WestJet touts strong results from its efforts to expand corporate revenue 

Canada’s WestJet is continuing its quest to expand its corporate traveller base, and ended 2017 by posting double digit growth in corporate revenues for the final quarter of the year.

Previously, WestJet has concluded it was “severely under-indexed” among business travellers in Canada, estimating its share in that passenger segment was 23% to 24%.

WestJet posted a 14% gain in its managed corporate revenue year-on-year in 4Q22017 while its Premium Economy revenue increased 19%.

The airline touted other progress it has made in other aspects of its business traveller strategy including a 19% year-on-year increase in members of its rewards programme during the last three months of 2017. Near the end of 2017, WestJet calculated it had more than four million members in its loyalty programme.

WestJet also continues to gain traction with its RBC co-branded credit card. During 4Q2017 card holders grew 34% year-on-year and the compounded annual growth rate for the RBC card programme has been more than 40% since 2010.

CHART – WestJet’s co-branded RBC credit card has been growing at a compound annual growth rate of more than 40% since 2010Source: WestJet

“Our initiatives to win new business travellers have great traction, and are driving the positive trend in yields we are experiencing this quarter [4Q2017] and in our forward bookings,” WestJet CEO Gregg Saretsky recently concluded. The airline’s yields increased 0.9% during 4Q2017 and 1% for FY2017.

The company also continues to bolster its connectivity at its hubs, which should also help drive corporate revenue. Executives recently cited improvements to the regularity of service from Calgary to Vancouver and Edmonton and between Edmonton and Vancouver.

CHART – Toronto’s Lester B Pearson International Airport is the largest point in the WestJet network when ranked by network available seat kilometres (ASK)s, albeit Calgary International Airport remains the largest by raw departure capacitySource: CAPA – Centre for Aviation and OAG

“It’s improving our reach to premium travellers, from whom schedule is an absolute prerequisite and key criteria,” said WestJet EVP commercial Ed Sims. He concluded the number of connections over the airline’s key hubs of Toronto, Vancouver and Calgary are growing by double digits every month. Those hubs are WestJet’s top three bases measured by ASK deployment.

WestJet’s focus on expanding corporate revenue is one factor influencing the airline’s healthy revenue outlook for 1Q2018. The airline projects unit revenue growth of 4.5% to 5.5%, driven by gains in business travellers, a strengthening economy in Alberta, improvements in inventory management and the shift of the Easter holiday to 1Q from 2Q in 2017.