WestJet ?welcomes? competition from Air Canada Rouge

CALGARY - As Air Canada announced its plans for a discount vacation carrier Tuesday, a WestJet spokesperson said the Calgary-based airline is unafraid of extra competition in the leisure travel market.

?We invented low-cost flying in Calgary, and have almost 17 years of experience running one of the most successful low-cost carriers in North America. So we welcome the competition,? said WestJet?s Robert Palmer. ?Bring it on.?

However, Rick Erickson ? an independent aviation analyst based in Calgary ? said WestJet will undoubtedly be keeping an eye on Air Canada Rouge, which is set to begin flying July 1 to holiday destinations in Europe and the Caribbean.

?You?re going to watch their (WestJet?s) marketing and network people be quite cautious and mindful of the fact that a new, reinvigorated Air Canada is back on the market,? Erickson said. ?I think WestJet is going to be watching it and watching it closely ? and so they should.?

Air Canada Rouge will begin operations with two Boeing 767-300ER and two Airbus A319 aircraft that will be released from Air Canada?s mainline fleet. Additional planes will be added as Air Canada takes delivery of new aircraft in 2014, eventually ramping up to 50 planes.

Rouge flights will be offered to European destinations like Athens, Venice, and Edinburgh and sun destinations in Cuba, Dominican Republic, Jamaica, and Costa Rica. Ben Smith, Air Canada?s chief commercial officer, said the chosen destinations are areas where demand for leisure travel has been growing, but which didn?t generate adequate profits under Air Canada?s existing cost structure.

?The creation of this carrier is to assist us in serving many destinations that our existing model does not work on a competitive basis,? Smith said. ?This is not viewed as entering markets that we haven?t been in in the past, they are markets that we?ve always liked to serve, some we?ve already served in the past, we just had to have the right vehicle to exploit them properly.?

Air Canada has said about half of incremental profits from its low-cost carrier will be derived from putting more seats into its planes. The rest will come from lower employee wages and more flexible work rules within the Rouge operation.

Air Canada pilots complained during labour negotiations earlier this year that the airline?s launch of a low-cost carrier could threaten their job security and working conditions. In the end, a federal arbitrator chose Air Canada?s final offer that included provisions allowing the airline to create a budget carrier.

In the beginning, Rouge flights will only be offered from Toronto and Montreal, but Erickson said he expects the service to grow.

?It?s something Air Canada badly needed to do ... They?ve been largely pushed out of the travel market because of very aggressive players like WestJet, like Air Transat, like Sunwing,? he said.

Gayle White, owner of Sundial Travel in Calgary, said airfares to some sun destinations are currently high because of simple supply and demand. She said she hopes the addition of Air Canada Rouge will result in lower fares in the long-term.

?It changes the landscape of what pricing will be. Other players will have to be more competitive to stay in the game,? she said.

Air Canada is currently offering ?special introductory fares? on Rouge flights until Dec. 25. Details about fares going forward were not immediately available, but the company said it will provide more details about pricing and its premium economy seats in January.The launch of Rouge will come the same year that WestJet launches its own discount regional airline. WestJet Encore will serve smaller Canadian domestic markets instead of international locales, but Erickson said the fact that two Canadian airlines are launching new carriers at the same time is unprecedented.

?It?s going to be a very interesting year in Canada?s aviation industry,? Erickson said. ?It will be interesting to watch as we see two new airlines introduced into the Canadian marketplace at the national level. We?ve not had that before.?

astephenson@calgaryherald.com

With files from the Canadian Press

Source: http://feeds.canada.com/~r/canwest/F233/~3/OPX-ibniezo/story.html

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