WestJet is known as a company that prides itself on its corporate culture. There is little doubt that Gregg Saretsky – president, CEO and owner – is a believer. He has proudly promoted the WestJet culture since he joined the company in 2009. Owner is a moniker he relishes as much as the other two titles on his business card.
One of Saretsky’s goals is to make WestJet one of the world’s top five airlines. Size has nothing to do with it, he said. Instead, he listed five key elements necessary to attain this goal: profitability; operational reliability; completion factor and on time performance; guest experience; and shareholder return on investment capital.
WestJet’s one-aircraft-type, low-cost, non-union structure has been incredibly successful over the past 17 years. A fleet of 100 Boeing 737-600, -700 and -800 series aircraft has delivered excellent reliability and lower operating costs for the airline.
During the last six months of 2012, the carrier broke all previous load-factor levels and recorded a single-day high of 57,464 passengers on Dec. 21. The company flew 17.4 million people in 2012, an increase of 8.6 per cent over 2011. Last year, WestJet had 100,000 applications for 1,500 jobs.
Big changes are on the horizon, however, as the company breaks out of its original mould by adding additional aircraft types to its business model. Canadian Skies sat down with Saretsky early in 2013 to discuss his plans for implementing Bombardier Q400 regional aircraft into WestJet.
WestJet Encore (Encore) is WestJet’s new regional airline. It will operate as a separate company with its own operating certificate and employees.
Just before Christmas, the airline advertised for pilots to crew its new Bombardier Q400 aircraft. In an uncommon move, salaries were also disclosed: captain, $68 per hour, and first officer, $38 per hour, with a guaranteed minimum of 70 hours per month.
We had a lot of applications, said Saretsky. In the first year, we are going to have seven aircraft, so we will need just less than 100 pilots. This call went out at a slow point in time when most people were away from work, but still we had far more applications than I expected. We wanted to be very up front with salaries, much like when WestJet started in 1996. We are starting Encore to be Canada’s low-cost regional airline service, serving communities that are dying for reasonably-priced air fares.
You have to have a cost structure that affords you the opportunity to offer low fares, Saretsky continued. We had no problem in 1996 attracting qualified pilots to fly 737s, and from early experience we will have no problem attracting pilots for these beautiful new Q400s. The unique aspect, and perhaps one of the reasons why we may be very successful in hiring pilots at lower wages, is we are guaranteeing them a career path into WestJet; their career track can lead them right onto the 737 or anything else we might fly.
If they sign up with Porter, or Jazz, or Central Mountain Air, or Bearskin, or anybody else, there is no flow-through guaranteed to any other jet flying in Canada, said Saretsky. Getting on with Jazz does not get you a job at Air Canada. Getting on with Encore guarantees you the eventual chance at a jet position with WestJet. This is a very attractive career path for young pilots.
WestJet does not have a union, and its corporate philosophy encourages employees to switch jobs within the company. One of the aspects that make us a stronger company is people can get experience in a multiplicity of work environments, explained Saretsky. We will take a 10-year CSA [customer service agent] and move them to the same wage on the flight attendant pay scale, at maybe the seven or eight year level. They don’t have to start on the first step. We do this in order to encourage our people to move from being flight attendants to an airport position, or from the call centre to the airport or to inflight. It is a disincentive if they have to take a huge pay cut.
WestJet is still finalizing its people policies at Encore and how they will mesh with the mainline operation. If we have, for instance, a three-year flight attendant at WestJet who wants to become a flight attendant at Encore, we haven’t yet finalized if they would start at the very first step or directly across, which is my preference. It’s more expensive for us to do what I am proposing, but I would like to facilitate the transfer of people between the two operations. We just haven’t finalized all the policies for how that will actually happen.
Another unique program will be the use of WestJet ambassadors – experienced pilots and flight attendants who will fly on their days off as supernumerary crew members on Encore flights. This will provide the new, generally less-experienced crews with operational and cultural mentoring. At the same time, a WestJet pilot riding in the Q400 jump seat will learn how the aircraft handles in comparison to the B-737.
We are trying to be completely transparent between the two organizations, emphasized Saretsky. This is one of the ways I feel we can facilitate the ˜two companies – one culture’ aspect. I think it would be great if we could get our flight attendants from both companies flying in each other’s aircraft, sharing stories and experiences to further meld the two companies and ensure barriers are broken down.
Uniforms will be very similar to the existing WestJet garb, with small differences to differentiate the companies.
Maintenance will also be separate between the two companies, but with shared responsibilities depending on the location. If Encore is flying in and out of a small airport where WestJet has no base, a local AME would be hired specifically to carry out maintenance on the Q400. If the airport has an established WestJet base, such as Winnipeg, with a mix of jets and turbo-props, the maintenance staff would be comprised of AMEs with both Q400 and B-737 endorsements and experience. At large bases such as Calgary, there will be separate maintenance facilities with no cross-over. AMEs who were hired with Q400 expertise will also have an opportunity to expand their qualifications with a B-737 course, depending where they are located.
A new 40,000-square-foot hangar is being planned for Calgary, just east of the existing hangar complex, and it will house two Q400s. The building will consume the existing purple parking lot, but WestJet has secured additional parking space just to the north. The main maintenance hangar in Calgary will be built in three phases, with a final capacity of six Q-400s, offices, maintenance shops, stores and a Q400 cabin trainer.
Culture is at the forefront at WestJet. We want to look at Encore as an incubator, to the extent that as we have gotten bigger we have become a little less entrepreneurial. There is a real sense of this spirit coming into Encore, as we are getting to build it from the ground up, and try out some new technologies, which is easier to do on a small fleet. We are also going to use new business practices and new technology in our operations control centre and crew scheduling system. If they work out, we can bring them over to WestJet, said Saretsky.
Under Transport Canada rules, operational control and crew scheduling must be separate. Encore requires a chief pilot, VP of technical services, VP of flight ops and other senior staff, but has temporarily filled those positions with WestJet employees. The permanent positions will be filled from within WestJet and from outside the company. The aircraft will be basic Q400s in WestJet colours equipped to conform with the low-cost concept, with stage lengths averaging 350 miles. Profit sharing will be combined with the entire WestJet corporate structure parent as a publically-listed corporation. All of the profits from both entities will go into one pool and be distributed equally amongst all WestJet and Encore employees. The owner performance portion will be separate for each entity. Encore will not have its own stock.
It is a very exciting time in the evolution of WestJet; there is a lot of excitement in Canadian communities, said Saretsky. Thirty-two communities have petitioned Encore for service, with the first aircraft arriving in June. The momentum and the excitement are building.
On Feb. 11, WestJet began announcing its first Encore routes with the new Q400s. At the time of writing, confirmed destinations included Fort St. John, Nanaimo, Victoria and Vancouver in B.C., as well as Calgary. More cities were expected to be announced over the coming months.
I am pretty confident that Canadians will not be disappointed with what they get with Encore, concluded Saretsky.