WestJet will begin expanding the network of its Encore subsidiary to central Canada by mid-2014 with a beachhead in Toronto, says the carrier's president and chief executive Gregg Saretsky while addressing investors on 18 September at the CIBC World Markets Eastern Institutional Investor Conference in Montreal.
Calgary-based Encore started flights on 24 June on regional routes within the Western part of the country, and Saretsky says that fliers can expect the regional carrier to operate flights from Canada’s west coast to the easternmost province of Newfoundland within the next two years.
The carrier will give more details on these new locations in early 2014, says Saretsky.
“Slowly but surely our fleet expansion will allow us to continue this march East,” he says. “I think [in] the next schedule, which will be announced January 27 for the summer, you’ll start to see the arrival of the Q400s in central Canada.”
WestJet is insistent on maintaining a targeted return on invested capital (ROIC) of at least 12%, he says, and that means the airline is waiting to take delivery of about half of its 20 firm Bombardier Q400 turboprops on order before expanding Encore to new regions. In the second quarter, the carrier’s ROIC calculated over a year-long period was 14.4%.
“The first nine or 10 aircraft will be focused in Western Canada, and then after that we can start developing a beachhead in central Canada, and we see Toronto as being the place where that beachhead would eventually be formed for the eastern part of the country,” says Saretsky.
New York, Philadelphia, Chicago and Boston are among some of the potential cities in the USA that WestJet management has indicated interest in expanding the Encore network to. The carrier would compete against US regional carriers and Porter Airlines in these markets in addition to the main incumbent on Canadian regional routes, Air Canada. It also plans to add Encore service to cities throughout the Canadian provinces of Quebec, Ontario, Nova Scotia, New Brunswick and Newfoundland.
WestJet Encore has added four Q400s to its fleet since beginning operations and is receiving the new aircraft at a rate of one per month. Encore’s fleet will grow to seven aircraft by the end of the year and 16 at the end of 2014. In addition to 20 firm orders, WestJet also has 25 options for the aircraft type.
WestJet is well-established at Toronto Pearson International airport, but the carrier has also indicated that it would be interested in entering the Billy Bishop Toronto City Airport, where the Q400s are one of the few types of larger aircraft now permitted to fly into the airport due to strict noise and emissions regulations.
The Toronto Port Authority says that no slots beyond the 172 slots operated by Porter Airlines and 30 used by Air Canada are available, and the likelihood of more opening is unclear.
Porter Airlines has said it would need at least 40 additional slots for its proposal to open up the airport to Bombardier CS100 jet, effectively relaxing a long-standing ban on jets at the airport to allow the aircraft to operate there. In June, WestJet’s Saretsky sent a letter to Toronto councillors urging the city to research whether future types of next-generation aircraft could also meet the noise requirements. The carrier announced in late August that it would renew its Boeing 737 fleet with new MAX variants in a pending deal for 65 aircraft.