Founded as a low-cost carrier (LCC) in 1996, WestJet is a Canadian airline group with its headquarters in Calgary. The implementation of the LCC business model in Canada enabled WestJet to be highly-competitive. Consequently, WestJet soon became the second-largest Canadian airline with over one-third of the Canadian domestic market share by 2018. In addition to its domestic air transportation services, WestJet also flies to other North American, Central American, and some European destinations. As of February 2019, the Canadian LCC provided flights to 109 different destinations across 24 countries. Their routes expanded into eastern Canada from the early 2000s, and international routes to various North American destinations were added in the mid-2000s. WestJet is currently in the process of rebranding into a full-service carrier. This transition will include the expansion of their European presence, including the addition of flights to continental Europe for the first time with flights to Paris from May 2019. WestJet will continue to service the low-cost market, however, through the creation of a subsidiary brand, namely Swoop. Swoop provides services as an ultra-low-cost carrier which commenced services in June 2018.
Economic and financial performance of WestJet
A market presence with a strategic corporate strategy enabled WestJet to sustain steady growth since its establishment. Between 2011 and 2019, the airline group improved its revenue by roughly 26 percent, generating over 3.8 billion U.S. dollars in revenue during 2019. The number of passengers carried by WestJet increased much rapidly, up from 17 million in 2012 to 26 million air travelers in 2019. Similarly followed the revenue passenger kilometer (RPK) of WestJet during the same period, reaching more than 46 billion RPKs in 2019. Yet, there are many more potential opportunities ahead of WestJet. The successful business performance of a firm attracts the attention of larger corporations; this similarly happened for WestJet. In May 2019, the Onex Group completed the acquisition of WestJet Airlines at five billion Canadian dollars. WestJet originally provided flights across western Canada (hence their name).
Competition within the Canadian aviation industry
Compared to many other industries, aviation is a highly capital-intensive industry requiring large sums of investments only to start operating. This is one of the factors preventing many companies to emerge as an airline group because the toll of potential business failure could be such that it disincentives some investors from allocating funds to take risks. On the other hand, a well-designed business strategy enables a firm to position itself despite all hurdles of the competitive forces in the market. WestJet resisted a multitude of potential threats and emerged as a stronger company. For instance, its largest domestic competitor Air Canada held only 12 percent more of the domestic market share than WestJet as of 2018. Nevertheless, Air Canada has significantly higher revenue than WestJet because of the nature of differing business models. For instance, the revenue per passenger of an LCC is much lower than a traditional airline business model. Therefore, WestJet generates additional ancillary revenue to make business balance sheets in positive values. Over the recent five years, the company more than doubled its ancillary revenue, reaching roughly 477 million Canadian dollars. Compared with other airline groups, WestJet was only the 11th largest airline group in North America.
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