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WestJet CEO Saretsky expands on 2014 vision

To accommodate these changes, WestJet will early next year establish bases in Vancouver and Toronto, in addition to Calgary.

That decision has ruffled a few feathers within WestJet’s ranks,
however, and was largely to blame for its pilots rejecting a new labour
agreement earlier this month. It is also fueling unionization drives for
the pilots and the airline’s flight attendants.

The Financial Post’s Scott Deveau spoke to Gregg Saretsky,
WestJet’s chief executive, about the year ahead. This is an edited
version of that discussion.

Q What are the major changes ahead of you in 2014?

A Lots of things. We’ve made a few announcements in
the last few weeks. One is the  new service to Europe with our first
entry into that continent at Dublin next year. And the bigger news story
is perhaps the arrival of Encore into the East. We’ll be announcing
that schedule in January and you’ll see that we will be just moving a
little further East and then a little further East. Our annual general
meeting will be in Toronto next year. It’s the first time we’ve done an
AGM away from Calgary. You’ll  start to see Encore in Toronto by late
Spring. Most of next year will be concentrated on more than doubling the
size of Encore.

Q What was behind the decision to fly to Europe?

A We have an aircraft in our fleet that can make
transatlantic trips from Eastern Canada. Europe is closer to Atlantic
Canada than Hawaii is to Vancouver. So it isn’t such a stretch to think
that we shouldn’t be doing that. We’ve been flying to Hawaii for seven
years now and we’ve been making good money doing that. We think we can
do the same thing across the Atlantic from Atlantic Canada.

Q Is there a possibility of other European destinations next year?

A The pace will be driven by the financial results that
we experience. If we can make a buck, we’ll do it. Certainly that
aircraft has a lot more ability to serve a lot more points in Europe
than Ireland to Newfoundland. Not only from St. John’s but other points
in Atlantic Canada. So, the answer is yes. What I will tell you is our
advanced bookings have blown us away, that we’re far further ahead at
this time than we expected to be. There’s clearly a market there that
hasn’t been served and a demand at the right price that exceeds the
demand that was identified by other airlines.

Q If it’s doing so well, would it not lead to other markets being added by the summer?

A Yeah. One might conclude that. We have a deal  that
when we talk to the press we don’t announce things  until we tell
WestJetters or the market. So, I can’t give you a scoop on other
destinations until we’re ready to tell the market.

Q Would you also consider making a decision on a wide-body fleet in 2014.

A No decision in 2014, I wouldn’t expect. But these are
all building blocks. Taking Encore to Eastern Canada creates a platform
for a lot more connectivity that will one day be  used to fill
bigger-gauged aircraft.

Q WestJet’s pilots rejected their  labour agreement earlier this month. What do you think was behind that?

A [The concerns] were mostly unrelated to the
[tentative agreement]. They were mostly related to the change in the
business. For our pilots and flight attendants, the biggest change they
will face next year is moving to a multi-based system. We’re going to
have crews that are going to be domiciled in Toronto and Vancouver. So,
that means people who had previously lived in other parts of the country
are now being reassigned. They got to pick where they wanted to go:
Toronto, Calgary or Vancouver. But clearly we needed people in Toronto,
and so there were more spots open in Toronto than people who wanted
them. So, through that process, people have been forced to a Toronto
base. There was some discontent around that. People build their lives
and family around where they are going to be living, and all of a sudden
they’re like, “Hey, this doesn’t feel WestJetty because we’ve always
been Calgary-based and now we have a Toronto base and I don’t want to go
to Toronto.”

Q Why was it necessary?

A The reality is our operation in Toronto has grown.
When we started in 1996, we didn’t even serve the city. In fact, Clive
[Beddoe, WestJet’s chairman and one of its founders] said we would never
fly there. Today, it’s our biggest base of operation and we need to
have our people where our planes are. That’s Toronto. For our guests,
having our people stationed  where we’re flying from means that when
there are irregular operations, when we get in the thick of the winter
storms, we actually have crews to pull from where we’re experiencing
that disruption. Last winter when Toronto was getting pounded, all of
our crews were sitting in Calgary. Before we could do anything to
address extra sections from Toronto, because we had two days of
cancelled flights, we had to deadhead crews from Calgary to get them
there for flights the next day.

Q Do you think this decision is fueling a unionization drive at the airline?

A  I think unions happen when companies stop taking
care of their people, and I would say, while people may not like the
changes, they may not like the multi-base system, at the end of the day
we have to run the business and the business demands that we put our
resources where are guests are and that’s what we’ve done. Ultimately,
it’s the employees who will decide how well  they’re being taken care
of. But our people are very well compensated.

Q Do you think a union would present a threat to WestJet’s culture?

A Yeah. Absolutely. Union is we and they, and WestJet
is us. WestJet is all about a culture that collaborates to come to
agreements that are in the interest of all parties. When you get to a
union, it’s about how much I can extract. The more, the better, and I
think a lot of the shared interests go away in that environment. Even in
our industry, ask any Air Canada pilot or flight attendant how well
ACPA or CUPE has protected them from all the nasty things that have
happened to them. The only protection, ultimately, that anyone has is a
profitable business.

Q How do you quiet that unrest?

A It will take care of itself. Everything is new and
everyone is asking themselves what it will be like after January when
they’re working in a multi-base environment. We’re probably the only
airline that is not multi-based in the world, and that was more of a
function of the geography we served. It would be very difficult to fly
to Europe with all of our crews based in Calgary when those flights are
leaving to Europe from St. John’s. Once people get comfortable with
change, it’ll quiet down.

Q But it’s clear that this decision has ruffled a few feathers.

A Yeah. But people had their feathers ruffled when we
started charging for headsets five years ago and said it was the
beginning of the end. People didn’t like when we put live television in
the seatbacks because that wasn’t consistent with the low-cost model.
People didn’t like when we closed Hamilton and moved to Toronto’s
Pearson. We have a long history of having to morph our business model
that has always been met with objections by people who need some time to
understand what these changes will do for them. But in all this, we’ve
grown, people’s income has grown, and the market has liked what we’ve
done.

Q How do you prevent  WestJet from being seen as
an airline solely in pursuit of profit at the expense of your culture
and customer service?

A You hire the right people, and you train them well.
You give them all the tools to do their job. Hiring well means you
select people who have that in their DNA. And then the culture carries
us. As I look at all the things in 2013, and this whole “WestJet Christmas Miracle”
video that’s gone viral. That’s such a reflection of WestJet’s culture.
Not only have we had 14 million people who have viewed it around the
world and felt  warm and fuzzy from it, but we got almost 10,000
WestJetters who are saying they have never felt more proud than to see
the reflection of our culture in that video. The culture of caring and
you keep finding ways to reinforce that. The week before that, we had
the Disney Magic plane. You can’t look at the plane and not feel warm
and fuzzy from that too.

Q A cynic would say this is all just make-up hiding other issues?

A Tell me who doesn’t feel better when they have their face made up.