WestJet increased revenue from managed travel more than 10
percent year over year in the third quarter, president and CEO Gregg Saretsky
said during an earnings call.
The number of managed business travelers flying WestJet
increased 12 percent, a larger year-over-year growth rate than reported in
the first quarter. The carrier has been pushing to boost its corporate
business for a few years, and Saretsky attributed recent growth to the
culmination of three "building blocks." One was adding higher tiers
to its WestJet Rewards program, which let the carrier "do a better job of
attracting higher-yield, elite members from other airlines," he said. The
carrier has been growing its routes and building more business travel-friendly
schedules, especially those between Calgary, Edmonton and Vancouver in Western
Canada and Toronto, Ottawa and Montreal in Eastern Canada, according to
Saretsky.
Additionally, WestJet's premium economy offering, which boosted
space by removing the middle seat on certain flights, has built business
traveler loyalty, Saretsky said. Revenue from premium economy was up 22 percent
compared with the third quarter of 2015, when WestJet began the seating
arrangement.
"In an environment where the economy is tanking,
particularly in Western Canada, we see a price sensitivity and a change to
corporate travel policies that no longer permit business class on flights under
five hours, and that plays beautifully to the model we built," Saretsky
said.
WestJet also is exploring joint sales opportunities with its
airline partners, executive vice president of commercial Bob Cummings said. It
already has begun joint contracting with Delta Air Lines to "good
success," and such ventures will allow it to attract corporate clients
with more global needs, he said.
Corporate travel growth helped keep overall revenue positive
in the quarter, despite the economic downturn in the energy sector-dependent
Alberta. Revenue rose 7.6 percent year over year during the third quarter to
C$1.1 billion. Yield, however, declined 5.3 percent. WestJet traffic increased
13.6 percent, and capacity increased 10.6 percent, pushing load factor up 2.2
percentage points to 84 percent.
The
carrier reported net earnings of C$116 million during the quarter, up from
C$101.8 million in the third quarter of 2015.