WestJet unveils service guarantees

WestJet Airlines Ltd. unveiled a new list of customer-service guarantees today as part of an aggressive new marketing campaign aimed at winning market share from Air Canada and staving off the need for the proposed passenger bill of rights now before Parliament.

The campaign launched this morning sets in stone what the airline will offer its passengers on day-to-day basis and in the event of delays or cancellations.

Many of the so-called “care-antees” are already part of the airline’s regular operations, including services such as two free checked bags.

Others entrench practices that were, until now, discretionary, including providing meal vouchers for passengers delayed by more than two hours and hotel rooms for those delayed overnight.

But they also include some new services, such as a cash-back guarantee for a cancellation made within 24 hours of booking it.

Bob Cummings, WestJet vice-president of guest experience and marketing, said the campaign is aimed at giving the carrier an edge over its competitors in an increasingly aggressive market for air travel due to declining demand.

“We have a smaller pie this year with respect to demand and revenue,” Mr. Cummings said. “We had to look to way to steal more share.”

The move comes on the tails of an apparent shift in strategy at Air Canada under the leadership of its new chief executive, Calin Rovinescu.

Until now, Air Canada has been scaling back its capacity to ensure it was flying its planes full and profitably. However, Mr. Rovinescu has said in a series of recent internal communications that he doesn’t adhere to the strategy of “shrinking to profitablity.”

“I don’t want to lose market share to our competitors without putting up a fight,” he said in a video to employees that was posted on YouTube.

Air Canada is looking for creative solutions to compensate for declining demand, he said, including leveraging its frequent-flyer partnership with Groupe Aeroplan Inc. To that end, the carrier announced last week it had sold an additional 250,000 seats to Aeroplan this year to help fill its planes.

But WestJet is not aiming its new campaign at just Air Canada. After a particularly difficult holiday season this past December due to harsh winter weather in Vancouver, a private member’s bill was presented to Parliament proposing a Passenger Bill of Rights be established in Canada.

Among other measures contained in the bill, carriers would be forced to pay hefty financial penalties to customers for delays or cancellations.

“We believe we have a market-driven solution that addresses each of the areas that is proposed under the bill,” Mr. Cummings said of the campaign.

Still, the new guarantees are not without their risks. WestJet incurred $5.3-million in additional expenses in the fourth quarter related to the storms in Vancouver, including covering the cost of meal vouchers, hotels, ground transportation and charters for its affected customers across the country.

Heading into the busiest time of the year, at a time Air Canada is set to renegotiate all of its labour pacts, WestJet’s network runs the risk of being overwhelmed by a job action at its domestic rival.

In addition, there is a risk this might occur if Air Canada were to file for creditor protection, as some have speculated.

“It simply could not replace Air Canada’s capacity,” said Chris Murray, CIBC analyst, in a recent note to clients. “In a strike or lockout situation, we expect we would see what happened at Vancouver replicated at every major hub across the country.”

Scott Deveau, Financial Post – scdeveau@nationalpost.com