WestJet eyes plans for regional carrier



Bill Kaufmann, QMI Agency

, Last Updated: 4:43 PM ET

CALGARY - WestJet is exploring whether a regional spinoff carrier will fly with its staff.

The offshoot, short-haul airline would serve smaller Canadian cities like Lethbridge, Alta., and speculation suggests its fleet would consist of Bombardier Inc.’s Q400 turboprops.

WestJet spokesman Robert Palmer wouldn’t comment on details, but said the proposal for a new airline is being shopped to staff throughout Canada.

“We announced today that we are considering the launch of a regional airline,” he said.

“Our next step is to meet with our employees across the country to present the proposal.”

That process, he said, would be complete in early February and rely heavily on staff viewpoints.

Reports say if the plan is given the go-ahead, the Calgary-based airline could begin operating the new planes and routes in early 2013.

Palmer hinted airline management hopes employees will be supportive of the idea.

“WestJetters will also be asked to vote on the proposed regional airline and we are hopeful they will see the benefit and shareholder value,” he said.

“Given our strong corporate culture and excellent relationship with WestJetters, we believe this is an important part of the process.”

At least one airline analyst cautioned the carrier from making the move he said would compromise its so-far successful formula.

Prof. Joe D’Cruz said the small size of the markets being eyed by WestJet may ultimately ground the effort.

“The occupancy or load factor won’t be high enough -- you need 60% on the Q400 to be profitable,” he said, adding the turboprops are too big for those short haul markets.

Departing from its one-aircraft business model that employs a fleet of Boeing 737s is also a gamble, said D’Cruz, who teaches business management at Toronto’s Rotman School of Management.

He also said the new airline would target Air Canada’s operations, which would likely launch a costly seat price war at a time when the upstart carrier cold least afford it.

But Calgary-based airline analyst Rick Erickson said the move would make sense.

“If they want to grow their business in Canada, this is exactly what they should do,” he said.

“It would benefit Calgary because they would probably base six or seven planes here.”