Yahoo Finance Canadians can expect 'lots of bargain options' for winter travel, says WestJet CEO
WestJet’s chief executive officer Alexis von Hoensbroech says Canadian flyers can expect more deals on airfares this winter and next summer, as pent-up travel demand moderates and productivity improves in the airline industry.
“There are markets that have seen strong pent-up demand that drove pricing, because there was an imbalance between supply and demand, the most prominent being on (transatlantic routes) over the summer,” von Hoensbroech said in an interview with Yahoo Finance Canada.
While travel demand has remained resilient, he says it is now more in line with capacity, which has helped bring prices down. At the same time, von Hoensbroech says productivity levels are improving as the airline overcomes a pilot shortage, helping drive operational costs down.
“I think there will be lots of bargain options for this winter and also next summer,” he said.
Strong pent-up demand following the pandemic combined with capacity that remains below 2019 levels resulted in higher airfares, particularly when it came to international travel. According to data from FlightHub, the average price for an international flight topped $1,516.71 in July, a 35 per cent increase compared to the previous year.
But that pent-up demand appears to be tapering off. Statistics Canada reported this week that airfares plummeted 19.4 per cent in October compared to the same month last year, as airlines boost capacity and travellers reconsider trips due to higher costs.
Still, von Hoensbroech says demand remains resilient. WestJet, which is a private company owned by Onex Corp. and does not publicly disclose its financial results, has reported a profit in the first three quarters this year, he says. The airline is on track to surpass pre-pandemic capacity levels next year.
Strategic shift to focus on Western Canada, leisure travel
WestJet is in the midst of a strategic shift that has seen it focus on service in Western Canada – “returning WestJet to its roots” – while also expanding its leisure and sun destination offerings through the help of its acquisition of Sunwing.
“It doesn’t mean it’s a 180, or that WestJet is going back to the very beginning,” von Hoensbroech said of the change in strategy. The airline first launched in 1996 as a low-cost carrier and didn't fly east of Winnipeg until 2000.
“It’s about focusing on the things that have made WestJet strong in the past, and also stopping things that actually weren’t that successful.”
One of those things includes some regional travel within Eastern Canada. For example, in October the airline suspended service between Toronto and Montreal through the winter.
“We decided we wanted to be active in the markets where we can actually win and lead,” von Hoensbroech said. Those markets are primarily in Western Canada, where the airline already has a dominant foothold, and in leisure travel, a segment of the market which has seen demand fully recover.
And while WestJet plans on growing its leisure travel footprint, von Hoensbroech says the company is taking a “rather cautious” approach when it comes to intercontinental flying with its wide-body fleet. Prior to the pandemic, the airline had set its sights on significant international expansion, but scrapped that plan post-pandemic, cancelling its remaining order for Boeing 787 Dreamliners and dismantling its hubs in Toronto and Vancouver. The airline now flies its seven Dreamliners out of Calgary, using them to fly to Europe and Asia in the summer, and south in the winter.
The leisure travel segment, primarily to sun destinations, is where von Hoensbroech sees opportunity.
“That's the other area where we think we not only can be a strong number one but also grow and broaden our footprint,” he said.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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