The Future of Air Travel WestJets Perspective on the Canadian Domestic Market

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The Future of Air TravelWestJets Perspective on
the Canadian Domestic Market

• What is the key driver of growth in domestic air
  travel?
• Price?
• What is preventing growth in the domestic market?
• What are the consequences?
• What are the possibilities?

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The WestJet Effect in EdmontonEnplaned Guests-
Edmonton
132 Domestic Increase over 1995
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The WestJet Effect in KelownaEnplaned Guests-
Kelowna
140 Increase over 1995
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Percent Change in Origin Destination
GuestsKelowna vs. Kamloops 1995-1999
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Percent Change in Origin Destination Guests
1995-1999 Calgary to
Statistics Canada data supplemented with
WestJet data
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Percent Change in Origin Destination Guests
1995-1999 Victoria to
Statistics Canada data supplemented with
WestJet data
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What is preventing growth?
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Flat Taxes Fees Added Since March 96 Calgary-
Edmonton Round Trip
157
100
Not including ATT/Nav GST
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Consequences?

• Less air travel in short haul markets leads to
  spiraling costs
• less travelers in the system
• costs/price goes up for the remaining travelers
  (ex YEG-YYC used to be the 2nd busiest route for
  YEG)
• further exacerbates problem for the system
• Short haul and small markets become uneconomic
  for larger aircraft small communities see small
  turbo-prop service where larger jet service used
  to be viable
• result is higher per seat costs, therefore higher
  prices, and less people traveling to/from smaller
  communities

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Possibilities?

• Tiered AIFs and tiered Security Tax
• Accountable airport authorities
• Elimination of airport rent
• All of these would help stimulate travel back to
  normal levels, after which air travel would
  resume growth based on the typical drivers
• economy
• interprovincial trade
• population growth

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Fleet Plan