WestJet

History in the making...

WestJet is a Canadian company in the private sector that was founded in 1996 by a team of people who all envisioned the same goal; creating an airline that costs less but has all the same qualities and services of a larger, well established airline. By 2016, they aspire to be one of the top 5 airlines in the world and changing the face of air travel by providing  outstanding, friendly service. Starting their journey with just three aircrafts and serving only 5 destinations and 220 "WestJetters", being a top 5 airline of the world may have seemed like a pipe dream but judging by all WestJet has accomplished in their 16 years, they seem to be well on their way to achieving that goal. They now have the youngest fleet of Boeing aircrafts; 100 strong and average age of 6.6 years, 8800 WestJetters and service more than 80 destinations across North & Central America. That's an average growth of 536 employee's per year! WestJet markets their excellent quality of service by saying "WestJetters care because they are WestJet owners." In my opinion, consumers prefer knowing that the founders care about their employee's and that one person is not the sole beneficiary of all the hard work and dedication that everyone gives on a day to day basis. This gives WestJet an advantage over other airlines. Generating such success domestically gave WestJet the opportunity to expand into other economies such as the USA and the Caribbean. I imagine we can expect even more growth over the coming years as they have established an excellent reputation in not only Canada, but their other destinations as well.

They'll get you there on time and on budget...

As previously mentioned, WestJet's goal is to provide quality service at an affordable price and remaining positive and passionate about everything they do is the key. In today's society, people are always on the go and don't have enough time in the day to accomplish all of their tasks which means that demand for airline tickets has increased since it is a much more efficient way of travelling and also the safest mode of transportation.

The chart on the left represents the average flight load for both Air Canada, which is WestJet's number one competitor (we will discuss that more in the next section) for the years 2011 and 2012. You can clearly see that planes were fuller in 2012 and that represents significant growth. "Our airline partnership strategy and growing number of business travellers are contributing to our positive momentum," said CEO Gregg Saretsky to CBC News. Although most may think that business travel is down to do online conference calling, that is clearly not true as business travel has been a large contributing factor to WestJet's growth due to it being more affordable and convenient than ever to fly out of province or even out of country. WestJet has also just added about 40 more planes to the fleet and which will serve it's regional airports beginning in early 2013 so we can expect even more growth in the coming years.

Some significant fixed costs for the short run would include the aircrafts themselves, and the hangers in which aircrafts are repaired in. These are huge costs so decisions to add or remove planes from the fleet would not be made on a whim.

Significant variable costs would include things like fuel as oil prices are constantly fluctuating. Employee's salary; people may come and go and have different levels of education thus putting them in a different pay scale or perhaps there is too much overhead in one department. With 8800 employee's this would be a very large variable factor.

As we can see by the graph to the right, WestJet has experienced significant growth over the past 5 years with a slight hiccup (slight to a multi-billion dollar corporation anyway) during the recession of 2009. The have recovered from that with flying colors and have experienced tremendous growth for the last 2 years and by the looks of things will continue to do so. Obviously owning an airline comes with huge costs, but they have still managed to maintain an enormous profit margin, hence why they were able to purchase 40 new planes for their new regional service. Profits were an unimaginable 148 million last year according to their financial report for share holders found on WestJet.com and yet prices for a flight with WestJet are clearly seen as reasonable to passengers. In my experience, most times fairs are slightly if  not significantly below the costs of their closest competitor and aircraft travel is still on the rise.

Air Canada vs. WestJet...

WestJet's closest competitor is Air Canada. Both companies were founded in Canada although Air Canada could be considered a grandparent when compared in age to WestJet. Air Canada was founded in 1936 and perhaps has lost sight of it's goals and visions through the numerous changes in ownership over the last 76 years. WestJet's competitive advantage over Air Canada is that they are a young company who still needs to prove themselves to their customers with their exceptional service and passion in order to grow successfully and achieve their goals. In recent years, Air Canada has been bailed out by the Canadian government while WestJet is still obtaining tremendous economic profits. This looks like it could be a classic case of out with the old and in with the new. WestJet's young fleet of aircrafts provide the latest in technologies, a comfortable and significantly quieter flight and always carry an upbeat flight crew.

WestJet has also received a few very prestigious awards which includes claiming the top spot in the Waterstones 10 Most Admired Corporate cultures for four years. The program annually recognizes best-in-class Canadian organizations for having a culture that has helped them enhance performance and sustain a competitive advantage. They were also inducted into the programs hall of fame. Also, in 2011 WestJet was designated as the JD Power Customer Service Champions making them the only airline in history to achieve this status.

To Summarize...

Entering into a market that would be considered to be an oligopoly generally proves to be a very difficult task in most cases. It could be compared to the automobile market which is already well established, certain companies have already made a name for themselves and have loyal customers. It seems that WestJet was able to accomplish this task with ease.

It is quite easy to see why WestJet has been such a successful company; their passionate and friendly service being one of the top reasons. I find that if a customer has a great experience, they won't care if it costs a little extra because we will pay the price for an exceptional product. It takes a team who can efficiently work together and WestJet looks to have obtained that. Managing to achieve monumental economic profits, loyal guests and dedicated employee's, I think that WestJet must be considered one of the greatest Canadian born companies of all time.

References:

CBC News. (2012, December 5). Retrieved December 16, 2012, from http://www.cbc.ca/m/rich/business/story/2012/12/05/airlines-load-factors.html

Westjet (n.d.). WestJet. Retrieved December 16, 2012, from http://www.westjet.com: http://www.westjet.com

Noack, T. (2003-2012). Plane Spotters. Retrieved December 16, 2012, from http://www.planespotters.net/Airline/Westjet