January 14, 2016 12:10 pm
Updated: January 17, 2016 12:13 pm

WestJet won’t be beat on airfares by new discount carrier: exec

WATCH ABOVE: WestJet won't allow NewLeaf to take over discount airfare market

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A top executive from WestJet Airlines said Thursday the carrier won’t “concede” to being beaten on airfares by a discount upstart that plans to launch competing services next month.

“We’re not going to concede the low-fare positioning,” Harry Taylor, the Calgary-based carrier’s head of finance, said.

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WestJet, which still tells customers it is the low-cost alternative to the country’s biggest airline, Air Canada, faces the prospect of losing some business to NewLeaf Travel, which made a somewhat surprising announcement last week that it will start service between seven Canadian cities on Feb. 12.

NewLeaf plans to operate as a so-called “ultra-low cost” carrier, offering sharply lower airfares but without the frills bigger and costlier airlines typically build into the price of a ticket, like complimentary luggage carriage, in-flight beverages and snacks and online seat selection. With NewLeaf, all of those things will come at an extra charge.

WestJet currently charges first-bag fees for economy fares only, a fee it introduced in late 2014.

Pricing power

Though NewLeaf only plans to fly to less busy airports while avoiding major travel hubs — launch cities include Halifax, Hamilton, Winnipeg, Regina, Saskatoon, Kelowna and Abbostford, B.C. — experts say WestJet and Air Canada will feel some pressure on airfares.

“A new entrant into the market will at the very least mess with the incumbents’ pricing power,” airline analysts at financial services firm Raymond James said Jan. 7, a day after the Winnipeg company announced launch plans.

MORE: ‘Ultra-low cost’ airline NewLeaf takes flight next month

Speaking at an investor conference hosted by AltaCorp Capital, Westjet’s Taylor was asked if the carrier planned to launch a “flanker” or competing brand that would mimic a low-cost carrier in its fares and service.

“We have no plans to introduced another brand into the Canadian market place,” Taylor said.

Taylor suggested that while WestJet will be competitive on base fare prices, it won’t compete on price alone. WestJet doesn’t plan to completely “unbundle” services the same way an ultra-low cost airline typically does.

“We’re not going to compete the way they do,” the WestJet exec said.

© 2016 Shaw Media

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