Course material

1. A strategic Analysis of WestJet Airline Company
Give a strategic Analysis of WestJet Airline Company………………….Answer:Business
descriptionWestJet Airlines Limited is a Canadian airline company that provides low cost,
quality air travel to both local and overseas destinations. The company’ s head office is
located at 22 Aerial place NE, in Calgary, Alberta. According to the company website,
WestJet currently offers flights to 70 destinations in Canada, the United States, Mexico, and
the Caribbean. The company is the second largest airline in Canada and currently owns 91
Boeing 737 aircraft. Additionally, WestJet airlines Ltd has more than of eight thousand
employees under its payroll.Company HistoryWestJet was established by four Canadian
entrepreneurs; Clive Beddoe, Donald Bell, Tim Morgan and Mark Hill on 29 February 1996
in the city of Calgary, located in the province of Alberta in western Canada. The negative
consequences of the Gulf war and an economic downturn in the early 1990s had gravely
affected the airline industry due to prohibitive fuel prices and low passenger rates.Clive
Beddoe conceived the idea of starting an airline that offered low-cost, high quality services
in air travel across the western region of Canada, structuring their business model in a
similar fashion to the US airlines Morris Air and Southwestern Airlines, that had managed to
weather the tough industry conditions at the time (Simon, 2002). The company started by
providing transport to five cities; Kelowna, Winnipeg, Edmonton, Vancouver, and Calgary.
The only aircraft they had at the time were three Boeing 737-200s and their staff comprised
of only 220 employees.By the end of 1996, the airline had added three more Canadian cities
to its route: Victoria, Saskatoon and Regina. The airline came to be a great success and by
the end of 1999, it had flown a total of two million passengers to destinations within
western Canada. 1999 also saw the company carrying out its first Initial Public Offer of
stocks, which managed to raise 30 million Canadian Dollars. The money from the Initial
Public Offering was then directed to acquiring more planes in line with the company’ s plan
of growth (Martin, Feils and Allen, 2005).In the year 2000, WestJet Airlines started a
campaign to extend its reach into the eastern territories of Canada. The airline’ s route
stretched out eastward to Hamilton and Ontario in March that year, Moncton and New
Brunswick in April, Ottawa in June, and finally Montreal in September (James Brooke,
2000). This saw a 77 percent increase in the company’ s profits and a 54 percent increase
in capacity. In the same year, the company also made a deal with Boeing to increase its fleet
of jets to a total of 30 by the end of the decade (Pritchard, 2000).By 2003 WestJet had added
fourteen Canadian destinations to its network and by the end of 2004 the airline had
expanded into the United States (CBC News, 2004), progressing into international flights by

2. 2007. The airline was also given top position in corporate culture rankings by Waterstone
Human Capital for four consecutive years up to 2008 and in 2010 and acquired a
prestigious position in the corporate cultures hall of fame as a result (WestJet, 2011).
According to the WestJet’ s official website, the company is currently the leader in
affordable and quality air travel in Canada providing transport to 71 destinations with 96
Boeing 737 aircraft as at December 1, 2011. Key executives In WestJet airlines LimitedClive
Beddoe: Chairman of the Board of Directors of WestJet from September 2007.Gregg
Saretsky: President and Chief Executive Officer of WestJet.Vito Culmone: Executive Vice-
President, Finance, CFO.Bob Cummings: Executive Vice-President, Sales, Marketing and
Guest Experience.Cameron Kenyon: Executive Vice-President, Operations.· Ferio
Pugliese: Executive Vice-President, People and Culture.· Cheryl Smith: Executive Vice-
President and Chief Information Officer.Business model of WestJet Airlines
LimitedWestJet’ s MarketAccording to the company’ s website, WestJet aims to provide
services to individual travelers who prefer to use affordable means of air transport on
flights lasting up to 10 hours (2012). The company also targets travelers on business trips
who prefer the cost-saving services offered by the airline (2012).Presently, WestJet’ s
market is comprised of the areas served by the airplane. In North America, WestJet serves
67 destinations, 30 of which are located in Canada and 17 in the United States (WestJet,
2012). WestJet’ s primary hub is located at Calgary international Airport. The second
largest market is located at Pearson International Airport in Toronto. Other major hubs
include Winnipeg (James Armstrong Richardson International Airport), Edmonton
(Edmonton International Airport) and Vancouver (Vancouver International Airport).
Majority of Canadian travelers access WestJet’ s transport services from these
sites. Secondary markets that are served by the airline are located in the United States
in Las Vegas (Mc Carran International Airport), Los Angeles (Los Angeles International
airport), San Francisco (San Francisco International Airport), and Newark (Newark
International Airport). WestJet SWOT AnalysisStrengths:Following five consecutive years
of having a position as one of Canada’ s most admired corporate cultures by Waterstone
Human Capital, WestJet was inaugurated into the corporate cultures hall of fame in
2010. The company occupies the position of being the second largest airline in Canada. The
success of this company is derived from its strategy of providing affordable and quality air
travel. Profitability in the company has encountered steady growth for seven consecutive
years up to 2011. Revenues realized by the airline were in excess of three billion dollars in
2011, 17.8 percent growth from 2010. Year-over-year revenue per available seat mile for
the company grew by 8.6 percent while capacity in available seat miles expanded by 8.5
percent in 2011. WestJet’ s earnings before tax (EBT) margin was pegged at 6.8 percent,
which is one of the highest in the North American airline industry.According to WestJet’ s
official website, The company increased its airline partnership alliances in 2011 and
boosted the number of flights to major destinations. Partnerships with other airlines are
made in order to increase the range of destinations that they can offer to travelers.
Partnerships have been made in both code-share and interline agreements. Code-share
agreements with Cathay Pacific, Delta Airlines and Japan Airlines allow WestJet’ s
customers to access international destinations beyond the airline’ s network, with the

