WestJet to launch ULCC???

[internet]

We plan to launch a new ultra-low-cost-carrier by the end of 2017. More details below. 

 

https://blog.westjet.com/westjet-announces-plans-to-launch-a-new-ultra-low-cost-carrier/?sm_cid=social:ws-world:ulcc-announcement:twitter

 

 

[Seeker]

Hasn't this been tried by other airlines?  Simply adds cost and cannibalizes the mainline.

[internet]

http://www.newswire.ca/news-releases/westjet-announces-intent-to-launch-ultra-low-cost-carrier-619941133.html

 

10 x 737-800 in high density layout

[Seeker]

....and just when I thought it was impossible to make the 737 less comfortable than it already is.

[Vsplat]

I have to ask when is this densification going to hit its limit?  There are very real health effects already.  The trouble is, the passenger population chases price point.  So when this launches, passengers will demand the same price on carriers that don't use the same seating.  On this trend line,  at some point (and not saying this is it), an airline is going to have to make a decision between something known to be harmful to its passengers and meeting their price expectations.

Vs

[internet]

As Seeker says, this just causes problems. I wonder how serious they are vs. This just being a warning shot to the proposed ventures and an attempt to finally convince NewLeaf that if you continue, it's about to get uglier.

Why not to US style and offer a basic economy seat, no changes, no bags, no carry on, no seat assignement etc..

[Seeker]

I say ram the 250 seats in, give the passengers nothing but a 2 oz glass of stale ditch water and charge 12 bucks for a flight from YYC to YYZ along with a 1-800 "customer service" phone number that goes straight to voice mail with no-one to ever return a call.  People are stupid.

[rudder]

I had to check to make sure the press release was not dated April 1st. More importantly, this announcement is an admission that a WJ does not feel that it is cost competitive with potential new entrants (or potentially AC Rouge with an expanded domestic network?) This may be a preemptive strike agains AC plans that are not yet announced.

Max seating in an -800 is 189 (O'Leary wants it certified for 200). That must be what WJ means by 'HD'. It will look just like the Sunwing seating chart.

Airline within an airline is rarely effective. It confuses the customer and dilutes the brand. But I am sure that WestJet Rouge will be a complete success....

[Geminoid]

Isn't this an attempt to emulate the success of Rouge to Air Canada?  It will be interesting to see what routes are selected for this "low cost" service.  I'm guessing that similar to Rouge it will be seasonal sun destinations including Florida, Hawaii, Las Vegas etc.

 

[rudder]

Hopefully the WJ pilots will not make the same mistake as ACPA (yes, I know that Rouge/LCC came from a government imposed agreement) and allow a separate AOC creating the opportunity for divisions in the ranks and carve outs of flying from the mainline bid package. My bet is that WJ will try to sell this concept to the WJ pilots as 'growth' (meaning upgrades).

I also wonder if this is an attempt by WJ to insulate part of the airline from impending unionization by creating multiple corporate subsidiaries.

[Seeker]

How much lower can Westjet go with their cost - they are non-union (so far), use the FAs and pilots as grooming staff, use contract ground handling (most places), don't offer hot meals.  They can increase the density, take away interlining, charge for bags which will bring in a few extra dollars but at the cost of restricting certain aircraft to certain routes.  I can't imagine they will have dedicated crews or that they will convince the pilots, FAs, check-in staff or ground crews to work certain flights for less pay so there will be no savings there.  Seems like someone at HQ ran a spreadsheet program that shows a few percent upside but when the plan meets the real-world it will fail - same as every other airline that has tried it.

[Seeker]

2 minutes ago, rudder said:

 

I also wonder if this is an attempt by WJ to insulate part of the airline from impending unionization by creating multiple corporate subsidiaries.

It might have the opposite effect - force the employees to unionize to protect themselves from corporate manipulation.

