WestJet Model Creating Opportunity

Adrian Loveridge – Hotel Owner

It is certainly not all doom and gloom in the travel and tourism industry. Take WestJet, the Canadian low cost carrier as an example. This April it posted record load factors, achieving an average of 86.2 per cent and a revenue passenger miles growth of 8.2 per cent over last year, together with record first quarter profits. The airline handled over 120,000 more passengers in April 2012, hitting a total of 1.48 million for the month. During the same three months, Air Canada’s losses climbed to CAD$210 million.

WestJet founder, Englishman Clive Beddoe made no secret at the time when the airline was formed in 1996 that it was modelled on the highly successful US SouthWest Airlines, adopting the single aircraft type with different variations. However, the current President and chief executive, Gregg Saretsky, has moved away from this business plan to place a firm order for 20, and options on another 25 of the Bombardier made Q400 turbo-prop planes. In his words its to ‘connect the dots’.

WestJet also considered the European made ATR, but ultimately chose the NextGeneration Q400’s based on their ‘combination of seating, speed and range given the distance the planes will need to fly to reach some of the smaller communities to be served’. And its easy to see the attraction of this particular Dash 8 version. The fastest, 414 mph (360 knots), a range of 1,567 miles and a passenger capacity of up to 78 seats. Small wonder then its been the best seller, with 428 orders up until 1st May 2012. The regional services will be phased in, as the airline takes delivery over the next six years.

While the new destinations have yet to be disclosed, it could certainly help Barbados open up and expand our Canadian market share. During the time Sean Durfy was CEO, I wrote to him, asking if he would consider operating a direct Winnipeg/Barbados service. All three types of the B737 they operate can easily do it nonstop, a great circle distance of 3,304 miles or less than 7 hours flying time. He was gracious enough to respond, albeit not positively, but perhaps then the timing was not right.

Why Winnipeg?

Well, currently Calgary (3,997) and Edmonton (4,037 miles) are out of the operating range of the fleet they have. With a metropolitan population of about 770,000 people, Winnipeg is the next best option. If Brandon, as indicated, Manitoba’s second city is serviced by the new turboprops, this will add another 53,000 passenger potential. But its a lot more than about just the numbers. It is the demographics.

Long winters, a predominance of farming communities, unable to work the land for extended periods of the year. Add the neighbouring Province of Saskatchewan, and the wealth created from potash, the world’s second largest producer and it makes even more sense. I am sure that both Regina and Saskatoon will be included in the deployment of the additions to the fleet.

It also seems inconceivable that we could not fill at least one 119 seater plane, once a week from November to May.  Hopefully over the next few months, our tourism policymakers will be carefully tracking any announced new routes and destinations with the connecting opportunities they may present from emerging markets.

0 thoughts on “WestJet Model Creating Opportunity

  1. David, Thank you. No I had not seen it. I think there is still so much potential from Canada. I think back to my days in Winnipeg and Wardair. When I left for the last time on a May long weekend it was still minus 25 degrees C.

    • Interesting listening to the debate in the House yesterday. Minister Sealy seems very satisfied with how the tourism numbers are trending and the good work of the BTA and committees. CAL just agreed to a new flight. BLP Ronald Toppin seems to think the government double-crossed Redjet and if this is the case it has an obligation to bail Redjet.

      Minister Sealy and the Prime Minister are again on record confirming that government will assist Redjet; its national designated airline. The overriding reason is that with Redjet in operation the numbers swelled. Of course former Minister Lynch has been vocal that it is madness to subsidize Redjet.

      Barbadians remain confused on the issue.

  2. Is there really going to be an all out effort to save RedJet or this is just a another unreal episode of Talk ? .RedJet was asking for $8 mil…..had 56 Bajans employed..contributed to the NIS (direct and indirect according to Kellmanomics)…..for the months now than transpired …..how much is the true tally of losses ?Let’s not forget the Almond closure…500+ withdrawing from the NIS Fund further….TIME we heard something from the NIS Board..as to what is their current financial position…..a request of an interim Statement of Cash Flow for 2011. (outside Special Audit )…is not too much to ask… A failure of the NIS Fund would be like a 8.0 Earthquake hitting Barbados….ITS RAMIFICATIONS ARE THAT DIRE…….

  3. David,
    I am not so sure any Minister of Tourism could be happy with our tourism performance for the first 3 months of this year. A growth of between 1.6 and 2.3 per cent ( depends on which figures you believe) in long stay visitors over the same period in 2011.
    St. Lucia up 20 per cent for the same period across all markets, including the UK up 30 per cent for the same three months despite increased APD. Our European arrivals (including UK) fell by 1.9 per cent.
    When the CTO posts up-to-date figures you will see that our (Barbados) performance was in fact one of the worse across the Caribbean.
    Start adding up the loss of air seats, loss of rooms and its not a pretty picture.
    Remember, the revenue/profit is mostly generated in the critical four winter months.
    As Horace Cobham, the President of the Barbados Bankers Association reminded us recently that of ALL the commercial bank loans (on Barbados), a staggering 43 per cent of non-performing loans were to the hotel and tourism industry.

  4. Thanks Adrian, there is a dearth of analysis when it comes to our most important industry. It seems all other manner of issues which are not as critical to national productivity are given top billing. We have become a country operating on the basis of agendas;mainly political.

    It is unfortunate Minister Sealy did not take the time to expound on the terms of reference given for the Tourism Master Plan.

  5. David, I expect this will be taken as a partisan view but nothing more could be farther from the truth. After reading Mr. Owen’s quoted comments, he really isn’t saying anything new or what several of us having been trying to get across for years. You have to realise that the vast majority of our 35 hotels (so far) and other tourism enterprises that have closed, did so under the BLP administration. Mr. Owen (despite appeals) relentlessly pursued the GEMS fiasco, which not only deprived the industry of what could have been nearly $300 million in marketing funds or soft loans for refurbishing/upgrading, but (in my humble opinion) has set back our small hotel sub-sector by at least ten years through their sustained predatory pricing.

    I had already submitted my Tourism MATTERS column for next Monday which specifically deals with this.
    We are now largely left with many old and very tired hotels whose owners
    simply cannot afford to upgrade and re-position them. Knowing this already, what does the current Government do? Increase land taxes by 50 per cent.
    Absolute nonsense.
    Take our own little hotel as an example.
    We would have to generate over $500,000 a year in profits just to service debt interest. One west coast hotel is currently offering return British Airways flights from Gatwick, 7 nights accommodation and airport transfers for GBPounds 629, when flight alone is currently over GBPounds 600.
    Imagine what room rate that hotel is getting. Where could the margin possibly be to upgrade the property?
    Four and a half years to even commission a tourism masterplan, that graphically shows just how serious our politicians are.

  6. @Adrian

    What is depressing is the lack of an overarching strategy. Seems Arthur is settling for creating public debt to help with sprucing up the plant but it seems the high input cost is not synched with the tourist market we are attracting.

  7. Flying Fish & Coucou, May 19, 2012 – “… is leading a team of like-minded business people in a bid to take over a certail well-heeled facility.”

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