American tourists aren’t heading to Canadian cities in huge numbers to take advantage of their turbo-charged U.S. dollar. At least not yet.
But WestJet CFO Harry Taylor says he wouldn’t mind such a development as depressed oil prices and the low loonie sends air travel in the company’s home province of Alberta into a tailspin and dampens demand generally from coast to coast.
Speaking at a conference in Whistler, he said it will be interesting to watch Americans realize the value they can get with the exchange rate so heavily tilted in their favour. “We’re a much more attractive place to travel now… We have tremendous natural assets.”
While Canadian travel by Americans is up, according to data compiled by Statistics Canada, it’s mostly day-trips made by car. That kind of travel is up eight per cent compared to a year ago, noted BMO Capital Markets. Whether air traffic from the U.S. accelerates as the loonie remains well below the value of the greenback remains to be seen.
MORE: Canadians face jacked up food, gas prices as Americans rake in savings
Discounting airfares
Calgary-based WestJet could use the tourism boost as core Alberta markets, such as Calgary and Edmonton, see traveller numbers dwindle. To combat the losses the carrier has increased flights into hubs like Vancouver and Toronto, regions of the country where demand is faring better.
The country’s second-biggest airline continues to grow overall traffic, Taylor said, but that’s come at the cost of lowering ticket fares.
“It has been driven by discounting,” Taylor said.
MORE: WestJet won’t be beat on airfares by new discount carrier: exec
New competitor
Taylor also commented on the emerging threat of new discount airline, NewLeaf Travel. It’s an upstart based in Winnipeg that plans to launch services as soon as next month.
“Any new entrant we’ll take seriously,” Taylor said, though the exec reiterated that WestJet won’t compete directly on price with NewLeaf but rather offer fliers more attractive “bundles” that include services above the base fare.
NewLeaf temporarily suspended operations this week amid a review from the Canadian Transportation Agency to determine whether or not the airline was required to directly hold an operating licence. NewLeaf has contracted out actual flight service to Kelowna, B.C.-based charter Flair Airlines Ltd.
NewLeaf announced Jan. 6 it would start flying from Halifax, Hamilton, Saskatoon, Kelowna, Regina, Winnipeg and Abbotsford with prices ranging from $89 to $149.
“We’re not going to be a seat and a seatbelt” operator, WestJet’s Taylor said. “But we will be very vigilant.”
WATCH: A ‘dogfight’ over discount airfares is about to takeover Canada’s skies, as WestJet says it will not allow upstart NewLeaf to undermine it.
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