Asia-Pacific Report: WestJet hints at big international plans, including flights to Asia

It is becoming readily apparent that Calgary-based WestJet will likely soon join the long list of airlines flying Canada-to-Asia routes.

What is unclear, however, is whether the carrier's future will focus on Vancouver — where much of Canada's Asia-bound flights already originate — or if WestJet will leverage its existing base of operations (along with a new runway and a new international terminal opening soon) in Calgary.

As part of the airline's 20th anniversary, WestJet CEO Gregg Saretsky has been making the rounds of Canadian media outlets in recent weeks. During a conversation with The Sun, Saretsky outlined a number of initiatives in the airline's future: The increasing use of wide-body aircraft, the hiring of staff who can speak either Mandarin or Cantonese, as well as a new company logo that incorporates the maple leaf.

The obvious conclusion: WestJet is moving into the lucrative (but very competitive) non-U.S., non-sun-destination international market. The airline begins flying to London (Gatwick) on May 6.

"If you ask me today, 'What other destinations are you going to fly to?', well, we want to build all the infrastructure for that, in advance of us making that decision," Saretsky said, noting WestJet is also looking for staff who can speak other European languages. "If we decide next year to fly to China, it's too late to hire Cantonese and Mandarin speakers next year.

"We're not going to disclose, for competitive reasons, where exactly we're going to fly. But the fact we are hiring people who speak Portuguese, Italian, German, Mandarin and Cantonese gives people a pretty good guess at where we're going next. We're going to build that capacity so that, when it's time to make a decision, it will be an easy trigger to pull."

WestJet is Canada's second-largest airline, and has seen a meteoric rise in its 20 years of operation, going from a regional carrier (focused on Western Canada) with revenues of $37 million in 1996 to a $4-billion operator with 140 aircraft across the country and beyond.

But Alberta's weakening economy in the past year has put a dent in WestJet's numbers. As the prices of oil plummeted, Albertans' demands for travel went with it. WestJet recently missed expectations in its 2015 Q4 financial results, and Saretsky said the airline will likely see Q1 revenue down by 10 to 15 per cent.

That may explain the airline's push into international markets, where carriers such as Air Canada have seen strong business in recent years. WestJet itself says its flights from Eastern Canada to Dublin three years ago "were the most successful launch in our then-17-year-old history" and was "instantly accretive" to earnings.

As Alberta's economy weakens, Calgary's loss has been Vancouver's gain. WestJet has started moving capacity away from Calgary to airports in Vancouver and Toronto, and YVR gained direct flights to Hamilton and London, Ont. this summer partially due to that shift.

But Saretsky said it is still up in the air whether Calgary or Vancouver (or both) makes sense as a jumping-off point for an eventual entry into the Asian market, specifically China. Calgary has been eager to expand its reach into Asia — it currently only has an Air Canada service to Tokyo (Narita), but a Hainan Airlines route to Beijing, with a code-share agreement with WestJet, is starting in June.

"It's a function of supply and demand," Saretsky said of the eventual decision between Vancouver or Calgary. "So we obviously look at where the demand is coming from. Vancouver benefits from having such a big Asian community to begin with, and the (visitors, families and relatives) segment from Vancouver is quite a bit larger just because the community is quite a bit larger than Calgary's."

But he also added that the airline has to consider the inbound demand from China, of the middle-class traveller in "secondary cities" seeking new tourism experiences. In that sense, Calgary, with its proximity to the Rockies, may be underserved.

"There's a very rapidly growing middle-class in China, and they — like tourists all over the world — are looking for new experiences," Saretsky said. "Because the cities they come from — a small city in China is eight million people — the opportunity to come to Alberta to experience the great outdoors, the Rockies, and to see the magnificent nature we have in Canada will be a big attraction, I think."

chchiang@vancouversun.com

Source: Asia-Pacific Report: WestJet hints at big international plans, including flights to Asia