WestJet

WestJet

March 15, 2005 20:37 ET

WestJet Comments on Current Price of Airfares; Sheds Light on Fare Pricing Following Jetsgo's Demise


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: WESTJET

TSX SYMBOL: WJA

MARCH 15, 2005 - 20:37 ET

WestJet Comments on Current Price of Airfares; Sheds
Light on Fare Pricing Following Jetsgo's Demise

CALGARY, ALBERTA--(CCNMatthews - March 15, 2005) - WestJet (TSX:WJA)
commented today on the current price of its airfares in response to
public concerns over the price of fares since Jetsgo's demise.

In 1996, WestJet launched service with a cost structure that allowed it
to offer airfares below what had ever been seen in the Canadian airline
industry. WestJet's fares, and the competitive response to those low
fares, dramatically reduced the price of flying in every market the
airline entered.

With its high-efficiency structure and motivated, non-unionized
workforce, WestJet is still the sustainable low-fare leader for flights
within Canada and to the United States.

As the custodian of capital invested by shareholders, and as the
custodian of money given to WestJet in the form of advance airfare
purchases, WestJet has a responsibility to operate in a profitable
manner to ensure its continued viability. Unfortunately, it has become
evident that not all airlines share these values.

By continually offering fares too low to cover the costs of providing
air service, including airfares as low as $1, Jetsgo was the key
contributor to artificially lowering airfares in Canada. To remain
competitive, WestJet and other Canadian airlines have had to lower their
own airfares below sustainable levels for many months.

For a business to be successful, it is necessary to price a service or
product competitively. It is equally important that prices cover costs
and the business generates an acceptable profit as determined by
shareholders. Jetsgo's pricing strategy clearly did not allow the
airline to meet its costs or allow for a profit, and this model was not
sustainable on a long-term basis.

Jetsgo's unsustainably low fares ultimately have been a disservice to
the flying public. Notwithstanding the estimated 17,000 former Jetsgo
customers affected by the abrupt halt to their operations, Canadians
have also become accustomed to airfares so low that no airline is able
to offer them successfully. Some members of the public now seem to have
an inaccurate understanding of the actual costs involved in operating an
airline and the airfares that must be charged to sustain the service
carriers provide.

Sean Durfy, WestJet's Executive Vice-President of Marketing and Sales,
said today: "We can appreciate that travellers have become accustomed to
very low fares offered by all Canadian carriers. This is unfortunate
because the irrationally low prices in the market made it very difficult
for airlines to operate successfully, which had a negative impact on the
industry.

"WestJet's pricing model has not changed since Jetsgo exited the market;
we have merely ceased offering defensive seat sales to the extent that
we have in recent months. Our bookings have increased since March 11
from already high levels, and consequently, our flights are filling up
and some travellers are paying higher short-notice and walk-up fares as
a result. Fares are generally lower when booked further in advance of
the travel date.

"WestJet is committed to offering Canadians low fares now and into the
future. We are confident that our guests and the flying public will
understand that we are simply operating our business in a way that
ensures we remain viable. We operate with one of the lowest cost
structures in the airline industry, and this will always be reflected in
the low fares we charge our guests."

WestJet provides scheduled service to 33 North American cities and
charter service to 26 destinations in eight countries. The airline
operates a fleet of 57 aircraft featuring 39 Boeing Next-Generation 737
aircraft.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    WestJet
    Public Relations and Communications
    (403) 444-2615
    (403) 444-2261 (FAX)
    Website: www.westjet.com