3. advantage of not having to make multiple reservations. Interline partners include Air
France, Alitalia and British Airways among others. Interline arrangements make it possible
for other airlines to sell tickets on behalf of WestJet airlines (Field, 2009). They also have
the added advantage of providing customers with the convenience of using a single booking
to travel with several airlines in a timely manner (Airline Business, 2011).According to
WestJet’ s website, The company is on the forefront of environmental protection, having in
their possession 30 percent more fuel efficient Boeing 737-series passenger jets (2011).
The company is conscious of its relations to existing and potential customers and it has a
regularly updated company website, together with an extremely useful travel planning site
called MyWestJet where members can view their travel itineraries, store booking
information and manage their flight bookings. The company is also involved in more than
one thousand community programs in Canada and such as the WestJet Cares for Kids
community investment program that works with aid organizations involved in children’ s
health concerns. The company also supports more than 25 festivals in Canada as a strategy
to maintain its visibility and enhance community participation.Weaknesses:WestJet only
provides flights to destinations within the Americas. This shows that the company lacks the
capability to provide flights to destinations spanning the globe which represent a large
portion of market share in an age of globalization. Travelers looking to travel to
destinations outside WestJet’ s network may turn to other airlines that provide these
destinations. Additionally, the company does not provide differentiated services based on
class, such as first class service with more comfortable seating for those willing to pay
above normal rates. Opportunities:Despite offering destinations in the Americas, WestJet
needs to diversify their services and expand their network to them international scene. The
company aims to increase their fleet of aircraft by 2016 in order to cater for increased
demand by the market. This is in line with their vision, which is to be among the five leading
international airline companies by 2016. Additional opportunities available to the company
include the addition of first class service for customers who prefer added service at higher
cost. Additional opportunities exist in terms of enlargement of their network. The company
should include more destinations in the region in order for its services to reach a larger
number of people. The company should also strive to be the leader in air travel in Canada,
by that ensuring that its goals are met according to plan to enhance its growth and
outperform Air Canada, the market leader.Threats:Alternative modes of transport such as
cars, buses, trains ocean liners and ferries constitute a threat to WestJet’ s market share.
WestJet also faces the threat of losing customers to other airlines in North America such as
American Airlines and Porter. As the company enters the international market, it will face a
larger number of competitors in the affordable air travel sector, along with more
established airlines from other countries. The high and unstable costs of fuel, together with
the small profit margins gained against the costs of providing international travel and
oscillations in the global economy present major threats to the company’ s prospects of
expansion into the international sphere. Terrorism contributes to the threats faced by every
airline and WestJet is not an exception.Technology presents a significant threat to WestJet
Airlines in this era of constant technological improvement and change. Most airlines in the
industry are always at constant risk of falling behind in the technological arena due to

