Canadian low-cost carrier WestJet is moving away from its focus on the leisure traveller as it enters the next phase of growth, with an overhaul to its fare structure and the roll-out of a new premium economy seating product in early 2013.
Launched in 1996, WestJet had initially provided low-cost competition to Air Canada and the then second largest Canadian carrier Canadian Airlines. It first began operating in western Canada, before gradually expanding to the rest of Canada, North America and the Caribbean.
The carrier has spent the last 16 years building up a fan base among cost-conscious leisure travellers, and now wants to attract a bigger segment of the higher value business traveller market.
WestJet's vice-president of revenue management Paul Harvalias tells Flightglobal that the airline has captured a "substantial part" of the leisure passenger market, and that it is time now to move on to the corporate traveller segment.
The airline estimated last year that it had an approximate 22% market share of the business traveller market, although it has been reluctant to quantify how much more it plans to grow this share by.
During an investors day presentation on 6 December, the airline revealed that it will overhaul its fare pricing structure in 2013, by offering fare bundles to travellers purchasing airfares on the carrier's website. Currently, travellers are offered the lowest fare on each flight segment that they book.
From early 2013, travellers will have three classes of fares to choose from: A low-price, no-frills "econo" fare , a mid-value "flex" fare with some extras and flexibility for changes, and a high-value "plus" fare targeted at the business traveller who wants complimentary amenities and full flexibility.
Harvalias says WestJet is in the midst of making changes to its online booking system to enable these changes, which are expected to roll out in the first quarter of 2013 with the launch of the carrier's new premium economy seating product.
WestJet announced this year it would introduce premium economy seating across its entire fleet of single-class Boeing 737 narrowbodies as it seeks to attract more business travellers. The seat reconfiguration will be completed in the first quarter of 2013.
Once finished, each aircraft will have 24 premium economy seats with a seat pitch of 36in (914mm). The carrier has said it expects the new premium economy product to offer up to 50% cost savings for travellers over Air Canada's business class, and WestJet's chief executive Gregg Saretsky has said it should lead to revenue improvement at the airline.
WestJet has yet to release full details of the premium economy product, but it is expected to come with priority boarding and other complimentary amenities on board.
Harvalias says the premium economy product will likely fall into the top high-value fare category that the airline envisions in its new fare structure. On routes with a significant number of business travellers, a "huge percentage" of seats will be in the premium bundle, he says.
For routes with a more even mix of business and leisure traffic, WestJet will offer extra amenities to passenger paying the mid-value fares, he adds.
Pointing out that WestJet now offers an "everyday low fare", Harvalias says: "That is great but some of those fares don't meet the needs [of business travellers]." Travellers who purchase the high-value fares will be offered "ultimate flexibility", he adds.
While WestJet is bullish about the revenue from its new product offerings targeted at business travellers, it does not plan to extend the premium economy seating cabin to the Bombardier Q400 fleet of its new regional subsidiary, WestJet Encore, which will begin operations in the third quarter of 2013.
This is because the average stage length of flights on the regional airline will be one to two hours long, says a carrier spokesman. WestJet Encore travellers, however, will still be offered the bundled fare structure, he adds.
WestJet is not the only low-cost carrier in the region seeking to win a greater share of higher-value, business traffic. New York-based JetBlue is aiming to expand flights out of Boston, one of its six focus cities, as part of an overall strategy to win more corporate travel. It has also added additional extra legroom seats to its Embraer 190s. Such seats are already offered on the airline's Airbus A320s and will be on its A321s entering the fleet in 2013 as well.