides, the last time the fiscal federalism system (which is what its called) was reworked - under Harper btw - Alberta was granted an extra $1 billion In annual healthcare funding.

So just shut up and say thank you.....
us Air Traffic Controllers have a good record, we haven't left one up there yet !!
 
robsaw
Posts: 431
Joined: Sun Dec 28, 2008 7:14 am

Re: 'We've just grown too big, too fast:' - WestJet's CEO

Sat Jan 05, 2019 4:22 am

Skywatcher wrote:
WestJet has become reactionary and un innovative. Who would have thought just a few years ago that WestJet would be the struggling airline in Canada (unionization/failed 767 strategy/retreating in certain markets and so on). I feel that the "take a breather" strategy is not planned but necessary in any event. They'll have to fix many small issues before launching any major new strategies I suppose. If I were the CEO I would;

a) change the name from WestJet
b) fix the Encore mess on the eastern triangle.
c) buy some A220's and ditch the 737-600's.
d) try Swoop at YUL as marcogr12 says. The WestJet brand at YUL is not great.
e) cut costs at YYC/YEG to match the economic realities in the AB economy until it recovers (if ever?).
f) the domestic Canadian market is saturated. They'll have to figure out a better international strategy for the future. I'm thinking western Canada to Asia offers the best opportunities.

Just my 2 cents.


Your first suggestion really shows why you shouldn't be Westjet's CEO. Brand recognition is huge - similar suggestions have been made for Alaska Airlines, and they haven't changed for the same reason.

The 600s aren't really needed - keeping them is just more cost-effectve than ditching them at the moment; nor do they need an A220 to fill any critical gap.

Point (f) is exactly why they are doing things like getting 767s and 787s but there is also at least as much or more competition internationally as there is domestically a transborder (see Delta JV).

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