4. disruptive developments in air travel technology. An example is the Airbus A380, which is
the biggest commercial aircraft made in history. The construction of the aircraft includes
two levels of passenger space which have the added advantage of increased capacity and
more space for enhancements that provide comfort and improved passenger experience.
The new standards of air travel that are likely to be brought about by this new aircraft will
shift rankings among competitors; since the early adopters will reap the benefits gained
from the increased volume and reduced cost of travel. Boeing’ s long-haul 787 Dreamliners
are also new entrants into the aircraft market. They have the capacity to travel great
distances on a single tank of fuel, providing the advantage of speed and punctuality over
other aircraft (Mutzabaugh, 2011). Due to the price of these aircraft and their level of
operation, WestJet is unlikely to adopt this new technology and therefore gaining a
competitive edge over its rivals.The prevailing situation in the global economy has forced
businesses to reduce their expenditure in order to stay competitive. This has been
manifested in the reduction of the frequency of business flights made by company
executives and staff. Furthermore, vacation trips made by individuals and families have
gone down due to the current economic downturn which translates to lower purchasing
power per individual. The status of air travel as one of the most costly forms of transport
contributes greatly to public avoidance of this form of transportation in favor of alternative
forms such as trains and ferries.Due to its status as an international airline, WestJet airlines
is obliged to follow the regulations that apply in the different countries that it provides
services to. Aerial routes plied by the airline have to be prepared in strict accordance to
government-specific regulations. Rules and regulations include descriptions of restricted
airspace, and established paths to be followed by commercial airlines. Lack of adherence to
regulations such as flying through restricted airspace and following undesignated paths
may lead to costly penalization for the airline and may also place passengers and crew in
danger. Additionally, flight paths that bypass restricted zones may result in greater
distances covered, which may result in increased fuel usage, thus exposing the company to
greater costs. Another form of government regulation that may have undesired
consequences is the Temporary Flight Restriction issued by the United States’ Federal
Aviation Administration. This regulation outlines locations that are out of bounds for
aircraft due to a potentially dangerous situation or an activity that requires aircraft to avoid
the area (Federal Aviation Administration, 2012). Unforeseen increases in fuel consumption
may result when flight paths are suddenly diverted for great distances without prior
notice.WestJet also faces challenges originating from society. Due to climate change and
public awareness of global warming and greenhouse emissions, industries in all sectors
including aviation are finding themselves under increasing pressure to reduce their
emissions of pollutants and “ go green” . Consumers are more aware of the environment
that they live in and they find it rational to choose products that are environmentally
friendly and contribute less to global emissions of greenhouse gases. Carbon dioxide is
ranked as the most prevalent greenhouse gas. The air transport industry is among the most
culpable groups when it comes to carbon dioxide emissions. This is because jet airplanes
produce more carbon dioxide than motor vehicles using gasoline. Commercial jets produce
more carbon dioxide per passenger in one trip than a motor vehicle produces in a typical

5. month (Stoller, 2006). In an effort to meet the wishes of their customers who had shown
preference to more environmentally friendly air travel, WestJet acquired Boeing 737- Next
Generation aircraft. These aircraft would provide more environmentally friendly transport
as they produce thirty percent lower carbon emissions than the previous aircraft (WestJet,
2012). According to WestJet’ s official website, Additional developments towards attaining
fuel economy and reduced emissions include Blended Winglet Technology to reduce fuel
consumption by 2.7 percent on each flight.The aging North American population is also a
point of concern in terms of the customer base that WestJet depends on for their growth.
Demand for air travel is set to decline with the retirement of the alder section of the
population who represent a significant portion of the Canadian population (Statistics
Canada, 2005). The reduction in purchasing power of the older generation coupled with
health issues is likely to influence their lifestyles and consequently their travelling
habits. In order to guarantee their continued operation, WestJet needs to source new
customers and create incentives that will draw the older generation towards using their
services. Competitors to WestJet Airlines Air Canada Air Canada is Canada’ s largest airline
and the leader in passenger transport in Canada. The airline also leads in the country in
providing travel between the United States and Canada and also between Canada and the
rest of the world. Air Canada currently provides scheduled services to more than 32 million
passengers in 170 destinations worldwide. According to their official website, the
company’ s mission is “ connecting Canada to the world” and its vision is “ Building loyalty
through passion and innovation” respectively (2012). Air Canada provides a range of
services to its customers to enhance their flying experience and increase recurrent
customers. Among these are mobile services that allow travelers to check in using their
mobile phones, obtain their electronic boarding pass, get updated on flight information and
book their flights. Additional services listed in their website include convenient check-in
facilities branded as Kiosk Check-in, comfortable waiting facilities such as maple leaf
lounges and concierge services for privileged customers (2012).American AirlinesAmerican
Airlines is an established commercial airline headquartered in Fort Worth, Texas. The
company is among the largest airlines in the world with more than 3000 daily flights to over
250 destinations across the globe. According to the company’ s website, providing safe,
dependable and friendly air transportation to their customers constitutes the mission of the
airline (American Airlines, 2012). The airline offers personalized in flight services and
travel options ranging from coach class to first class service, which provides flat beds and
screens for privacy.American Airlines also provides reward programs for customers such as
the AAdvantage, which has lasted for over 25 years. The airline also has a membership
service named the Admirals Club with 40 sites worldwide and lounge facilities all over the
world. In order to facilitate efficient travel for its customers, the airline is a member of
Oneworld Alliance. According to the company’ s official website, the airline has agreements
with codeshare partners such as Cathay Pacific and Quantas. Regional partners include
American Connection and American Eagle Airlines.Vision, Mission and Strategic Goals of
WestJet Airlines LimitedAccording to West Jet’ s official website, the company’ s vision is to
be among the top five international airlines in the world by 2016. The company aims to
change the existing standards in airline travel by providing customers with quality service

