Air Canada should be able to coexist with WestJet Airlines Ltd. in the Canadian market despite news that the smaller, Calgary-based airline is talking about teaming up with Air France, experts and analysts say.
While WestJet may snatch some Europe-bound flyers from Air Canada, it still won't be able to offer long-haul flights to Asian destinations on its fleet of smaller aircraft, National Bank Financial analyst David Newman said in an interview Monday.
"We often forget that Air Canada does have a strong international platform," he said, adding the airline is set to receive new 777 and 787 aircraft over the next few years, while WestJet doesn't have planes that large in its fleet.
"Obviously, you can't fly a 737 to Asia."
A WestJet spokesman confirmed the airline is "very much at the initial stages of discussion" with Air France, which along with Dutch airline KLM, is part of the SkyTeam alliance.
The first step would be to work out an interline agreement, said WestJet's Richard Bartrem. That means WestJet passengers heading to Paris via Air France could have their luggage sent straight instead of having to re-check it during a stopover.
WestJet already has a similar deal with Taiwan's China Airlines.
"The one that's been in place with China Airlines has really allowed us to test our systems and it's working very well for us, so we're quite confident that this arrangement along with several other major ones would be signed in 2008," Bartrem said.
Eventually, travellers would be able to reserve a flight to Paris through WestJet.
"It allows guests to make seamless reservations into the Air France network from wherever they might be in Canada where we fly from today. So it's ease of use and convenience for our guests," Bartrem said.
WestJet and Air France are good fits for one another, National Bank's Newman said.
"WestJet's strategy has been to offer an alternative to Air Canada in the domestic market for international airlines that are not affiliated with the Star Alliance," he said, referring to the 17-member airline network that includes Air Canada, Lufthansa and Scandinavian Airlines.
"So the likes of Cathay and British Airways and Air France would be a good fit to interline with."
Queen's University business professor Douglas Reid said he was surprised by WestJet's possible alliance because smaller airlines tend to "avoid entanglements of any kind."
"Interlining in general with other airlines, unless you are pretty sure you're getting traffic, almost always costs more than it creates," he said in an interview.
But he added that WestJet could justify the costs by moving more passengers from Western Canada toward European destinations, and by retaining its customer base.
"This is just an example of something that they're doing to keep eroding Air Canada's advantage," Reid said, adding he didn't think Air Canada would notice a change in traffic in the short term.
It's too early to tell how Air Canada might fare as a result of the change, said Trope Communications airline analyst Debra Ward, but she said the Eastern Canadian market is sure to heat up.
"This is sort of like a beachhead into the Quebec/Eastern market for WestJet," Ward said.
"They've been focusing on the West primarily and now they're going to be going head-to-head for European business."
For consumers, more competition is always a good thing, Ward said.
"Personally, I think it's bloody well about time. I'm looking forward to this. I think it will be good for the country. It's always good to have competition," she said.
"It's not only price. It's service quality, it's responsiveness to customers. There's a lot of things that go into the purchase of an airline ticket besides price that tend to improve when there's competition in that area." |
