WestJet and New York. Moving in a new direction?


The announcement last week that WestJet had successfully bid for eight slots at New York’s LaGuardia airport, along with its press release that indicated a new focus on “increased business travel in the East”, may signal a new phase in the airline’s development.

So far, places in the sun

While the WestJet website features a page on the benefits and facilities that accrue to business travelers, the carrier’s network has had a decidedly leisure focus with virtually all its destinations located in the US sunbelt, as well as Mexican resort cities, the Caribbean and Hawaii.

If the new slots are utilized for service between Toronto and LaGuardia, for instance, this will be in stark contrast to other US-bound flights from YYZ that end up in Florida or Las Vegas.

A clearly un-business network is currently in place.

Top 10 International destinations for WestJet (28 Nov-4 Dec, 2011)

No shortage of competitors

It will also enter a market that has ample competitive service with Air Canada and American already present at LGA, Continental and Air Canada flying from Newark and American and Delta active at JFK. WestJet currently codeshares with American on its Kennedy services. And there is the added challenge of Porter’s frequent flights to Toronto’s City Centre airport.

The competition also stresses frequency by operating primarily RJs, which allow for greater frequency with a more manageable seat offer. The bulk of WestJet’s fleet is comprised of B737-700s with 136 seats; considerably more seats per flight than the incumbents offer.

Looking at a current destination in the US, Miami, for travel in January WestJet, Air Canada and American all offer a round-trip fare of $388 which gives the carrier no price advantage and other dates chosen also showed little price variation amongst the competitors.

Looking at fares between New York airports and Toronto in January reveals a similar fare construct with all carriers offering flights at roughly equivalent rates. Should WestJet enter the market, it remains to be seen as to whether or not it could operate with a significant fare advantage. Porter’s fare, while a bit higher, has the advantage of its airport’s proximity to Toronto’s business district.

While WestJet does have codeshare links with some mainline carriers, it will not be able to offer the alliance based perks that are often important to frequent business travelers. And the delays associated with New York airports may also wreak havoc on the airline’s quick turnaround, low-cost model. Even on its Vancouver-Honolulu flights, the airline schedules only a one-hour ground turn.

Other options?

While the airline could use some of the slots for service to other Canadian cities, distances to western Canada exceed the perimeter rule and nearby points like Ottawa, Montreal and Halifax all are already well served by incumbent carriers.

All in all, the New York market may be a high risk/high gain endeavour for WestJet.

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