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North America

WestJet to Defer on Renewing Delta Joint Venture

Edward Russell

April 24th, 2023

A WestJet plane taxis past Delta planes at LAX

Canada’s second airline, WestJet, plans to go it alone when it comes to U.S. flights and not renew its plans for a transborder joint venture with Delta Air Lines.

“We are happy with what we are doing, and we haven’t decided to take any decision on potentially refiling a joint venture,” WestJet CEO Alexis von Hoensbroech told Airline Weekly in an interview. “We are happy with what we have, and [will] take it from there.”

That’s a break from past WestJet management teams that had expressed plans to resubmit an application for antitrust immunity with Delta on U.S.-Canada flights. The airlines dropped their initial plans for a joint venture in November 2020 after the U.S. Department of Transportation made divesting eight slot pairs at New York’s LaGuardia airport — the total held by WestJet — a condition to approval. In their response, the airlines called the condition “onerous” in part because it provided no guarantee that the divested slots would be used to expand competition on LaGuardia-Canada routes.

WestJet’s decision not to get closer to Delta comes even as its main competitor, Air Canada, has forged closer ties with United Airlines. Air Canada and United implemented a joint venture late last year that the former’s Chief Financial Officer Amos Kazzaz said in March was already “surpassing expectations.” The two Star Alliance carriers are able to do everything WestJet and Delta cannot under their codeshare, including “the ability to price together, manage inventory and so forth” on U.S.-Canada routes, as Kazzaz put it.

WestJet and Delta’s lack of a joint venture puts them at a competitive disadvantage to Air Canada and United. Without antitrust immunity, they can only codeshare on U.S.-Canada flights and offer things like reciprocal loyalty benefits.

U.S.-Canada capacity is down 10 percent in the first six months of the year compared to 2019, according to Diio by Cirium schedules. Air Canada and United jointly fly nearly 58 percent of the market, while WestJet and its budget subsidiary Swoop operate 23 percent, and Delta 4 percent.

The lack of immunity is not stopping WestJet from aligning itself closer to Delta’s star. The carriers introduced reciprocal frequent flyer benefits in 2021. And, beginning in May, WestJet will launch four new routes to Delta hubs, including Calgary to Detroit, Edmonton to Minneapolis-St. Paul and Seattle, and Vancouver to Atlanta. The airline has also extended winter seasonal service between Winnipeg and Los Angeles, another Delta hub, to year-round status.

Delta operated the three routes to Edmonton and Vancouver until 2020 but has not resumed them, Diio data show.

WestJet is seeing “actually quite a lot of traffic” booking on the routes and others to Delta hubs, Von Hoensbroech said. The partnership “adds a lot of Delta passengers to the WestJet network, and a lot of WestJet passengers to the Delta network,” he continued. “So, it’s actually increasing on market shares, our collective market share. That’s really good.”

Air Canada and United are not ignoring WestJet’s transborder expansion. Ten days after the latter announced its first ever flights to Washington Dulles from Calgary in February, United unveiled its own Washington-Calgary nonstop, and Air Canada a Vancouver-Washington nonstop. The Star airlines also touted “increased” service between the U.S. and Western Canada where WestJet dominates.

Air Transat, startups Flair Airlines and Jetlines Canada, and Porter Airlines are also growing on U.S.-Canada routes. However, Jetlines, Transat, and Porter are — for now — focused on routes from Eastern Canada, including Montreal and Toronto, where WestJet has retrenched under a new strategic plan Von Hoensbroech unveiled nearly a year ago. Flair, however, does compete directly with WestJet on some routes from Western Canada.

“We at WestJet, we welcome competition,” Von Hoensbroech said. “In the end, everyone has to make sure that their various business models are successful, and we will see how this plays out. I can’t speak for the others, I can only speak for us and the business model that we are pursuing is actually very successful and it’s very robust.”

Edward Russell

April 24th, 2023

Tags: North America

Photo credit: A WestJet plane taxis past Delta planes at LAX Flickr / Sean Davis

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