WestJet sees boost in ancillary revenues from fare bundles

Washington DC
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WestJet saw ancillary revenues increase about 15% to Canadian dollar (C$) $38.8 million ($37.53 million) in the second quarter compared to the same three months of 2012.

The increase is mainly driven by new fare bundles the carrier first introduced in April, says the airline in a regulatory filing.

"We're driving a change agenda here at WestJet to make WestJet stronger and more relevant to more market segments," says the airline's chief executive Gregg Saretsky. "And we expect our fare bundle strategy to be a method to further penetrate the business traveller market, which represents a significant opportunity for incremental revenue and to continue our profitable growth."

Under the new fare bundling system, WestJet increased change and cancel fees associated with certain fares and also allowed passengers to elect same-day upgrades to its new premium economy seating for a C$45 fee as part of a soft launch of the new section. The premium economy seating will undergo a full commercial roll-out on 17 August.

Ancillary revenues for the first half of 2012 totalled C$75.3 million, or an increase of about 9.4% from C$68.8 million from the second quarter of 2012.

The new three-tiered fare bundling system gives customers varying levels of flexibility for changing fares and different levels of amenities. The no-frills "econo" fare is the least expensive, followed by the mid-level "flex" fare. The "plus" fare offers maximum flexibility and is targeted at business travellers.

This year, WestJet has said it expects to see the fare bundles bring C$20 million to C$30 million in incremental revenues in 2013 and between C$50 million and C$80 million annually once fully rolled out.