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Tuesday,  June 18, 2024 10:03 PM 

WestJet CEO addresses closure of agent booking channel, APPR, Iceland & future strategy

WestJet CEO addresses closure of agent booking channel, APPR, Iceland & future strategy
CEO of The WestJet Group Alexis von Hoensbroech addressed members of the Toronto Region Board of Trade on Wednesday (Oct. 25). (Pax Global Media)
Michael Pihach

Michael Pihach is an award-winning journalist with a keen interest in digital storytelling. In addition to PAX, Michael has also written for CBC Life, Ryerson University Magazine, IN Magazine, and Michael joins PAX after years of working at popular Canadian television shows, such as Steven and Chris, The Goods and The Marilyn Denis Show.

The WestJet Group’s CEO Alexis von Hoensbroech took to a stage at the Toronto Region Board of Trade on Wednesday (Oct. 25) to share an update on what's going on, including the company's plans for the future. 

The former CEO of Austrian Airlines took up the reins at WestJet in February of 2022, and since then, it has been “quite a roller coaster,” he told event attendees.

Some of the tasks that have defined von Hoensbroech’s ride over the past 20 months include navigating aviation’s post-COVID recovery, sealing up WestJet’s acquisition of Sunwing, averting a pilots’ strike in an 11th-hour deal, growing the airline’s fleet, and shifting resources to grow the brand’s presence and pull in Western Canada.

Operational resilience, in the face of a changing aviation sector, seems to have been the code word at WestJet over the past year.

It’s a strategy that has led to operational changes, such as the decision to close low-cost arm Swoop (the last flight is this Saturday), integrate both Swoop and Sunwing Airlines into WestJet’s mainline, and cut underperforming routes, such as Toronto to Montreal and New York City (which also conclude this weekend).

READ MORE: Swoop shutdown will expand low-cost reach to "broader network," says WestJet CEO

von Hoensbroech, yesterday, addressed most of the above. But for context, he immediately highlighted the challenges (and high costs) that come with running an airline in Canada.

Alexis von Hoensbroech on stage at the Toronto Region Board of Trade on Wednesday (Oct. 25). (Pax Global Media)

“Canada needs airplanes more than any other country in the world,” the CEO said, noting Canada's vastness. “And with this, I'm puzzled by how the regulation of the sector is not supporting this more. The federal government is very generous in supporting VIA Rail with hundreds of millions. But it sees aviation as a source of money, and not as a destination of money.”

READ MORE: WestJet to integrate Sunwing, reconfigure aircraft; tour op unaffected, says Dawson

Coming from Europe, von Hoensbroech said he was “surprised” to see how expensive it is to provide air travel in Canada.

He targeted high airport fees and taxes, citing an example of how a flight from Calgary to Toronto will ding $160 in charges “before you actually reach your seat on the airplane.”

Add the cost of fuel, and “the first $300 is being spent before you actually start paying pilots, flight crew, aircraft and so on.”

“This is a pretty high hurdle,” he said. “If you see an airline offering you a $59 ticket across the continent, then you know one thing: this airline will be far better off handing you out $59 for not flying and taking you aboard. That’s a fact.”

WestJet Group CEO Alexis von Hoensbroech. (Supplied)

The CEO summed up this “user-paid system” as a “choice” the Government of Canada has made.

“You hear about the $35 airport improvement fee. [However], the one thing they don’t do with airport improvement fees is improve the airports because [airports] have to use this money to pay rent, pay down debt and interest rates,” von Hoensbroech said.

The CEO called this “very unfortunate.”

“Airports in Canada could use a lot of money to upgrade the infrastructure to a standard that Canadians deserve,” he told the room.

On shutting down WestJet Agent  

Following von Hoensbroech’s speech, PAX went one-on-one with the CEO to ask some trade-specific questions, such as why WestJet decided to decommission its booking channel, WestJet Agent, which shut down on Tuesday (Oct. 24).

While he didn’t know specifics, von Hoensbroech said he was aware of the issue and that his team is “working very intensely to create a solution.”

In a statement on Oct. 13, WestJet’s Director of Sales, Amanda Ierfino said WestJet Agent was shutting down for “technical reasons,” noting that a new booking option could be in place by Q1 of 2024.

