Wal-Mart on Wednesday endorsed WestJet in a press release as its "preferred Canadian airline," prompting Air Canada to claim that it broke up with Wal-Mart first.
"Air Canada advised Wal-Mart in January that we would not be renewing" a contractual arrangement, because "Wal-Mart's travel purchases on Air Canada did not meet ... pre-defined volume and market-share targets," according to an Air Canada spokesperson.
A Wal-Mart spokesperson declined to comment on Air Canada's statements.
Although Wal-Mart global travel services director Duane Futchis a strong advocate for the sort of complete global distribution system access to airline fares and inventory that Air Canada has eschewed(ostensibly because GDSs cannot facilitate Air Canada's alternative pricing schemes), Futch did not address distribution in his prepared remarks about the new WestJet relationship. Still, WestJet vice president of sales Duncan Bureau told The Transnationalthat Wal-Mart would book the airline primarily through a GDS. [ Wal-Mart uses Sabre.]
"As a low-cost carrier, WestJet offers outstanding value as it relates to price, customer service, schedule frequency and responding to our corporate requirements which, when grouped together, makes them a valuable business partner and logical choice for our company," according to Futch's statement in a WestJet press release.
Wal-Mart's decision to not only partner with WestJet but also to announce the arrangement is at least partly the result of what some perceive as a hard line taken by Air Canada on distribution issues.
According to Business Travel Coalition chairman Kevin Mitchell, "Wal-Mart's move is the tip of the iceberg in Canada. Hundreds of empowered major corporations are letting Air Canada, and other airlines around the world, know that they do have a choice in air travel, and they that they are prepared to direct business to those airlines that commit to corporation-friendly distribution policies."
A carrier like WestJet having "corporation-friendly distribution policies" seems upside-down considering that North American airlines of its ilk--such as AirTran, JetBlue and Southwest--traditionally shunned broad GDS usage. Although carriers like Southwest and WestJet today employ limited GDS functionality--for example, through Sabre's Basic Booking Request participation level--their mere existence in the GDSs is perceived by some corporations as better than Air Canada's creation of new fare programs exclusively available in non-GDS channels. Air Canada's argument is that GDSs simply cannot handle new programs like "transparent branded fares," "a la carte pricing" and Flight Pass.
Air Canada general manager of product distribution Graham Wareham said Wednesday that it's partly the limitations of traditional computer reservations technology--even Air Canada's internal reservations system--which force the airline to put newly developed functions and fare "products" on its Web site rather than in GDSs. A booking connection announced Wednesday with Concur's Cliqbook tool links to Air Canada's Web site instead of the airline's core reservations system. Wareham admitted the latter would be ideal.
Connections such as the one developed with Concur help facilitate access to such products as Air Canada's Corporate Pass, which offers clients the airline's best discounts but is not available in GDSs. Air Canada vice president of sales and product distribution Marc Rosenberg has said Pass products have been well-received, but client and travel management company sources dispute that.
Meanwhile, WestJet said it plans to "leverage" the new Wal-Mart relationship "to appeal to a broad range of corporate business travelers--anywhere from local to international organizations." Participation in Sabre did not make its way into WestJet's plans until five years after the airline was founded, but it is not the only circa-1990s carrier now trying to increase its corporate-travel credibility. JetBlue, for example, this week said it was considering preferred seating and "refundability" for higher fares as well as corporate discounts--all of which follows that airline's decisions last year to reenter the GDSs.
"Our agreements are based on volume growth, not market-share requirements," said WestJet's Bureau.
Not only did Air Canada say the relationship with Wal-Mart ended because the retail giant failed to meet market-share thresholds (without providing the reason for that), but the airline also downplayed the impact of losing the account.
"With respect to the size of the Wal-Mart's prior corporate sales account with Air Canada, although [it is] a very large corporation, from a Canadian travel volume perspective, the account was at the lower end of our contracted agreements in the small- to medium-size category," according to the Air Canada official. "Corporate sales agreements reflect the value of the whole product being delivered, including network and schedule, and are not meant for corporate travel buyers driven primarily by lowest price on the spot market, which was the case for Wal-Mart."
Wal-Mart Canada's CEO just this week said it the company would make its "single largest annual investment in Canada" by adding 29 stores; Wal-Mart ended January with a total of 289 outlets and employed about 70,000 people in Canada.