WestJet CEO Alexis von Hoensbroech says bringing Swoop and Sunwing Airlines under its banner won't lead to higher airfares, since integrating the discount carriers will also tamp down costs.
Canada's second-biggest airline will be able to swap out planes more easily and expand the range of destinations for travellers on the hunt for cheap tickets, the chief executive said in a phone interview Wednesday.
"I don't think this will mean higher fares," he said.
"With the scale, we will actually be able to operate more efficiently and also more reliably, because if something goes wrong, if it's a small airline then it's far more difficult for them to recover," von Hoensbroech said.
He pointed out the broad pool of reserve aircraft WestJet can draw on — unlike Swoop and Sunwing on their own, which count 16 and 18 planes, respectively.
Nearly all 150-odd planes now under the WestJet, Swoop and Sunwing brands — the figure does not include regional service WestJet Encore — are Boeing 737s, making for easier fleet integration that will allow the airline to serve communities more flexibly across its entire network, von Hoensbroech said.
"Let's take Victoria. From Victoria to Cancun, there may not be sufficient guests to fill a Sunwing plane with 189 people on board. So therefore Sunwing wouldn't be able to actually fly."
But a WestJet aircraft could carry tour package customers as well as other travellers to the Yucatan resort town. Or it could hop from Victoria to Calgary and then funnel passengers from several Canadian cities onto a Calgary-Cancun flight, he said.
Like rivals Flair Airlines and Porter Airlines, WestJet aims to vastly expand its business this decade, with 61 Boeing 737s on the order book over the next five years, plus an option for 20 more, the CEO said.
That growth will cancel out any need to cut staff as a way to shore up efficiency, von Hoensbroech said from company headquarters at the Calgary airport.
"We don't intend to use this to reduce jobs," he said of the mergers.
Over the past two weeks, the 27-year-old carrier told employees it would shut down Swoop at the end of October and Sunwing Airlines over the next few years, folding them into WestJet's main operation while maintaining Sunwing's tour package division, with its 30-plus hotels in the tropics.
Some experts have warned that the mergers would result in lower competition and higher airfares, particularly for sun destinations. In particular, travellers served by fewer carriers in smaller markets ranging from Saskatoon to St. John's, N.L. may have to pay more, said aviation consultant Rick Erickson.
But Barry Prentice, director of the University of Manitoba's Transport Institute, said customers may not see a big change in ticket price.
"It's not like anybody's going out of business. All they're doing is they're just amalgamating the airlines into one," he said. The observation echoed von Hoensbroech's point that the three airlines had not been looking to "compete internally" after WestJet acquired Sunwing's airline and vacation segments on May 1.
Nonetheless, WestJet and Sunwing comprise 37 per cent of seat capacity on direct flights to sun destinations, and 72 per cent from Western Canada, according to an October report from the Competition Bureau, which warned of steeper prices and fewer services, especially around package deals. Toronto-based Sunwing Vacations mainly serves Central and Eastern Canada, while WestJet and Swoop maintain a western focus, particularly when it comes to regional flights.
Von Hoensbroech said WestJet may ramp up flights to Europe from Eastern Canada in the years to come, building on routes to London, Paris and other hot spots that it serves from Calgary with its handful of wide-body Boeing 787 Dreamliners.
While competition remains intense and prices low on major Canadian routes such as Toronto-Vancouver, fares to sunny getaways, U.S. cities and European hot spots have all gone up over the past year.
Out of more than 180 sun destinations — mostly in Mexico, California, Arizona, Florida and the Caribbean — prices rose in roughly 87 per cent of cases between March 2022 and March 2023, according to aviation data firm Cirium.
In late February, round-trip fares from Canada were up 14 per cent to $368 for the United States, 19 per cent to $600 for Mexico and Central America, and 32 per cent to $1,015 for Europe compared to a year earlier, according to travel data firm Hopper Inc. Prices were also a lot higher than in February 2019, before the COVID-19 pandemic struck.
This report by The Canadian Press was first published June 21, 2023.
Christopher Reynolds, The Canadian Press
