WestJet’s 787-9s could disrupt Air Canada |

Today’s announcement that WestJet will double its 787-9 fleet deserves context: the airline is still a minnow compared to Air Canada, but that may be its advantage. WestJet is a minnow This chart makes it clear that WestJet is the market minnow. But this isn't bad news. It means WestJet can use its growing 787-9s to cherry-pick routes that are the juiciest. [caption id="attachment_105301" align="aligncenter" width="580"] Skailark; AirInsight[/caption] Fight smarter Skailark's data enables us to identify the most lucrative markets that WestJet should focus on. Using their 2024 Network Profit model, we see the following. Green markers show profitable markets. Red markers are not profitable. [caption id="attachment_105305" align="aligncenter" width="640"] Skailark[/caption] The Skailark tool is impressive. Selecting one green market, Orlando-Toronto, Air Canada achieves its highest margin here using the 787-9 and 777-300ER. The 787-9 has a slightly better cost per ASM. The market has an 84% load factor. So we have a benchmark to beat. WestJet did not serve this market with twin-aisles. Air Canada's 787-9 seats 298 compared to 320 for WestJet. WestJet's 787-9 flies at a higher load factor (76% vs 71%) and, crucially, burns 6% less fuel. Nimbleness wins WestJet's being smaller is its advantage. Nibleness beats big. Economies of scale are a powerful weapon. But being nimble can offset this. We have seen this in the US. Southwest is far bigger than its LCC peer group. But its heft slows it down. More nimble competitors like Frontier have carved out markets. Large airlines come with higher costs, too. Summary WestJet's decision to double its 787-9 fleet signals its longer-range ambitions. Even with double the number, WestJet's 787-9 fleet will only be half that of Air Canada. To ensure it wins by being profitable, WestJet must cherry-pick markets. Its lower costs give it an edge. It will have to remain nimble to avoid direct responses from Air Canada. Air Canada's primary tool will be its network heft, as it's the most obvious one. If WestJet can avoid confrontation with Air Canada, it can thrive. The optimal solution for WestJet is to utilize its 787-9s to develop new markets, rather than solely focusing on Air Canada's most lucrative ones.

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