Tuesday, October 05, 2010

WestJet Boeing 737 at Palm Springs Internation... WestJet, American may strike code deal
American Airlines has emerged as a possible U.S. partner for WestJet Airlines Ltd. after the Calgary-based carrier struck its first code-share deal Monday with Cathay Pacific Airways Ltd.

Scott Deveau, Financial Post · Monday, Oct. 4, 2010

American Airlines has emerged as a possible U.S. partner for WestJet Airlines Ltd. after the Calgary-based carrier struck its first code-share deal Monday with Cathay Pacific Airways Ltd.
While the scope of the Cathay Pacific deal is somewhat limited, opening up six Canadian cities to the Hong Kong carrier in addition to Toronto and Vancouver, it is a significant milestone for WestJet, which holds future partnerships as the cornerstone of its growth strategy.

Such code-share agreements allow airlines to seamlessly pass passengers and luggage onto the each other’s planes using one ticket. In addition to Cathay Pacific, WestJet has laid the groundwork for a similar deal with Air France-KLM, and signed another memorandum of understanding with British Airways PLC.

But finding a U.S. partner has proven as problematic as it is pivotal in gaining access to the estimated $2-billion market such code-share deals have in Canada.

“It’s important to us to continue our expansion into the U.S., because our focus so far has been primarily [to leisure destinations],” said Hugh Dunleavy, WestJet’s executive vice-president of strategy and planning.

“With a U.S. partner you’d be able to look at more year-round destinations, which are probably a combination of both business or leisure, or just business. For that, you need a strong U.S. partner,” Mr. Dunleavy added.

If WestJet and American Airlines strike a deal, it will be the first major partnership in this country for the U.S. giant since its bid to bankroll the consolidation of the Canadian airline industry failed 10 years ago.

While WestJet is content to let its partners in Asia, Europe and Latin Ameria handle marketing and sales under their brands, with a U.S. partner WestJet would be looking to play a more active role, including selling tickets under its own name to destinations in its partner’s network, Mr. Dunleavy said.

In 2008, WestJet jumped the gun in announcing a preliminary deal with Southwest Airlines Co.
But earlier this year, Gregg Saretsky, WestJet’s chief executive, said that deal had been shelved and that WestJet was considering a tie-up with Delta Air Lines Inc. instead due to the inadequacies of Southwest’s reservation system.

The Delta deal has since hit some turbulence, however, after U.S. regulators rejected a planned slot swap between Delta and US Airways Inc. that would have granted five landing slots to WestJet at New York’s LaGuardia airport as an offshoot.

“Unless we can get some good slots, either working with a partner to share slots or to gain access to them, we’re not going to go down that path,” Mr. Dunleavy said. “We still keep our contacts going with Delta, but this is a relationship that they have to sort out, and we’ll see where that goes.”

Meanwhile, early talks have begun with AMR Corp., the parent company of American Airlines, he said.

Both U.S. airlines are not part of Air Canada’s Star Alliance, and as such, have essentially been left without the possiblity of a Canadian partner until WestJet implemented its new SabreSonic reservation system late last year.

“Delta is a potential partner, being a key player in Skyteam, and the same could be said of American [Airlines] as a part of Oneworld,” Mr. Dunleavy said. “With the consolidation going on in the U.S., Continental and United are now combined. There aren’t too many big airlines that are left that are not aligned with [the Star Alliance].”

WestJet has held talks with 70 airlines worldwide about potential code-shares, he said, but won’t implement another one until early 2011.

The goal is to have “three or four” in place by the end of next year, Mr. Dunleavy said.
scdeveau@nationalpost.comRead more:

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