READ MORE: WestJet Agent deactivating due to “technical reasons,” new tool expected by Q1 of 2024

“Our travel partners are very important to us,” von Hoensbroech told PAX. “Obviously we sell a certain share of tickets on our direct channels, but we also sell a very significant chunk through our travel partners. Having travel partners that are offering what we have, and selling it to our guests, is core to our strategy.”

“We will make sure that our partners have all the tools and services they need to be able to sell WestJet tickets or vacation packages.”

An “unfair” passenger rights system

The CEO on Wednesday also addressed Canada’s Air Passenger Protection Regulations (APPR), which states how airlines must reimburse or compensate customers for delayed or cancelled flights or for damaged luggage.

“We usually have to pay guests $1,000,” von Hoensbroech told the audience. “The average profit on a passenger, by the way, is $10. So, it’s 100 flights worth of average profits to compensate them under this regulation.”

Canada’s APPR were “copied” from Europe, he said, “because there was a belief that Europeans have a really smart model.”

“But I’ve lived in Europe for a long time, [and] this is the most ineffective system on the planet,” von Hoensbroech said.  

READ MORE: “Frustrating!” WestJet CEO blasts air traffic control for flight delay

The CEO sympathized with the frustration of travel disruptions, echoing customer concerns about the current air passenger rights system.

“Without shared accountability, no one should expect to see any significant improvements” in air travel, said WestJet's CEO. (Pax Global Media)

But repeating an argument he’s made on social media previously, von Hoensbroech stressed that airlines should not be the only ones held financially responsible for disruptions.

From airports to navigation to security to border control to ground handlers, there should be “shared accountability” across the ecosystem, he said.

“Why does a passenger only get compensation on management failures that we do, but not get compensation on management failures that NAV Canada does?” the CEO asked. “I think it's absolutely unfair to guests. They should always be compensated if there's a management failure, full stop. And we will be ready to pay it out. But then we would like to recover it from NAV Canada, in this particular example.”

“That’s not the system the government has chosen, and as long as they don’t change it, I don’t think we’ll see any improvement in Canadian air travel.”

Speaking with PAX later on, von Hoensbroech said it’s “time to pause and rethink how our regulation should look like and actually benefit the consumer.”

The current model is going to “cost a lot of money” and, in turn, increase ticket prices, he said.

“Without shared accountability, no one should expect to see any significant improvements,” he said.

Back in the black

WestJet is currently operating a fleet of more than 180 aircraft, offering more than 600 flights a day to more than 100 destinations, with a workforce of 15,000 employees.

After a challenging three years due to the COVID-19 pandemic – capacity, at one point, dropped by 90 per cent, von Hoensbroech shared – WestJet has surpassed pre-pandemic capacity levels and returned to profitability.

von Hoensbroech noted that WestJet was one of the few airlines around the world that did not accept sector-specific government aid.

“Which speaks to how solid the underlying business model of WestJet is,” he said.

In regards to the network, the strategy, he said, is to be number one in the markets that WestJet operates in, and be a “national leisure champion” for Canada.

From left: Alexis von Hoensbroech, CEO, WestJet Group;  Giles Gherson, president and CEO, Toronto Region Board of Trade. (Pax Global Media)

Pre-pandemic, in Eastern Canada, business travellers did not fully utilize WestJet, but families taking a trip to Disney World did, he said.

“We were already a strong player in leisure flying here, and that’s where Sunwing comes in,” he said. (WestJet completed its acquisition of Sunwing Airlines and Sunwing Vacations in May). 

“We are now, by far, and by a longshot, the largest leisure airline in Canada.”

von Hoensbroech also underscored WestJet’s commitment to being a low-cost airline.

“We want to be affordable,” he told the crowd, later showing how WestJet, currently, has more than 1.7 million seats for sale that are under $100. “We are targeting every Canadian, and not just the elites of this country.”

On the cost of air travel, von Hoensbroech said that air tickets, in general, are not rising in price.

“Domestic flying in Canada is actually cheaper than was pre-pandemic,” the CEO said later on in a fireside chat with Giles Gherson, president and CEO of the Toronto Region Board of Trade.

He pointed to rising competition. “There are lots and lots of other airlines in the market and this is naturally bringing down ticket prices,” he said. “As to how sustainable this will be is to be seen.”

