For most big airlines, having a chief executive with a long and accomplished history in the business would be considered a no-brainer. Not at WestJet. Since its launch nearly 15 years ago, the remarkably successful low-cost carrier has made a point of ditching industry conventions whenever possible. Economy-class only. No connecting flights. Friendly staff. And, until recently, chief executives who generally came from outside the industry.
So eyebrows were naturally raised earlier this year when WestJet, based in Calgary, named industry veteran Gregg Saretsky as a replacement for outgoing CEO Sean Durfy, who was formerly the head of Enmax, a utility company. Durfy, in turn, had replaced WestJet co-founder and chairman Clive Beddoe, who, although a hobby pilot, was in the real estate business prior to launching the airline in 1996.
In fact, WestJet has only once before attempted to tap an industry type for the top job—with little success. In 1999, Beddoe attempted to hand over the reins to Steve Smith, who had formerly been with Air Ontario, a subsidiary of Air Canada. He was replaced after 19 months (with Beddoe suggesting his top-down management style was a poor fit with WestJet’s egalitarian corporate culture). Indeed, WestJet has often prided itself on charting its own flight path, avoiding industry practices and conventions that it deemed self-destructive, including the pursuit of growth at any cost and treating paying customers as human cargo.
But Saretsky has a long history in commercial aviation, including stints at the former Canadian Airlines (which Air Canada took over in 2000) and Alaska Airlines. Since his appointment as CEO last March, speculation has been rising about whether WestJet has finally reached a point in its evolution where it’s not content to remain a folksy discount airline. It has set its sights on challenging Air Canada, not only domestically, but in the growing market for global air travel. To start, it’s looking to expand its reach through a series of partnerships with other carriers, not unlike those that Air Canada enjoys with its Star Alliance partners, although some wonder if it’s only a matter of time before WestJet begins flying far-flung routes on its own. “Our plan is to partner with carriers from each of the major geographic regions from around the world,” Saretsky told analysts during a recent conference call. “I believe we have a solid road map in place to achieve our vision to be one of the five most successful airlines in the world by 2016.”
Just last week, WestJet announced that it had finally clinched a deal with Hong Kong’s Cathay Pacific Airways, which had been talking to WestJet about a partnership, on and off, for years. Some have also speculated that Saretsky, who first came aboard WestJet last year as head of its packaged holiday division, was also behind a recent push to negotiate a deal with Delta Air Lines, at the expense of fellow discount operator Southwest Airlines (Saretsky declined to be interviewed). Southwest had signed a preliminary agreement with WestJet two years ago and was touted as an ideal partner given its similar low-cost business model (WestJet was originally modelled on Southwest). “Delta has a far more affluent, well-heeled passenger base than Southwest,” says Rick Erickson, an airline consultant who lives in Calgary. “That shows an example of where WestJet is going. It’s no longer a low-cost carrier. It has morphed itself into more of a mainline carrier of the sort that we’re familiar with.”
At Alaska, Saretsky was credited with helping transform a mostly regional player into a full-blown airline through the negotiation of alliance deals with some of the biggest names in the industry, including Continental, Delta, American, Qantas and Cathay Pacific. Tasneem Azim, an associate analyst at UBS Investment Research, estimated in a recent report that WestJet is currently in talks with as many as 70 potential partners worldwide, of which eight to 10 could become key code-sharing partners over the long term. Code sharing refers to the complex agreements that allow different airlines to coordinate schedules and sell tickets on each other’s flights.
Pages: 1 2