6. that emphasizes warm relations between staff and travelers in a caring environment. The
vision statement of the company reads: “ By 2016 WestJet will be one of the five most
successful international airlines in the world providing guests with a friendly and caring
experience that will change air travel forever.” WestJet’ s corporate values include the
following:Commitment to safetyPositivity and passion in providing their
servicesAppreciation of their employees and customersCreating a pleasurable, friendly and
caring atmosphereMaking the interests of the company’ s staff parallel to the interests of
the companyCreating a culture based on honesty, openness, and commitment.Strategic
AnalysisWestJet’ s strategic plan provides a multifaceted approach to boost revenues and
foster company growth. In their strategic plan, the company aims to focus on people and
culture. This involves creating a positive corporate culture which will facilitate the growth,
development and commitment of the employees. Secondly, the company plans to enhance
the services provided to customers by regularly providing a memorable experience for its
customers. Thirdly, WestJet Airlines aims to focus its energies on cost reduction. This will
enable the company to attain a leading profit margin in comparison to other airlines in
North America. WestJet also plans to boost revenue and growth by launching a new regional
airline that will provide affordable travel over short distances.The company plans to launch
a new short haul airline in 2013 as announced by the company’ s board of directors on
January 16, 2011. According to WestJet, the new aircraft will allow the company to provide
air transport services to smaller communities within Canada who need affordable air
transport over short distances (2012). Smaller, more efficient turboprop aircraft will be
used by the airline to provide air travel services to smaller communities, increasing the
volume of flights and forging links between existing markets. This will facilitate the
company’ s aims of realizing average annual compound growth rate in available seat miles
of up to seven percent.As part of their strategy, the company also plans to create affiliations
with airlines across the world in all continents. Additionally, the company is looking
forward to providing regular transport to New York City and is in the process of requesting
for landing slots at La Guardia Airport. WestJet also aims to accomplish its strategic goal of
expanding its fleet by adding three Boeing 737 aircraft to their line. Further
implementations proposed by the company with the view of accomplishing their strategic
plan include assessing and making improvements on their accounting procedures in order
to strengthen their finances.Key Products, Services and Brands Offered by WestJet airlines
LimitedAmong the products offered by WestJet are travel packages and reward programs
that provide attractive deals and incentives that act to draw new customers to the airline
and retain existing ones. WestJet offers a travel package under the brand WestJet vacations.
According to the company, the package presents customers with the opportunity to save
money when reserving flights for certain destinations. Additionally, the packages are
reliable and easy to book and provide the customer with a distinctive and personalized
vacation experience (2011).Other products showcased in WestJet’ s official website include
reward programs such as WestJet Rewards and WestJet RBC MasterCard (2012). WestJet
Rewards is a program that gives customers the opportunity to redeem a percentage of their
expenditure when they use the airline. The reward program also offers bonuses such as free
tickets for travel companions, free access to exclusive lounge facilities and the advantage of

7. selecting desirable seating positions.WestJet RBC MasterCard is another reward program
provided by the company that gives bonuses to holders in the form of points referred to by
the company as WestJet dollars. Card holders get the opportunity of redeeming a
percentage of money spent on the airline’ s services depending on their frequency of using
the airline. ConclusionDespite the challenges that face WestJet Airlines Limited such as the
global economic downturn, fuel price fluctuations and a limited network of destinations, the
company has a generally positive outlook. The internal strengths of WestJet Airlines Limited
outweigh their weaknesses, which is a significant achievement for an airline company of
their size and age. WestJet airlines have demonstrated their ability in developing their
strengths to stay on the competitive edge and surpass their rivals in the North American
airline industry. The company is aware of their weaknesses and their 2011 agenda is
focused on addressing these problems with plans to increase regional capacity and enhance
market penetration. Opportunities for the company exist in many fronts, such as expansion
and cost reduction. Furthermore, the company shows great ability in transforming their
weaknesses into opportunities and maximally exploiting these opportunities. WestJet plans
to grow rapidly in the next five years and become world leaders in the aviation industry.
While WestJet is faced with numerous threats to its continued growth, these have little
effect on the company’ s direction at present. Furthermore, most of the threats facing the
company are shared with other airlines as well, which means that WestJet’ s competitive
edge is not at significant risk. Being a successful company that is considering expansion into
new markets, WestJet is faced with an eventful future which demands focus and
determination to rise above the hurdles they are likely to face in their campaign to be
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