Company Overview

WestJet is a Canadian company in the air travel industry. They fall under the services sector. WestJet places a great deal of emphasis on customer satisfaction, which has resulted in them building a loyal customer base and lent to their growth. Their prices are competitive and they are steadily increasing the number of places that they fly to in order to draw more customers as well.

WestJet’s mission is “to provide safe, friendly and affordable air travel”. (Retrieved from http://westjet.com/pdf/responsible-growth-en/pdf Pg. 5, August 27, 2012)

Watch a clip on WestJet posted on YouTube here.

Company History

Westjet was founded in 1996. They started out with three planes, five destinations and two hundred and twenty employees. WestJet’s founders “Clive Beddo and a team of like-minded partners, [who] believed that just because you pay less for your flight, doesn’t mean you should get less”. (Retrieved from http://www.westjet.com/guest/en/about/index.shtml August 27, 2012).

WestJet has grown significantly over the years. Today they have 99 planes and travel to 80 destinations, employing 8500 people. Gregg Saretsky is the President and CEO, but each WestJet employee is an owner. Employees can purchase up to 20% of their gross salary in WestJet shares and WestJet matches their purchases (Retrieved from http://www.westjet.com/pdf/greatWestJetJobs.pdf August 27, 2012)

Company Production

WestJet has one service that they provide, and that is air travel. WestJet marketing seems aimed at adults who travel, likely ages 18-59. Since their marketing campaign stresses customer service and attractive rates, pretty much any Canadian who travels by plane would consider travelling with them.

In June of 2011, there were more empty seats on WestJet flights as travel prices reached a rate that the customers were unwilling to pay. As a result of this drop in demand, WestJet responded by lowering prices the following month. (Retrieved from http://www.theglobeandmail.com/globe-investor/air-canada-westjet-lowering-fares/article588961/ August 26, 2012).

WestJet’s stages of production for the service they provide, in the tertiary stage, involve selling tickets to customers, staffing airport staff and staff on the plane to check them through and convey them to their destination.

WestJet’s productivity is evident in their numbers. Aviation Week magazine just ranked WestJet 10th in the world for top performing airlines. “The magazine analyzed financial and operational data from 71 carriers worldwide, scoring them in five categories — liquidity, fuel cost management, financial health, earnings performance, and asset utilization. With 68.9 points out of a possible 100, WestJet was the second-highest rated North American airline, second only to Nevada-based Allegiant Air”.

 (Retrieved from http://www.calgaryherald.com/business/productiveconversations/Westjet+says+regional+fares+will+cheaper+than+Canada/6913881/story.html August 30, 2012)

Company Costs and Profits

Pricing of WestJet products varies greatly. A flight to another city in the same province would be cheaper than a flight to another country, or an all-inclusive WestJet Vacation. Due to seat sales and promotions, connecting flights, etc. these prices can fluctuate.

Some of WestJet’s significant fixed costs are principal installments on funding (Retrieved from http://www.westjet.com/guest/en//media-investors/2011-annual-report/WestJet-Annual-Report-2011.pdf August 31, 2012) building rent/mortgage for office space, aircraft leases, and labour costs for salaried employees.

Some variable costs include labour costs changing with staff turnover and more people being staffed during peak times; profit sharing – as this depends on the revenue of the company. Aircraft maintenance will vary depending on repairs that come up unexpectedly. Fuel is a variable cost as the price of gas fluctuates. Building utilities fluctuate as well as oil and electricity prices vary day to day. 

In 2011, WestJet achieved $149 million in net earnings and “broke the three-billion-dollar revenue threshold” ( (Retrieved from http://www.westjet.com/guest/en//media-investors/2011-annual-report/WestJet-Annual-Report-2011.pdf August 31, 2012).

The Competition

Since WestJet is a Canadian company, it makes sense that its main competition is Air Canada. With regards to pricing, WestJet is coming in lower than Air Canada regionally, with prices 30 per cent lower than Air Canada’s for last-minute bookings. (Retrieved from http://www.calgaryherald.com/business/productiveconversations/Westjet+says+regional+fares+will+cheaper+than+Canada/6913881/story.html August 30, 2012).

With pricing lower than Air Canada’s, and most loyal WestJet customers raving about their customer service experiences, it’s no wonder that WestJet’s CEO stated that they are “closing the gap” with their competitor; “on pace to challenge Air  Canada for the lead in domestic market share four years from now” (Retrieved from http://www.theglobeandmail.com/report-on-business/westjet-closing-gap-with-air-canada/article311800/ August 30,2012).

Summary

WestJet has shown great success in a relatively short amount of time. Since 1996, the company has grown exponentially, creating more jobs for Canadians while building a loyal customer base in Canadian travellers. Their rates are affordable, they treat their employees well, and their productivity level seems high, resulting in a profitable company.