The Airline Industry: Westjet's Business Model
Clive Beddoe and three other entrepreneurs founded Westjet on February 29th 1996. They had only three airplanes and five destinations and 220 employees, Beddoe believes that “Just because you pay less for your flight, doesn’t mean you should get less”. With this motto, Westjet becomes one of the lowest operating costs and the most successful airline company nowadays.
In the early 1990s, the airline industry suffered a serious threat, caused by high fuel costs and a decline in air travel. At that time, only few airlines with low price of fare, such as Southwest airline, were able to make profit.(Hoover, 2010) Thus, the executives of Westjet decided to follow Southwest airline’s business model, which featured a low cost, high efficiency structure. To be highly efficient, Westjet limits itself to have less frequency of flight and services, compared to other competitors so it can pass the lower cost benefit to its users. Westjet used various methods to reduce costs. For instance, the company specialized in the Boeing 737 for the purpose of …show more content…
Westjet has kept focusing on niche markets and expanding slowly and carefully. Instead of providing luxury airplanes, Westjet pays attention to customer relationships. It uses customer experience system to collect information from every passenger’s experience in order to evaluate its current performance and to seek the rooms for further improvements. (ResponseTek) However, it is not an easy job to change the stereotype that the public generally believes low price service often comes with low quality. Therefore, it becomes the major weakness of Westjet when it plans to expand its international routes and attracts more business travelers. Making balance between the expansion and continued provide low price flight will be the main issues of Westjet in the
In the early 1990s, the airline industry suffered a serious threat, caused by high fuel costs and a decline in air travel. At that time, only few airlines with low price of fare, such as Southwest airline, were able to make profit.(Hoover, 2010) Thus, the executives of Westjet decided to follow Southwest airline’s business model, which featured a low cost, high efficiency structure. To be highly efficient, Westjet limits itself to have less frequency of flight and services, compared to other competitors so it can pass the lower cost benefit to its users. Westjet used various methods to reduce costs. For instance, the company specialized in the Boeing 737 for the purpose of …show more content…
Westjet has kept focusing on niche markets and expanding slowly and carefully. Instead of providing luxury airplanes, Westjet pays attention to customer relationships. It uses customer experience system to collect information from every passenger’s experience in order to evaluate its current performance and to seek the rooms for further improvements. (ResponseTek) However, it is not an easy job to change the stereotype that the public generally believes low price service often comes with low quality. Therefore, it becomes the major weakness of Westjet when it plans to expand its international routes and attracts more business travelers. Making balance between the expansion and continued provide low price flight will be the main issues of Westjet in the