Yahoo Finance WestJet CEO: Swoop has 'significantly exceeded our expectations'
The chief executive of WestJet Airlines Ltd. says its ultra low-cost carrier Swoop has surpassed the company’s expectations, consistently flying jets that were nearly full throughout the first three-months of operations.
In August, the Calgary-based airline reported a load factor – a measure of how full flights are – of 95 per cent for Swoop. At the same time, WestJet’s overall load factor, which includes its mainline, Encore, Link and Swoop operations, fell year-over-year in August by 1.6 percentage points to 89 per cent. In September, Swoop’s load factor dipped slightly to 90 per cent while WestJet’s overall load factor for the same month fell 1.2 percentage points year-over-year to 79.2 per cent.
“That has significantly exceeded our expectations,” WestJet’s CEO Ed Sims said in an interview with Yahoo Finance, adding that he has also been surprised at the demographic range and size of the passenger groups opting to fly on Swoop. The average party size on Swoop – which began operations in June – is 15 passengers, Sims said.
“We’re carrying a number of older travellers who themselves are on very tight budgets,” Sims said. “I think we thought a higher proportion of passengers would be students and millennials, so we’ve been surprised at the diversity of the level of interest in the lower fares Swoop can offer.”
Sims comments came shortly after WestJet unveiled new details of its ambitious growth strategy that will see it expand internationally with the acquisition of at least 10 Boeing 787-9 Dreamliner aircraft. On Wednesday, Sims announced that Calgary, Alta. would be the home base of its first three Dreamliner jets, which will fly non-stop to London (Gatwick), Paris and Dublin beginning in late spring next year. According to WestJet, the international service will support 650 full-time jobs and eventually bring 185,000 visitors per year to the Calgary area.
“We think Western Canada and Calgary in particular are very underserved by international carriers… and we think there is a great opportunity for inbound tourists from western Europe to fly directly to western Canada,” Sims said.
“This gives us access to the premium revenue and international revenue streams that we’ve lacked in our development over the last 22 years.”
Sims said that a year from now, the airline will introduce new routes for the next three Dreamliner deliveries. Additional routes will also be introduced in two years, when the next four aircraft are delivered. WestJet also has an option to purchase an additional 10 aircraft, which could arrive between 2020 and 2024.
While the first three jets will be based in Calgary and flying to Europe, Sims said the airline is looking at different network strategies for the the remaining Dreamliner deliveries.
“Asia and Latin America are still very much in our sights,” he said. “We have designated rights and access to fly to markets like Japan, and I’m still very excited about the propositions there.”
WestJet’s growth strategy – which included the launch of Swoop as well as the Dreamliner expansion – has been met with skepticism from some analysts. The airline reported its first quarterly loss in 13 years during the second quarter this year, in part due to a labour dispute with WestJet pilots and soaring fuel prices.
Sims said Wednesday the company has made progress since the second quarter, pointing to the Dreamliner announcement and cost management which is expected to shave $60 million in costs this year alone.
“We’ve made very significant progress over the last three months,” Sims said.
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