Westjet Business Model

The WestJet Business Model revolves around providing exceptional customer service, offering competitive prices, and maintaining a solid fleet of aircraft. By focusing on these key aspects, WestJet has managed to carve a niche in the highly competitive airline industry.

WestJet is a Canadian airline company that operates both domestic and international flights. Based in Calgary, Alberta, WestJet has become one of the leading players in the aviation industry. With their unique business model, WestJet offers affordable air travel options to a wide range of passengers, catering to both leisure and business travelers.

With a fleet of modern and fuel-efficient aircraft, WestJet is able to offer cost-effective travel options without compromising on comfort or reliability. Their commitment to customer satisfaction is evident through their friendly and helpful crew members, who strive to make each passenger’s journey pleasant.

In addition to their regular flights, WestJet has also introduced various ancillary services and partnerships, such as vacation packages and loyalty programs, further enhancing their value proposition. This business model has enabled WestJet to attract a loyal customer base and grow their market share over the years.

A brief history of WestJet

The story of WestJet began in 1996, with a group of entrepreneurs who saw an opportunity to provide a low-cost airline option in Canada. At the time, a few major players dominated the Canadian airline industry, and airfare prices were often high. This group of visionaries believed that there was a demand for affordable air travel that wasn’t being met.

With this in mind, the founders of WestJet set out to create a business model that would disrupt the industry and offer Canadians a new way to fly. They focused on three key principles: low fares, good value, and friendly service. These principles would come to define the WestJet brand and set it apart from its competitors.

In 1996, WestJet took flight with just three aircraft and a handful of routes. The airline started with service to five cities in Western Canada: Calgary, Edmonton, Kelowna, Vancouver, and Winnipeg. From the beginning, WestJet positioned itself as a no-frills carrier, offering low fares and a no-fee checked baggage policy.

As WestJet grew, it remained committed to its founding principles. The airline expanded its route network, adding more destinations across Canada and eventually venturing into international markets. It also introduced new aircraft, investing in modern and fuel-efficient planes to enhance the customer experience and reduce environmental impact.

One of the key factors in WestJet’s success has been its unique corporate culture. The airline has always prioritized its employees, recognizing they are instrumental in delivering exceptional customer service. WestJet fostered a sense of community within its workforce, encouraging open communication, teamwork, and a positive work environment. This culture of care and collaboration has helped WestJet build a loyal and dedicated team.

In 2013, WestJet took a significant step in its evolution by launching its regional airline, WestJet Encore. This subsidiary airline focused on serving smaller communities and providing connectivity to WestJet’s broader network. The introduction of WestJet Encore allowed the company to expand its reach and offer even more travel options to its customers.

Over the years, WestJet has continued to innovate and adapt to changes in the industry. The airline has invested in technology to enhance the customer experience, introducing features like mobile check-in and self-service kiosks. WestJet has also expanded its ancillary services, offering additional products and services to enhance the travel experience, such as vacation packages and travel insurance.

Today, WestJet is one of Canada’s largest airlines, serving over 100 destinations across North America, Central America, the Caribbean, and Europe. The airline upholds its founding principles of low fares, good value, and friendly service while embracing new opportunities and challenges in the ever-changing aviation industry.

Who Owns WestJet

WestJet Airlines is owned by WestJet Group, a privately held company. Since December 2019, the ownership of WestJet Group has been transferred to Onex Corporation, a Toronto-based private equity firm.

Onex Corporation made a successful offer to acquire WestJet in May 2019, with a bid of $5 billion. The acquisition process was completed on December 11, 2019, resulting in the withdrawal of WestJet’s shares from the Toronto Stock Exchange, where they were previously traded under the symbol WJA. With this transaction, Onex Corporation became the sole owner of WestJet.

WestJet Mission Statement

WestJet’s mission statement is “To enrich the lives of everyone in WestJet’s world.”

How WestJet works

WestJet’s business model is centered around offering its customers a wide variety of flight options, including both scheduled and charter flights. The company operates a modern and fuel-efficient aircraft fleet to ensure passengers’ safe and comfortable travel experiences.

Customers can visit the company’s website or use its mobile app to book a flight with WestJet. They can then search for available flights based on their preferred travel dates, destinations, and other preferences. WestJet’s user-friendly platform makes it easy for customers to compare prices, select seats, and add any additional services or amenities they may require, such as extra baggage allowance or in-flight meals.

