Canada’s Westjet is defying the industry and making long-haul low-cost work and in this exclusive interview AirlineRatings.com finds out how!
For Alexis Count of Hoensbroech, a German noble family with a long tradition, it was a jump into cold water. Or rather cold air, literally. “I had never been to Calgary, and I first came here only after signing on as CEO of WestJet in January 2022, when we landed it was minus 35°C outside. My wife wanted to turn right back,” he recalls in an exclusive interview with Airlineratings.
Hoensbroech had a high-profile career at Lufthansa Group and was seen as a possible successor for long-time CEO Carsten Spohr. But he felt he needed more entrepreneurial freedom in his decisions, rather than having to function in the large hierarchy of one of the world’s biggest airline groups.
From 2018 he had been CEO of Austrian Airlines, part of Lufthansa Group, based in Vienna, leaving at the end of 2021. The private equity owners of WestJet, a company called Onex, had called on him to lay out his strategy for Canada’s second-biggest carrier.
And Hoensbroech found a very similar scenario to something he had seen in Germany earlier, a true deja-vu: “WestJet had started 27 years ago as a classic low-cost carrier in Western Canada, modelled on Southwest Airlines. But then they began to expand their business model – they put in a Business Class, opened lounges and started long-haul flying,” explains Hoensbroech.
Under his predecessor Ed Sims, a Kiwi, WestJet, operating over a hundred Boeing 737s, had ordered ten Boeing 787-9s and held ten more options, “and they wanted to run not one, but three hubs, in Calgary, our home, plus Toronto and Vancouver,” says Hoensbroech.
“For me, this was like a movie plot I had already seen, and the equivalent was Air Berlin, which was exactly the same, they wanted to be everything for everyone, like WestJet.” Air Berlin went under in 2017, and Hoensbroech didn’t want the same to happen to his new employer. “In speaking to the owners, we conceived a new strategy to focus on what we had become strong with, being a low-cost carrier for Western Canada, a bit of back to the roots.”
And while not having a global draw, Calgary is a surprisingly well-suited home market for this endeavour, though boasting only 1.5 million inhabitants. “The province of Alberta is Canada’s powerhouse, where the entire oil and gas industry is based, but they also have diversified and a surprising economic power,” says the CEO. “To Calgary, you either fly or don’t come at all, it’s too far by car from other major centres, and there is no rail or bus service, as a European you have to get used to the vastness of this country.”
While having fierce competition on domestic routes, WestJet as number two and national carrier Air Canada as number one, there are several others, expanding Porter Airlines from Toronto plus ultra-low-cost carriers Lynx and Flair.
WestJet has recently incorporated its own ultra-low-cost affiliate Swoop into its mainline, Swoop is now seen as another deviation from the core business model. Critics accuse Canada and its airlines of basically retreating into an oligopoly – fuelled by recent moves of WestJet to cut back its services in the East of Canada, while Air Canada letting go of much of the West, dividing the turf among them. While airfares are on average much higher than in Europe due to high-cost infrastructure and long sectors, competition is very intense, insists Hoensbroech.
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And he initially frowned at the odd long-haul business the carrier had started before he came, which seemed like an ongoing distraction from the holy grail of low-cost flying. Hoensbroech was ready to dump that very small part of the business, which is otherwise mostly leisure-oriented flying in North America. After all, basically, nobody globally has been successfully able so far to establish a long-haul business as a low-cost platform.
But then he realized that “seats on long-haul were selling like hot cakes”, especially after WestJet had decided to concentrate its entire 787-flying on its Calgary hub, where Air Canada had dropped its own long-haul routes like to Frankfurt. WestJet now serves Paris-CDG and London-Heathrow year-round from Calgary. In the northern summer period, WestJet additionally serves London-Gatwick, Edinburgh, Dublin, Barcelona and Rome plus Toyko-Narita from Calgary several times weekly. All these flights are operated by the Boeing 787-9 fleet.
“We have a high-density seating with 320 total capacity, including a very small Business Class with 16 lie-flat seats in staggered 1-2-1 configuration and 28 Premium Economy seats,” Hoensbroech points out. However small, WestJets long-haul Business Class is considered the best of any Canadian carrier by many frequent fliers. Airlineratings tried it out and found it to be top-notch.
“For us, summer and winter are equally good business, that’s unique in the industry,” explains Hoensbroech. “In summer people fly to Canada, in winter they fly out of Canada. Winter is a gigantic business, we will fly more than four million Canadians to the American sunbelt. On peak days, we operate 26 times between Canada and Cancún in Mexico, two or three flights are by 787s. Same to Puerto Vallarta and Hawaii. Usually, you earn a lot of money with 787s in summer and lose a lot in winter. But because of this double season, we are possibly able to operate widebodies profitably in the long run as the only low-cost carrier anywhere,” says the CEO.
“That was what all the Air Berlins, Virgin Australias or Norwegians couldn’t achieve.” Next summer, WestJet plans to restart its transatlantic services with either the Boeing 737-800 or its newer 737 MAX 8s in true low-cost fashion. “Our transatlantic routes are sometimes quite short. From St. John’s in Newfoundland, going to Paris takes five hours, to Calgary you need six and a half hours as a domestic flight. Halifax, London and Calgary are equally far away. In 2024 we aim to serve more destinations on the British Isles with 737 flights,” announces Hoensbroech.
WestJet is unique proof that in the right niche low-cost flying can have a much wider scope than one would usually expect.