[rudder]

25 minutes ago, seeker said:

How much lower can Westjet go with their cost - they are non-union (so far), use the FAs and pilots as grooming staff, use contract ground handling (most places), don't offer hot meals.  They can increase the density, take away interlining, charge for bags which will bring in a few extra dollars but at the cost of restricting certain aircraft to certain routes.  I can't imagine they will have dedicated crews or that they will convince the pilots, FAs, check-in staff or ground crews to work certain flights for less pay so there will be no savings there.  Seems like someone at HQ ran a spreadsheet program that shows a few percent upside but when the plan meets the real-world it will fail - same as every other airline that has tried it.

My guess is that AC costs for pilots at Rouge are very close to current WJ 767/737 pilot costs. AC FA costs at Rouge are likely slightly lower than WJ FA costs due to low tenure and no soft credits. I am not sure how much of the AC overhead costs are applied to Rouge. 

Given that WJ already has no J class product offering and a premium economy offering that is little more than an empty seat alongside, it is hard to believe that there will be a product offering that will come in below what currently exists on the WJ 737's.

It would appear that Gregg wants to emulate O'Leary. A fee to use the lavatory cannot be far away.

[Guest]

 

 

WestJet to target price-sensitive fliers with no-frills airline 

Greg Keenan - AIRLINE INDUSTRY REPORTER

The Globe and MailPublished Thursday, Apr. 20, 2017 8:37AM EDTLast updated Thursday, Apr. 20, 2017 11:44AM EDT

WestJet Airlines Ltd. is moving to capture the most price-sensitive airline passengers – and attract some people who don’t fly at all – creating an ultralow cost carrier (ULCC) that is scheduled to begin operating before the end of the year.

Canada’s second-largest airline will make the move down market as fledging ultralow cost carriers Canada Jetlines Ltd. and Enerjet try to raise money to begin operations.

“We believe this is the best approach for us for the price-sensitive end of the market,” WestJet executive vice-president Bob Cummings said. “We do believe there’s a significant market out there beyond what we have today.”

Mr. Cummings would not reveal route plans, fares or other operating details, but said WestJet will begin with 10 Boeing 737 800 aircraft in a high-density seat configuration.

Ultralow-cost carriers typically charge rock-bottom fares and jam as many seats into an airplane as possible while charging fees for baggage, food and drinks, in-flight entertainment, paper tickets and other services that some mainline airlines include in the price of a fare.

Among the targets for the new airline are people who don’t fly now, Mr. Cummings said in an interview Thursday.

“If you go through our history, how we’ve stimulated markets, I think it was about 15 per cent of Canadians flew in 1995 before we entered the market and last year I think it was 33-34 per cent,” he said.

The ULCC service is likely to offer flights both within Canada and to the United States, he hinted.

“A 737 has a range of almost 3,000 miles so it makes sense for us to look beyond domestic,” he said.

There’s a potential market of about 10 million passengers, about half of whom travel to such U.S. border cities as Bellingham, Wash., Buffalo, N.Y., Plattsburgh, N.Y., to take advantage of lower U.S. fares.

“Where this is going to be attractive is someone who’s very price sensitive, ‘I’ve got a family of four and I want to go Florida, if the family and I drive over to Bellingham I can save $1,200,’ ” said industry analyst Chris Murray, who follows WestJet for AltaCorp Capital Inc.

Mr. Murray agreed that there is a market for people who want to pay ultralow fares, which could be as low as $19. But they will have to pay for any amenities, he said, up to and including boarding the plane earlier than others.

Spirit Airlines Inc., an ultralow cost U.S. carrier based in Miramar, Fla., generates revenue from 60 to 70 separate ancillary services for which it charges, he noted.

A search on Spirit’s website revealed a fare of $276.08 (U.S.) for a return flight between Buffalo to Fort Lauderdale, Fla., with one stop.

WestJet’s fare for a non-stop flight to Miami from Toronto with a one-stop return flight was $661.24 (Canadian).

While WestJet moves down market in competition with the new carriers, it has also been targeting Air Canada by adding flights to Britain on wide-bodied aircraft.

The Calgary-based airline appeared to be making a bigger international move earlier this year when it got approval from its pilots to add more wide-bodied planes, but Mr. Murray said he wonders if WestJet is rethinking that further expansion.

Mr. Cummings said WestJet is still evaluating further expansion, but had nothing to announce Thursday.

