A BEST OF TAIT: 24 JUN 2010: It was kind of odd to hear Gregg Saretsky CEO of Canada’s second largest carrier telling a New York industry gathering how they are being outfoxed (or is that “out-raccooned”?) by Canada’s biggest little airline. Westjet’s new CEO’s ‘fessing up to Porter having a higher level of brand awareness in the Toronto market was far more shocking than the fact he was revealing.
Mr. Saretsky has only been in the WestJet job for a few months so can probably be forgiven such a surprisingly forthright statement. It was quite refreshing to hear such honesty from a senior airline spokesperson, but don’t go expecting the condition to be contagious.
In my estimation however, Mr. Saretsky has a lot more important things to focus on than Bob Deluce – whether smiling or not.
At last week’s conference the rumblings were already beginning when in response to the Porter challenge, Robert Kokonis, president of Toronto consulting firm AirTrav Inc. suggested that, “WestJet should re-evaluate its single fleet strategy.” For those of you who don’t speak the lingo, this means they should introduce more than one kind of airplane to the fleet.
In 1996 when Clive Beddoe and buddies conceived WestJet, they simply cloned Southwest Airlines’ business model, the cornerstone of which has always been the operation of just one type of airplane – the Boeing 737. It would be a gross understatement to say it is a strategy that has served Southwest well.
In the almost 40 years since their founding, Southwest has turned a profit in an incredible 37 straight years. In 2009 the Dallas-based carrier’s fleet was only the third largest in the world but they still managed to carry more passengers than any other airline on the planet.
Over the same four decades a potpourri of deregulation, rampant fuel prices, unions, recessions and mismanagement has seen the failure of goliaths like Pan Am, Eastern and TWA while hundreds of aspiring wannabes have come and gone. As the surviving legacy carriers still try to be all things to all people using hugely diverse fleets to do it, the few major success stories have almost always been carriers following in Southwest’s single fleet type footsteps.
It is no small coincidence that the world’s biggest international airline by passengers carried is no longer British Airways, for the last two years that title has belonged to Ireland’s RyanAir with its fleet of – you guessed it – 100% Boeing 737s.
The advantages that accrue to a single aircraft-type fleet are colossal in both economic and operational terms. One of the biggest is that with one type you only need a single pilot group. While cabin crews can work several different kinds of aircraft, pilots are “type-rated” and limited to one. So, for every aircraft in their fleet most airlines will have seven or more two-person flight crews. In other words, adding a single different airplane will necessitate the hiring and/or retraining of at least fourteen pilots who can only operate that one airplane.
Maintenance and ground handling costs are another huge bite for every additional aircraft type in a fleet. Not just the extra spare-parts inventory and its disposition, but the need for differently trained mechanics, loading bridges etc. etc. Southwest’s signature 20-30 minute turn time just couldn’t be done but for the fact that everyone and everything involved is totally interchangeable every time.
Ever wonder why the dreaded “change of equipment” announcement always seems to create overbooking problems? The Southwest fleet has 540 B-737’s and 95% of them have the exact same 137-seat configuration. So a change in aircraft has only a 5% chance of causing “involuntary off-loads” a.k.a. “bumpings” because it is a 95% certainty that the substituted aircraft will be identical to the first. Good odds in any business.
WestJet has already slipped a little in the configuration area – their 737s have three different seating plans of 119, 136 and 166, but that still looks good compared to Air Canada where the Boeing 767 fleet alone probably has six or seven markedly different cabin configurations.
So WestJet, why would anyone want to mess with such operational perfection? Okay so perhaps you can’t compete with Air Canada on every domestic or Caribbean route but so what? You will never be able to fly out of Billy Bishop with a 737. Who cares? Porter’s Q400’s can only fly a fraction of the routes that you can.
My advice to Mister Saretsky would be to keep the consultants happy and “re-evaluate” as much as he likes. Consultants after all are much better at re-evaluating than they are at decision-making. In the end however please make the right choice and, as Southwest has done so well for all these years, “stick to your knitting”.
You can maybe get a little more creative in marketing the brand in the Golden Triangle and keep on being hospitable to your passengers (Porter sets the bar pretty high in that area), but don’t lose all the amazing upside that comes with that one airplane type.
Just promise me one thing. With the new more aggressive marketing, please oh please – no cutesy raccoons!
Editor’s Note:
This ‘Best of Tait’ was written in June 2010 – 7 years ago – in our story yesterday, “Rain Check on LCC” we wrote that Westjet was putting its new as yet unnamed ultra low cost carrier on the back burner till next year (it was supposed to launch this winter).
Reader ‘Marty’ commented on yesterday’s story,
“What utter insanity!
“Westjet will reconfigure existing 737 aircraft with more seats and expect its newly unionized pilot group to happily fly them for less money. At the same time they are opening a HQ building for a new management group, all in the name of lower costs to produce lower fares that – like it or not – will inevitably compete with the mothership (Westjet mainline) which was supposed to be a low cost low fare alternative to AC: Unitl Mr Saetsky lost the plot!
“Now they will have widebody aircraft flying to Europe and over the Pacific, they will have Encore flying Q400’s and ‘Lessjet’ as a ‘less high cost’ alternative to the original (now getting ever closer to AC cost levels) Westjet. Four aircraft types, three employee groups another HQ building… sounds like they really want to become a true legacy carrier as soon as possible!”
What are they doing?
We have to agree with Marty. Quite aside from drastically changing its successful model, Westjet is now going into competition with itself. It is, or was supposed to be, the low cost alternate to Air Canada.
Now it has Encore, the low cost alternate to Westjet and coming soon, ‘Lessjet’ as Marty has dubbed it, the lower cost alternate to Encore, and presumably lower, lower cost alternative to Westjet – therefore – in competition with both Encore and Westjet. And each with its own equipment, crew, staff and headquarters.
The flushing sound you hear is money swirling down the drain.