Once a flight is selected and booked, WestJet provides customers with a seamless travel experience. On the day of departure, passengers can check-in online or at the airport, where they can drop off their baggage and complete the necessary security procedures. WestJet’s focus on customer service ensures that passengers feel supported throughout their journey, with friendly and knowledgeable staff available at the airport and onboard the aircraft.

WestJet offers its passengers a range of amenities and services during the flight. This includes complimentary snacks, non-alcoholic beverages, and the option to purchase additional food and beverages from an in-flight menu. The company also provides in-flight entertainment, with a selection of movies, TV shows, and music available for passengers to enjoy.

In addition to its flight services, WestJet offers a loyalty program called WestJet Rewards, which allows frequent flyers to earn points that can be redeemed for future flights, upgrades, and other benefits. The company also partners with various hotels, car rental companies, and other travel providers to offer customers additional discounts and perks.

How WestJet makes money

WestJet operates a revenue model primarily based on airline operations and ancillary services. The following are ways through which WestJet generates revenue:

Airline Operations

WestJet generates a significant portion of its revenue through its core business of providing airline operations. Customers purchase tickets to fly on WestJet’s flights, and revenue is generated from the fares paid for these tickets. WestJet offers various fare classes, including economy, premium economy, and business class, each with different price points depending on the level of service and flexibility offered. Revenue is also generated from additional services such as baggage fees and seat selection fees. WestJet operates both domestic and international flights, catering to a wide range of destinations and routes.

Ancillary Services

In addition to airline operations, WestJet offers ancillary services to generate additional revenue. These services include:

• Baggage Fees: WestJet charges fees for checked baggage, providing an additional revenue stream for the company. Passengers are given the option to purchase additional baggage allowance or upgrades to higher weight limits;

• Seat Selection Fees: WestJet allows passengers to select their preferred seats for an additional fee. This service allows passengers to choose seats with extra legroom, near the front of the aircraft, or in other preferred locations;

• In-flight Sales: WestJet offers a variety of products and services for sale during flights, including food and beverages, duty-free items, and Wi-Fi access. These sales contribute to the company’s revenue generation;

• Travel Insurance: WestJet offers travel insurance packages to its customers, providing coverage for trip cancellations, medical emergencies, and other travel-related issues. Revenue is generated through the sale of these insurance packages;

• Vacation Packages: WestJet offers vacation packages that include flights, accommodations, and other travel-related services. These packages provide convenience and value to customers while generating revenue for the company;

• Loyalty Program: WestJet operates a loyalty program called WestJet Rewards, which allows members to earn points for flights and other travel-related purchases. These points can be redeemed for future travel, upgrades, and other rewards. The loyalty program contributes to customer retention and generates revenue through increased ticket sales and customer engagement.

WestJet Business Model Canvas

The WestJet Business Model can be explained in the following business model canvas:

WestJet Customer Segments

WestJet’s customer segment is diverse and consists of the following:

• Leisure Travelers: Leisure travelers comprise a significant portion of WestJet’s customer segment. Individuals and families use WestJet’s services for vacations, family trips, and personal travel. They seek affordable flights, convenient schedules, and a comfortable flying experience. Leisure travelers may choose WestJet for its wide range of destinations, competitive pricing, and reliable service;

• Business Travelers: WestJet also caters to business travelers who must fly for work-related purposes. These customers prioritize efficiency, flexibility, and reliable connectivity options. WestJet offers business-class services, comfortable seating, and amenities to meet the needs of business travelers. Additionally, WestJet’s corporate travel program provides tailored solutions for companies and their employees;

• International Travelers: WestJet serves a global customer base, including international travelers worldwide. These customers seek a reliable and convenient way to travel to and from Canada. WestJet’s extensive network of international destinations, partnerships with other airlines, and codeshare agreements allow them to serve the needs of international travelers;

• Budget-conscious Travelers: WestJet attracts budget-conscious travelers who value competitive pricing, promotions, and discounts. These customers are looking for affordable flights without compromising on quality and service. WestJet’s pricing strategies, such as its Basic Economy fares and regular promotional offers, cater to this segment of customers;

• Frequent Flyers: WestJet’s customer segment also includes frequent flyers who travel frequently for personal or business reasons. These customers value loyalty programs, rewards, and benefits. WestJet’s Rewards program offers various perks, such as earning points that can be used toward flights, upgrades, and other travel-related benefits;

• Cargo Shippers: Besides passengers, WestJet serves customers in the cargo shipping industry. This segment includes businesses and individuals who require efficient and reliable air cargo transportation services. WestJet Cargo offers solutions for shipping various types of cargo, including perishable goods, live animals, and general cargo;

• Tour Operators and Travel Agencies: WestJet collaborates with tour operators and travel agencies to cater to customers who prefer all-inclusive vacation packages or customized travel itineraries. These customers rely on WestJet’s flights and services to plan and book travel arrangements;

• Charter Services: WestJet’s customer segment also includes clients who book charter flights for special events, group travel, sports teams, or corporate functions. These customers require tailored flight services and flexible arrangements, which WestJet’s charter services can provide.