 

[Guest]

They say the new carrier will offer cheaper flights with no frills....   WestJet low end fares (econo) already do that so will those fares disappear from the rest of WestJet and only be on the newbie? How can you get less frills than, add on for baggage, for food, for seat selection, for more leg room etc? Perhaps participation in fuel purchase , loonie slot on toilets, charge for water, coffee, pop and a tip jar for the crew. 

[rudder]

I think that WJ was just looking for an excuse to increase seating to 189. And now they will find out the challenges of fleet substitution when things go wrong. It creates inefficiencies. A separate AOC would just compound the logistical challenges.

[Johnny]

Great, another Low Wage carrier.  The only employee group at Rouge that took a pay cut, were the Pilots.  F/A's were all new hires, AME's, Agents, Dispatchers, Rampies are all mainline at AC wages.

(yes, I know that Rouge/LCC came from a government imposed agreement)

The Government stuck us with Rouge, only after ACPA was foolish enough to negotiate it in an agreement that got voted down. Here's hoping the WJ Pilots don't make the same mistake we did. 

[blues deville]

 

[Canoehead]

41 minutes ago, Malcolm said:

"...cheap and cheerful flying"

Saretsky wins oxymoronic term of the year in my mind. 

[rudder]

2 minutes ago, Canoehead said:

Saretsky wins oxymoronic term of the year in my mind. 

What he meant to say was "cheap and cheerful westjetters....."

Time to sign the cards and put an end to the charade.

[chockalicious]

Couple things I found interesting with this.

Clive is rarely quoted in the media on the business anymore. By having the first person quoted be Clive instead of Gregg it is a deliberate tactic to sell this internally. Clive is still pretty much universally beloved, Gregg universally respected.

Lots of internal chatter on the front line about how this is great and that this is like Encore part 2. I don't think the realization is there yet that this is designed to undercut the cost of their labor as well. I don't see how they can operationally have the same people check in for both airlines. The guest confusion on what service they would be getting and what fee structure could be a bit of a customer service nightmare.

Release says they are negotiating with pilots. This says to me that there will be new crop of FA being hired on the higher density aircraft. I don't see how this works unless you really cleave it off from the mothership and have a whole new staff with lower expectations, no ESP, no profit share, etc.I don't think you can even have the WS name attached to it.

I think it will also extend to service recovery and employee empowerment, no picking up the hotel on weather delays, no front line agent cutting a break on re-accomodation, wouldn't surprise me to see contracted out Canadian staff either.

[Super 80]

My boss was just "re-accommodated" after missing a connection on British Airways with a routing that including a Vueling segment. He said he wasn't sure whether he should be relieved there was nothing approaching that bad in North America yet or frightened it was a sign of things to come.

But boy is Saretsky invested in the ULCC bogeyman!

[Super 80]

3 hours ago, Vsplat said:

I have to ask when is this densification going to hit its limit?  There are very real health effects already.  The trouble is, the passenger population chases price point.  So when this launches, passengers will demand the same price on carriers that don't use the same seating.  On this trend line,  at some point (and not saying this is it), an airline is going to have to make a decision between something known to be harmful to its passengers and meeting their price expectations.

Vs

This won't change until pax are incinerated in a survivable evacuation, then it will probably change pretty rapidly.

[chockalicious]

2 minutes ago, Super 80 said:

 

But boy is Saretsky invested in the ULCC bogeyman!

New Leaf is proving that people will eat a crap sandwich to save a dollar. Still lots of people at WS who remember Jetsgo and what that did to the business, flight passes for profit share, reduced margins, etc.

A well funded ULCC with good operations will severely screw with both carriers.

[Guest]

1 hour ago, rudder said:

I think that WJ was just looking for an excuse to increase seating to 189. And now they will find out the challenges of fleet substitution when things go wrong. It creates inefficiencies. A separate AOC would just compound the logistical challenges.

Here is the config used by Ryanair, note that none of the seats recline. Also I have shown 1 for 186 pax.

https://www.seatguru.com/airlines/Ryanair/Ryanair_Boeing_737-800.php