WestJet takes on NewLeaf

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WestJet is trying to lure business away from ultra-low-cost airline NewLeaf by adding routes that compete with the Winnipeg-based company.

Calgary-based WestJet announced it would launch new routes in direct competition to NewLeaf and increase flights on other NewLeaf routes.

WestJet said it would offer direct flights between Winnipeg and Abbotsford, B.C., starting April 30; and between Winnipeg and Hamilton on May 1. It would increase non-stop flights between Abbotsford and Edmonton, and service between Winnipeg and Edmonton.

Those routes are all part of NewLeaf’s relatively small network. The airline launched Canada’s first ultra-low-cost air service last July. Since then, WestJet has gone head to head against NewLeaf on a number of routes.

In early January, NewLeaf cancelled plans to offer flights from Calgary and Edmonton to Phoenix — and had to refund tickets that had been sold — after WestJet mirrored those routes.

A WestJet official would not address the apparent head-on competition with NewLeaf directly, but the optics are apparent.

NewLeaf offers direct flights from Winnipeg to Abbotsford, Edmonton and Hamilton. By April 1, WestJet will cover all those routes.

According to NewLeaf CEO Jim Young, it’s virtually an institutional policy at WestJet now.

“We are just really happy we are doing all of WestJet’s network planning for them,” Young said sarcastically. “At the end of the day, they have decided to fly over top of every one of the routes that we started on.”

Young said this type of response from the predominant player is not unexpected. He said because NewLeaf has lower overhead — and solid 80 per cent-plus load factors — it will continue to offer low fares.

“These are routes (WestJet) did not think were all that important prior to NewLeaf starting, so you have to question that,” he said.

Lauren Stewart, a spokeswoman for WestJet, preferred to talk about the excellent business strategy of a Winnipeg-Abbotsford route because of the economics and customer convenience rather than it being an out-and-out battle against NewLeaf’s newly acquired market share.

“We have flown from Vancouver to Winnipeg for 15 years, and we know that when our guests land in Vancouver that it’s often not their final destination and that many go on to commute to the Fraser Valley,” she said. “It just made sense to provide another convenient option.”

WestJet has been flying out of Abbotsford since 1996, and Stewart said the airline holds it up as an example for other airports because of its low service charges to carriers. She also made it clear WestJet is serious about defending its turf.

“WestJet is Canada’s low-fare leader with a track record of reliability, stability and growth,” Stewart said. “We have said for many years that we are going to defend our position in the market. That is exactly what we are doing.”

Young said NewLeaf is not afraid of competition but is well aware airlines are not allowed to offer fares at rates below cost.

“You have to ask the customer: is the competitor out there because they want the low-fare market or is he just out there to put us out of business?” Young said.

He contends that WestJet fares on certain routes fluctuate depending on which days NewLeaf flies to those destinations, going up dramatically on the days NewLeaf does not fly.

Jim Scott, the CEO of Canada Jetlines, another ultra-low-cost carrier that is in the process of raising money with the hopes of entering the market, has been watching closely how the incumbents behave with the new competition.

“We are monitoring WestJet’s treatment of NewLeaf very carefully,” he said Tuesday. “We have a law firm in Toronto building a file. The rules are clear — you can compete, but you cannot go below your costs if you are the predominant airline. That’s considered predatory pricing under the Competition Act.”

Even though NewLeaf is based in Winnipeg, with offices in the same building as the Winnipeg Airports Authority management team, the WAA does not play favourites.

Tyler MacAfee, spokesman for the WAA said, “More options for travellers from Winnipeg is always a good thing. WestJet is an airline we have a really great working relationship with. It is an airline that is always looking to expand the market here in Winnipeg.”

martin.cash@freepress.mb.ca