Getting priorities straight

WestJet’s game plan is to eliminate avenues where there is “no path to being number one,” von Hoensbroech said.

Such as the airline’s recent decision to suspend its Toronto-Montreal link – a route that is already well-served by other airlines.

“None of you will have to walk from here to Montreal,” von Hoensbroech said. “There are plenty of options, but it may not be with WestJet.”

“Our assets are better off being invested in leisure flying and in the West.”

WestJet’s strategy is to eliminate avenues where there is “no path to being number one,” von Hoensbroech said. (Pax Global Media)

This extends to investing less in wide-body and regional flying, and more in expanding the airline’s “737 backbone fleet,” he said.

The CEO also debunked the notion that WestJet has abandoned Eastern Canada.

The airline indeed suspended some routes in Eastern and Atlantic Canada, but it has also established new direct connections to Western Canada, increasing access to leisure and sun destinations, he explained.

“We’re actually a very sizeable business in Toronto, in Ontario, and in Eastern Canada,” he said, noting that WestJet, in Toronto alone, employs more than 3,000 people. 

"This is a place for us to stay and for us to grow," von Hoensbroech later said. 

The CEO also hinted that WestJet will “maybe,” one day, resume operating 737 narrow-body aircraft into Europe out of Eastern Canada.

READ MORE: Introducing Sunwing Vacations Group – “home to North America’s largest vacation brands”

This winter, however, the WestJet Group, inclusive of WestJet and Sunwing Airlines, will offer 230 nonstop routes from 26 Canadian communities to 55 popular sun destinations in the U.S., Mexico, the Caribbean, and Central America.

Furthering this will be the newly-formed vacations division, Sunwing Vacations Group, which encompasses Sunwing Vacations, WestJet Vacations, and other brands, forming the largest tour operator in Canada.

Team Sunwing at the Toronto Region Board of Trade on Wednesday (Oct. 25). (Pax Global Media)

“This is the new powerhouse of Canadian vacation travel,” von Hoensbroech said, referencing the Sunwing leadership team, who attended yesterday’s event.

Will a possible recession interfere with things?

Speaking with media later on, von Hoensbroech said that while a recession can slow down growth, it will “usually not revert the number of people travelling.”

“It will always have an impact on the financial side, but overall, we see that travel is actually very resilient against any kind of external shocks – particularly private travel.”

WestJet in Iceland?

Following the Canadian Transportation Agency (CTA) approving a request from WestJet to operate flights between Canada and Iceland, PAX asked von Hoensbroech how the Nordic nation fits into the airline’s strategy.

READ MORE: CTA approves WestJet’s request to operate flights to Iceland

“Iceland is a beautiful country,” von Hoensbroech said. “I've been there. That's definitely a nice place to travel.”

But he stopped there.

“I read what the CTA said, and there’s nothing more I can comment on at this point in time. If there’s anything to communicate, we will do so.”

Densify cabins, distribute costs

Meanwhile, WestJet’s recently-announced integrations will result in a reconfiguration of Sunwing and Swoop aircraft – a move that will densify cabins to distribute costs across more seats.

As PAX first reported, WestJet’s 737-800s and MAX 8s, including legacy WestJet, Sunwing and Swoop planes, will be reworked to feature 180 seats – up six seats from the current configuration – including 12 Premium seats.

The airline’s Max 10s – there are 70 on order for the next five years – will also add 13 seats, totalling 212.

“We will not segment our guests by airline [like through Swoop], but segment our guests within the aircraft,” von Hoensbroech said. “For a market like Canada, that makes most sense.”  

Supporting the entire vision is a workforce that WestJet has spent the last 18 months rebuilding.

Speaking with media, von Hoensbroech said he’s not concerned about losing pilots to U.S.-based airlines. (“Most people prefer to stay in Canada,” he said).

The CEO, on stage, also noted how the WestJet Group has recently hired more than 5,000 employees to improve upon all areas of its guest experience.

“We are stronger than ever,” he said. “We have a business model that functions. We are very much looking forward to delivering on this.”

And, despite changes in the travel ecosystem, “travel partners are core to our strategy,” von Hoensbroech later told PAX.

“We see them as partners,” he told PAX, “and we will work together with [them] to improve products for Canadians and make everyone successful.”

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