WestJet Value Propositions

WestJet’s value propositions consist of:

• For Leisure Travelers: WestJet’s value proposition for leisure travelers is to offer affordable and convenient flights to a wide range of destinations. With competitive pricing, flexible booking options, and a variety of amenities, WestJet aims to make travel accessible and enjoyable for leisure travelers;

• For Business Travelers: WestJet’s value proposition lies in its commitment to providing efficient and reliable air travel solutions for business travelers. They offer business-class services, comfortable seating, and in-flight amenities to ensure a productive and comfortable journey;

• For International Travelers: WestJet’s value proposition for international travelers centers around its extensive network of destinations and partnerships with other airlines;

• For Budget-conscious Travelers: WestJet’s value proposition for budget-conscious travelers is its commitment to offering competitive pricing, promotions, and discounts;

• For Frequent Flyers: WestJet’s value proposition for frequent flyers revolves around their Rewards program. They offer a range of benefits, including earning points that can be redeemed for flights, upgrades, and other travel-related perks;

• For Cargo Shippers: WestJet’s value proposition for cargo shippers lies in their reliable and efficient air cargo transportation services. They ensure that cargo is delivered on time;

• For Tour Operators and Travel Agencies: WestJet’s value proposition for tour operators and travel agencies is to offer a reliable and comprehensive airline partner. They collaborate with these organizations to provide all-inclusive vacation packages or customized travel itineraries. By partnering with WestJet, tour operators, and travel agencies can offer their customers a seamless travel experience, with access to a wide range of destinations and travel options;

• For Charter Services: WestJet’s value proposition for charter services is to provide tailored flight services for special events, group travel, sports teams, or corporate functions.

WestJet Channels

WestJet’s channels consist of:

• Online booking platform: WestJet provides an easy-to-use online booking platform, allowing customers to book flights, manage bookings, and access other travel-related services;
• Call center: The airline also offers a call center for customers who prefer assisted booking or require support;
• Travel agents: WestJet partners with travel agents who help customers with travel planning and bookings;
• Partner airlines: WestJet has codeshare agreements with other airlines, extending its reach and allowing customers to book connecting flights through a single reservation.

WestJet Customer Relationships

WestJet’s customer relationships consist of:

• Self-service: WestJet emphasizes a self-service approach, enabling customers to independently manage their bookings, check-in, and select their seats;
• Customer service: WestJet maintains a commitment to providing exceptional customer service, aiming to exceed customer expectations through friendly and knowledgeable staff;
• Loyalty program: The airline offers a loyalty program called WestJet Rewards, providing frequent travelers with benefits and incentives to encourage repeat business;
• Social media presence: WestJet actively engages with customers through various social media platforms, responding to queries, providing updates, and addressing feedback.

WestJet Revenue Streams

WestJet’s revenue streams consist of:

• Airline Operations
• Ancillary Services

WestJet Key Resources

WestJet’s key resources consist of:

• Fleet: WestJet’s fleet of aircraft is a critical resource that enables the airline to operate its flights and serve its customers;
• Network of destinations: WestJet’s extensive network of destinations plays a crucial role in attracting customers and generating revenue;
• Skilled workforce: The airline’s employees, including pilots, cabin crew, and ground staff, are essential resources in ensuring smooth operations and delivering quality service;
• Brand reputation: WestJet’s strong brand reputation, built on its focus on customer service, safety, and affordability, is a valuable resource that attracts and retains customers.

