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$9 Airfares


blues deville

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Book by September 9, 2008 at 11:59 p.m. M.T.*

Travel on Tuesdays, Wednesdays & Thursdays until December 17, 2008.

Departing city: Toronto (Pearson)One-way flights starting from:

Sale Price Regular Price

Montréal $9 (Reg)$89

Ottawa $9 (Reg)$89

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Guest rattler

So much for bookings being good or is this a final attempt to gain a better share of this market? Then of course there would also be an impact on a certain small carrier operating in the triangle. Naaa Never..... ph34r.gif

Westjet also has a 70% off sale today to the rest of Canada.

AC & Porter lowest in Oct (week of the 14th), at least for now on TWT is $49.00. YYZ-YOW as an example.

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So much for bookings being good or is this a final attempt to gain a better share of this market?  Then of course there would also be an impact on a certain small carrier operating in the triangle.  Naaa Never.....  ph34r.gif

Westjet also has a 70% off sale today to the rest of Canada.

AC & Porter lowest in Oct (week of the 14th), at least for now on TWT is $49.00. YYZ-YOW as an example.

The difference is, the triangle represents less than 1.7% of WJ's system capacity.

I won't say it's insignificant, but it's no where near as significant as the folks in the centre of the universe seem to think it is. biggrin.gif

Do the math. The triangle produces 26.3m asm's a month out of a total of 1.57b asms.

Even if every seat, every flight, every day on each of the 168 trips made in August in the triangle went out 100% empty, WJ's Aug load factor would have been 86.7% vs the reported 88.4%.

Everytime WJ puts a sale on, the pundits will come up with an excuse as to why.

Within 90 days, WJ produces the numbers that show that, yet again, even with the discounts, their profitability significantly exceeds that of every other publicly traded non-cpa airline operating in North America.

As a referesher, WJ's op margin was 10x the industry weighted average in 2Q 2008, an infinite multiple over the industry's -2.8% margin in 1Q (with WJ at 13.7%), 15x the industry in 4Q 2007 and at 22%, 2.3x the industry average of 9.3%.

If they don't provide numbers, like Icarus Airways and RacoonAir, its just more "yadda yadda yadda". Zoom did a lot of that too.

How do they do this? The same way they've done it since Feb 29 '96. Having unit costs about 40% below the competition in a commodity marketplace where in order to be "competitive", fares have to be matched. That's why US Airways fares to LAS are matched to WJ's fares.

cool26.gif

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As an employee I still dont like it !

Dont come to the pilots looking for more productivity when your selling seats at this price thats all I can think when I see this.

SB

mad.gif

Sounds like you need to go to a culture presentation. biggrin.gif

It's called an "Oh my gosh" fare. It's a one day sale. It's for Tues, Weds and Thursdays.

WJ has been doing $9 fare promotions for years. Add the fuel surcharge and it's $29. Then there's the allocation for the fixed cost of Nav fees, which are paid regardless of the load.

Let's call the casm on this stuff about 16.5 cents a mile. That makes the fully allocated cost per seat about $37 from YOW-YYZ. The $9 fare just about covers the fully allocated costs, (when costs were based on $135 fuel, not $105 fuel).

Remember that most airlines are happy to simply cover variable costs in this sort of promotion. Due to it's cost structure, WJ can throw these out and cover virtually all of their fully allocated costs.

The fares encourage trial ridership on off-peak days, on off-peak flights, across a part of the network that represents under 1.7% of the total system capacity.

So....as you can see, these sorts of things really aren't a big deal, either way. If other airlines are full, there's not much point in matching this sort of thing. It becomes quite dilutive.

Keep an eye on the big picture. It is announced about 30 days after the end of each quarter. That's what's important.

cool26.gif

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Bbbbbbbbbbut Bean.... you're not accounting for the effect the ad has on the rest of the folks who see it but don't have an opportunity to take it. It adds to a perception that flying is cheap, and thence an expectation of cheap . There's definitely a cost here and it most likely is to employees.

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Guest rattler
Thank god Skyblazer isn't in marketing at WJ. You don't have a clue bud. The goal is to maximize revenue. Look at the big picture. Just drive the airplane

I wonder what it costs Westjet to process a Reservation, check in the passenger, load his / her baggage etc. It has got to be more than $9.00.

