Advertisement
Canada

Lower airfares to Europe? WestJet’s move signals discounts on horizon

New non-stop service to London could be the 'tip of the iceberg' for WestJet's ambitions to open routes in Europe, experts say.
New non-stop service to London could be the 'tip of the iceberg' for WestJet's ambitions to open new routes to Europe, experts say. The Canadian Press /Bayne Stanley

Canadian travellers to London are likely to see lower airfares across the board beginning next spring. That’s when WestJet said this week it plans to begin non-stop service to the city’s Gatwick airport.

That’s good news for more than just those headed to London — it could be the start of a trend that could lower airfares to other European centres, too, experts say, if the Canadian carrier continues to open up new routes that challenge Air Canada’s slice of the international market.

“What we believe WestJet is trying to do in London is the same thing that it has done since its inception in all other markets that it has entered,” analyst Ben Cherniavsky at financial services firm Raymond James said in a note to clients on Wednesday.

That is: “lower fares [and] stimulate demand” at the expense of Air Canada, Cherniavsky said.

Stealing customers

The analyst suggested the London route as well as WestJet’s two other transatlantic routes (to Dublin and Glasgow) represent “the tip of the iceberg” for WestJet, which appears to be pursuing a broader push into airports in Europe.

Story continues below advertisement

There isn’t a ton of growth among new flyers crossing the Atlantic, which is considered a mature market by experts. That means WestJet must win customers away from Air Canada, which it will do by undercutting airfares.

It’s a game that Air Canada and WestJet have been playing for years as the latter has moved into the former’s turf. And Air Canada typically responds by matching WestJet’s lower airfares, Cherniavsky said.

“These threats to Air Canada’s incumbent position always elicit a fierce response,” the analyst said.

WATCH: WestJet flying to Gatwick.