WestJet Key Activities

WestJet’s key activities consist of:

• Airline operations
• Aircraft maintenance
• Marketing and sales
• Staff training
• Technology solutions

WestJet Key Partners

WestJet’s key partners consist of:

• Aircraft manufacturers
• Fuel suppliers
• Hotels and accommodations
• Car rental companies
• Tourism boards

WestJet Cost Structure

WestJet’s cost structure consists of:

• Aircraft-related costs
• Labor expenses
• Marketing and advertising
• Operational costs
• Administrative expenses

WestJet Competitors

As a major Canadian airline, WestJet faces competition from various industry players. Here are some of WestJet’s main competitors:

• Air Canada: Being the largest airline in Canada, Air Canada is a significant competitor for WestJet. It operates an extensive network, both domestically and internationally, and offers a range of services to cater to diverse customer segments;
• Porter Airlines: Operating primarily in Eastern Canada and the northeastern United States, Porter Airlines competes with WestJet by offering regional flights and focusing on customer service, including complimentary in-flight amenities;
• Air Transat: Air Transat is a leisure carrier that provides vacation package deals and seasonal flights mainly to destinations in Europe, the Caribbean, Mexico, and the United States. This differs from WestJet’s more frequent service offerings, creating a different customer segment overlap;
• Sunwing Airlines: A leisure airline based in Canada, Sunwing offers all-inclusive vacation packages to popular sun destinations. This carrier competes directly with WestJet for travelers seeking affordable vacation options;
• Delta Air Lines: As one of the largest global airlines, Delta operates flights in partnership with WestJet through a code-share agreement. However, it also competes directly with WestJet as it expands its operations in the Canadian market;
• United Airlines: Operating a solid network in the Americas and beyond, United Airlines offers stiff competition to WestJet. It serves some overlapping routes and has enhanced connectivity through its partnerships and alliances;
• Southwest Airlines: Although primarily a U.S.-based carrier, Southwest Airlines serves specific Canadian destinations. Its low-cost model and focus on customer service can create competition for WestJet, particularly on transborder routes.

WestJet SWOT Analysis

To understand the strategic position of WestJet in the airline industry, it is crucial to conduct a SWOT analysis — an assessment of its strengths, weaknesses, opportunities, and threats.

WestJet Strengths

• Strong brand image and reputation: WestJet has positioned itself as a low-cost carrier focusing on customer service. This has helped build a loyal customer base and positive brand perception;
• Extensive domestic and international route network: WestJet operates flights to over 100 destinations across North America, the Caribbean, Europe, and Central America, allowing it to capture a wide range of customers and market segments;
• Strong cost management: WestJet has a low-cost operating model allows it to offer competitive fares while maintaining profitability;
• Innovative approach to customer experience: With initiatives like the WestJet Rewards program and on-board entertainment and connectivity, WestJet aims to differentiate itself from competitors and provide an enhanced travel experience.

WestJet Weaknesses

• Concentration on the domestic market: Although WestJet has expanded its international operations, most of its revenue still comes from the domestic market. This makes the airline vulnerable to economic fluctuations and regulatory changes in Canada;
• Limited business class offerings: WestJet has a more limited range of premium class options than some competitors. This may limit its appeal to corporate travelers and high-end customers;
• Reliance on a single aircraft type: WestJet predominantly operates Boeing 737 aircraft, which could create operational challenges in case of any disruptions or issues with the aircraft.

WestJet Opportunities

• Growing leisure travel market: The increasing demand for leisure travel presents an opportunity for WestJet to expand its customer base and capture a larger market share;
• Expanding international operations: WestJet can continue to grow its international routes, especially in emerging markets with high potential for tourism and business travel;
• Partnerships and alliances: By forming strategic partnerships or joining alliances, WestJet can enhance its network reach and offer customers a more seamless travel experience.

WestJet Threats

• Intense competition: WestJet operates in a highly competitive industry, facing rivalry from both low-cost carriers and full-service airlines. Price wars and pressure on profit margins can threaten its market position;
• Economic uncertainties: Economic downturns or fluctuations can impact consumer spending on air travel, potentially affecting WestJet’s revenue and profitability;
• External factors: Factors like fuel price volatility, natural disasters, security threats, and regulatory changes can disrupt WestJet’s operations and create challenges for the airline.

Conclusion

WestJet’s business model can be characterized as a successful low-cost carrier that has disrupted the traditional airline industry.

By focusing on cost efficiency, customer satisfaction, and operational excellence, WestJet has been able to differentiate itself from competitors and achieve sustainable growth. Their innovative initiatives, such as introducing the Encore regional airline and the Swoop ultra-low-cost carrier, have allowed them to expand their network and attract diverse customers.

In addition, their commitment to employee engagement and a robust corporate culture have contributed to their success in delivering exceptional service. Despite challenges in the industry, WestJet’s business model remains resilient and adaptable, positioning them well for future growth and continued customer loyalty.