As far as the sale being on for today only, yes that is correct but the seats being sold are well into Dec. And Bean the days of sale only exclude Mon and Friday. Not sure how much inventory is out there but for example at 1658 MDT you can still book a $9.00 fare from YYZ - YUL (Oct 07 with a return Oct 09) and not just on one flight ex yyz seats are still on sale at $9.00 for 4 of the 8 daily flights (including the 9am) and return out of YUL 4 of the 8 still have 9.00 seats available 7, 8, 10 and the popular 1730.

Book today, September 9, 2008 (11:59 p.m. MT). For Calgary, Hamilton and Edmonton, travel on Tuesdays, Wednesdays, Thursdays or Saturdays until December 17, 2008. For Toronto, Ottawa and Montréal, travel on Tuesdays, Wednesdays or Thursdays.
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Thank god Skyblazer isn't in marketing at WJ. You don't have a clue bud. The goal is to maximize revenue. Look at the big picture. Just drive the airplane

Well, it's like I predicted several weeks ago -fuel and the fuel surcharge is assuming a pre-eminence that changes traditional marketing metrics. The fare is only a gimmick to grab the surcharge. In this case, I think it's marketing gimmick - and much ado about nothing.

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I wonder what it costs Westjet to process a Reservation, check in the passenger, load his / her baggage etc. It has got to be more than $9.00.

As far as the sale being on for today only, yes that is correct but the seats being sold are well into Dec. And Bean the days of sale only exclude Mon and Friday. Not sure how much inventory is out there but for example at 1658 MDT you can still book a $9.00 fare from YYZ - YUL (Oct 07 with a return Oct 09) and not just on one flight ex yyz seats are still on sale at $9.00 for 4 of the 8 daily flights (including the 9am) and return out of YUL 4 of the 8 still have 9.00 seats available 7, 8, 10 and the popular 1730.

If an airline is offering $9 fares on a peak Wednesday morning flight from YYZ to YUL or a peak Thursday afternoon flight from YUL to YYZ, it's got a lot of empty seats.

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Dont Worry Bean - I've got one scheduled soon enough wink.gif

What bugs me about these fares and perhaps my comment was driven by frustration out of the stock price - is that we sat around and gave all hell to Jetsgo for promoting these fares and yet we throw them around.

While our revenue management team has been what I consider a great job - I still thinks its hard to swallow.

I probably am just all Pi$$y over the union crap - while it will amount to nothing as it has a few times before.

Cheers

SB

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Thank god Skyblazer isn't in marketing at WJ. You don't have a clue bud. The goal is to maximize revenue. Look at the big picture. Just drive the airplane

Maximise revenue on a $9 fare ??

You have got to be kidding.

What possible revenue is there ??

SB has it bang on, and it is worthwhile comparing this to Jetsgo. The howls here about them doing this ervy thing were amazing to say the least.

Isn't a $9 fare considered predatory pricing ?

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Put people in the seats....

Cheaper than expensive TV ads....

Don't know about you AC guys, but if a lot of people like the product and come back.

Kinda like spending $5 to make $10.

Go, Westjet, Go

P.S. I am a Westjet owner.........

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... would never let a seat go for below break even cost. Gaining revenue on a seat that would otherwise go empty is maximizing revenue.

While this fare might create a few additional passengers, in many cases it simply reduces the amount paid by people who were already planning to fly. So, it is easily debatable whether it increases overall revenue. So, call it what it is... a way to ingrain the impression that Westjet has cheaper fares and to keep Westjet in people's minds ... much like the multiple announcements about YQR-LAS, YYJ-LAS. They could have all been issued in one press release, but WS cleverly issued them as separate press releases on separate days.

So, I'll give the WS publicity machine credit for keeping the name in lights.

But, these type of fares, in the long run don't help the industry in general or Westjet. If people think that, if they wait long enough, they can fly for $9, instead of flying this month for a reasonable fare, they will just wait until the next seat sale, which may or may not occur. Not what I would call maximizing revenue.

Beyond keeping the name in lights, fares like this are a low point, IMO, and do bring Westjet closer to Jetsgo, regardless as to what the "owners" say.

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I know AC does this too but I hate these low fare "events". It perpetuates the belief that the rest of the time (when only normal fares are available) that the companies are gouging the consumer.

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I don't think anyone in the industry likes to see this sort of thing. I think Dagger is bang on here in saying that there are alot of empty seats in this corridor. The problem is that Westjet can't pull the pin in the golden triangle like it has on so many other stale routes in the past and then brand itself as Canada's value leader.

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