WestJet Airlines Ltd. Chaitanya Joshi 251118635
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Added on 2020-09-08
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Lack of high class travel – As it caters mainly to the middle class passengers, it does not provide travel in first class or luxury travel which can hinder high class passengers from flying. Lack of international travel – WestJet offers domestic travel in Canada and internationally to USA, Mexico, Caribbean and Europe but compared to Air Canada which offers travel to almost 190 destinations in over six continents, it lacks several Trans-Continental travel opportunities.
WestJet Airlines Ltd. Chaitanya Joshi 251118635
Added on 2020-09-08
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ENG SCI 9501 - Business and Management: A Global PerspectiveCOMPETITIVE STRATEGY REPORT – WestJet Airlines Ltd.Chaitanya Joshi251118635
WestJet Airlines is an air travel company founded in Canada in 1996 and was started as a lowcost airline competing with the major airlines in Canada. WestJet caters to almost 65000passengers daily with an average of 775 flights operating every day. It is Canada’s secondlargest air carrier only after Air Canada and the ninth largest in North America. Initially the aircarrier catered to 5 cities in Canada but currently it offers travel to 55 destinations in Canada,USA, Mexico, Caribbean and Europe. WestJet holds approximately 35% of the domestic marketshare in Canada following Air Canada at 55% [1]. It operates an all Boeing fleet and usuallytargets the middle class and upper middle class passenger market.This report covers the competitive strategy that WestJet implements to stay in the market andits many aspects. More information on the organizations strategies, segmentation, Internaloperations is reported as follows:-SWOT AnalysisThe 4 aspects of an organizations competitive strategy are Strengths, Weaknesses,Opportunities & Threats (S,W,O & T respectively). Strengths and Weaknesses are usuallyconsidered the Internal factors while Opportunities and Threats are External factors. As forWestJet, the analysis is reported below –STRENGTHSLow cost – The low cost of the air fare is one of the main competitive advantages thatWestJet possesses over other carriers.Brand Reputation – WestJet is a well known reputed air carrier and carries a certainbrand image and presence Safe travel – The primary focus of WestJet is on the passenger and safety of thepassengers is one of the strong points of the organization.Non unionized labour force – The absence of a labour union keeps costs at a check andgenerally leads to fewer disputes.Recipient of multiple awards – WestJet has received numerous awards including theCanadian Airline of the Year, Travellers choice awards, most reputable company amongothers which not only helps with the reputation of the brand but also keeps the moraleof the employees high.WEAKNESSSacrificing amenities – Being a low cost air carrier, in-flight entertainment and foodspecially snacks are compromised.Lack of high class travel – As it caters mainly to the middle class passengers, it does notprovide travel in first class or luxury travel which can hinder high class passengers fromflying.
Lack of international travel – WestJet offers domestic travel in Canada andinternationally to USA, Mexico, Caribbean and Europe but compared to Air Canadawhich offers travel to almost 190 destinations in over six continents, it lacks severalTrans-Continental travel opportunities.Seating – To make room for more passengers, seats were usually more in number butsmaller which certain passengers do not like.OPPORTUNITIES New ultra low cost travel – WestJet has operated WestJet Encore and WestJet Link since2013, and with the advent of Swoop, opportunities arise to dominate the regional traveland also offers travel to some cities in the USA and Mexico.Plane modifications – Some of the newer aircrafts in the fleet are wide-body aircraftswhich can provide comfort as well as longer air travel which can be used to furtherexpand operations.Growing passengers – Domestic population and tourism both have increased in the pastfew years and this will lead to more people flying and can be considered as anopportunity.Codeshare agreements with over 15 airlines could help assess the prospect ofexpanding.THREATSAir Canada Rouge is a low cost airline operated by Air Canada, and is a serious threat.Expanding operations internationally will need competing with internationalcompetitors, who are generally well known and experienced.Increasing fuel and commodity costs will make it difficult for the organization tomaintain the low prices.With the pandemic affecting air travel and with the corporation planning to increase thefleet size, it will be difficult to fill up the seats to full capacity which could lead to losses.The Transport Authority of Canada (Transport Canada) regulates air travel while localgovernments own and control the local airport regulations particular to the region.Some company values that WestJet follows are as given below –Aligning the interests of the corporation with that of the passengerPositive and passionate in every task and rising to any challengesAppreciative of guests and employeesCommitted to safetyHonest and open communication
The WestJet corporation culture is fun and friendly and they provide training and rewards totheir employees. They use strategic hiring procedures to achieve efficiency and combined withreduced maintenance cost results in a high Return on Investment. Employees are shareholdersand the employee and the guest experience is similar. [2]MARKET SEGMENTATIONWestJet operates with two direct subsidiaries – WestJet Link and WestJet Encore, bothoperating regionally. WestJet Link was started in 2018 in areas of Alberta and British Columbiato connect it with bigger cities like Calgary and Vancouver and operates as a brand name underthe Pacific Coastal Airlines. As it operates in small cities and uses a smaller aircraft which is theSaab 340, the maintenance costs are low. The average age of the 3 aircrafts is 23 years and theplane can seat 34 people at maximum capacity, so it can be inferred that compared to othersegments the passengers and the revenue is less. WestJet Encore is the other regional airlinethat operates a fleet size of 45 aircrafts focused mainly on cities like Edmonton, Halifax,Vancouver. WestJet, once sought competitive advantage by having only one type of airlinewhich was the Boeing 737 which would lead to lower maintenance costs and betterstandardization but increasing air travel, changing demographics and better technology inaircrafts lead to using different aircraft types. WestJet Encore uses the Bombardier Q400 for itsoperations and operates over 200 flights. Claims are that WestJet Encore has dropped air travelcosts by over 50% and increased air travel by almost 90% year by year. Lower fares haveencouraged the passengers to travel more thereby bringing competition in the market. In 2018,WestJet Encore employed close to 1700 employees and has claimed to create over 13000 jobs,so a considerable amount of resources is spent on this segment [1]. Swoop airlines is anotherairline owned by WestJet that provides ultra-cost travel, both domestic and international toalmost 25 cities. It has claims to cut travel cost by atleast 40% by implementing a differentbusiness model. Swoop has been a major competitor and operates Boeing 737-800 and fillingup to the full capacity of 185 passengers majority of the time. The extent to which they focus on the segment is estimated based on the fleet size andoperations in the previous years. The information about segments is tabulated below –AirlineStarting FareHub ofDestinationsFleet SizeFocus
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