Yahoo Finance Recession won't stop people from travelling, says WestJet CEO
A recession will take a toll on Canadians but it won’t stop them from travelling, the chief executive of the WestJet Group said, underlining the company’s optimism that robust demand will persist even as consumers grapple with a challenging economic environment.
Alexis von Hoensbroech told an audience in Toronto Oct. 25 that though recessions might slow the sector’s growth, they have not usually reversed the trend in the number of people travelling.
“It will always have an impact on the financial side but overall we see that travel is actually very resilient against any kind of external shocks, particularly private travel,” von Hoensbroech said, noting the pandemic was a unique case that actually took down the industry.
He said past events since 1975 — including the Gulf War, Asian financial crisis, 9/11 and the 2008 global financial crisis — have not affected the number of global aviation passengers for an extended period of time.
According to The International Air Transport Association (IATA), global traffic was at 95.7 per cent of pre-COVID levels in August, the most recent month of available data.
So far this year, international traffic is up 50 per cent from a year ago, reflecting not only a recovery in business travel, but the release of pent-up demand after pandemic restrictions were lifted.
Describing the COVID-19 pandemic as “really, really bad for the industry,” von Hoensbroech said it was the only event that reversed passenger growth trends, though these have since been recovering.
“It would take a lot for people to step away from vacation flights,” he said. “That’s something that everyone loves and that’s one of the last things that people skip, especially Canadians (looking to escape cold winters).”
Bringing Sunwing on board
The CEO said that with the company’s acquisition of Sunwing earlier this year, WestJet is now “by far, by a long shot” the largest leisure airline in Canada.
In June, the company announced it will integrate Sunwing’s airline business into the WestJet mainline carrier in 2024, combining the airlines along with discount carrier Swoop, which concluded its integration on Oct. 30.
Von Hoensbroech told the Financial Post in a June 22 interview that the company’s move to combine the three carriers into one WestJet mainline carrier was a bet on customer segments being differentiated within one airplane, rather than across various airline brands.
“We decided that in the future, we will not segment our guests by airline but segment our guests within the aircraft,” he said in October. “For a market like Canada, this just makes the most sense.”
Since Sunwing pilots are in a different union than those with WestJet and Swoop, which are represented by the Air Line Pilots Association (ALPA), von Hoensbroech said there was still a lot of work to do to finish the integration, which he expects will take another year.
WestJet’s pilot recruitment efforts have borne fruit and attrition has been down since the company agreed on a new labour agreement with its pilots in mid-2023, he said.
“We actually are now starting to slow down hiring pilots because we are getting so much demand, so that’s actually pretty good,” he said. “So we are not concerned at all that we have enough pilots.”
As for the tour operator Sunwing Vacations, WestJet has said it plans to grow and keep operating the brand as a separate business, side-by-side with its existing operator, WestJet Vacations.
“This is the most comprehensive leisure network that Canada has ever seen in its history,” von Hoensbroech said.
WestJet plans to focus on its tour operating businesses and strong network in Western Canada, where the chief executive says it is a leader.
Flying in Eastern Canada never worked out for WestJet, where it is only the second- or third-ranked airline, he said. The routes between Toronto and Montreal and Toronto and New York were among the airline’s least profitable.
In early October, the airline announced it was halting flights between Toronto and Montreal for the winter. The airline runs flights once a day along the busy Toronto-Montreal corridor, which currently sees four carriers — Air Canada, WestJet, Porter Airlines and Air Transat — operate more than 350 trips per week, according to aviation data firm Cirium.
“Why waste our expensive assets fighting in a market where we can’t win anyway? Let’s just drop this and move it to places where Canadians actually appreciate what we’re offering,” von Hoensbroech said.
• Email: dpaglinawan@postmedia.com
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