WestJet’s von Hoensbroech calls for national aviation strategy

WestJet is calling for a National Aviation Strategy to address mounting cost pressures and a growing market imbalance that is weakening Canadian aviation’s ability to absorb fuel-price shocks and sustain investment in connectivity.

Speaking to the Calgary Chamber of Commerce, WestJet CEO Alexis von Hoensbroech warned that rising fuel costs are pushing a system already stretched thin by cumulative charges and regulatory burden to the brink.

Said von Hoensbroech: “That is why the fuel story is not only about fuel. Fuel is bringing to light what was already there: Canada’s aviation system has very few shock absorbers left.’

Higher jet fuel prices add cost without additional ticket sales, while aircraft, crew, airport and navigation costs remain. Airlines can recover only part of the increase through fares, leaving thin margins to absorb the rest. Airport and passenger charges, passenger-protection and taxes and fees add pressure, compounded by changing demand and labour disruptions.

The airline argues that WestJet continued market interventions from the federal government by handing out direct financing to some airlines have unintentionally swayed market dynamics.

Self-funding companies are left challenged to compete against fares subsidized by public financing. While well-intentioned, this is now undermining the entire industry’s ability to recover the cost of fuel and restore financial and competitive health. No other country but Canada has chosen to do anything like this.

“We fundamentally believe that governments should not intervene in markets if they want a healthy and competitive industry,” said von Hoensbroech.

WestJet is proud of its three decades of commercially funded growth and absorption of pandemic-era losses without government funding.

The objective, WestJet argues, should be durable competition, not a permanent cycle of market intervention.

Canada ranks 105, out of 119 countries, in regard to the cost competitiveness of its airline industry.

Von Hoensbroech compared the burden of running an airline in Canada to the U.S.:

• Airport improvement fees are often $40 in Canada, while they are capped at $4.50 in the U.S.
• Canadian airlines pay for all air-navigation costs, while the U.S. has a subsidized model.
• Canadian airlines absorb sky-high passenger-rights costs, expensive emission offsets and some of the highest taxes and fees, unlike the U.S.
• Canada experiences repeated labour disruptions, while the U.S. hasn’t seen any labour disruption at an airline in decades and still employs among the best-paid airline workers in the world.
• Unlike the U.S., Canada provided minimal support during COVID-19, leaving depleted airline balance sheets behind.

WestJet’s boss said that: “We are asking Canada to be bold and strategic in developing a National Aviation Strategy that advances the essential nature of aviation and leads to a competitive, affordable and healthy airline industry.”

In his address, von Hoensbroech highlighted Calgary’s growth as a model for Canada. WestJet serves more than 100 non-stop destinations from the city — nearly twice its pre-pandemic total — connecting businesses, visitors and talent.

An October 2022 memorandum of understanding with the Government of Alberta formalized WestJet’s commitments to make Calgary its sole global connecting hub, base its widebody fleet there and expand capacity and routes, alongside government, airport and business partners’ commitments to support that investment.

That collaboration helped attract a Lufthansa Technik engine repair facility supported by a 15-year, multi-billion-dollar contract and a 126,000-square-foot CAE training Centre of Excellence with eight full-flight simulators and cabin trainers, strengthening Calgary’s aviation and aerospace ecosystem.

Said von Hoensbroech: “Calgary didn’t get here by changing one policy. We got here by dreaming big together and lining up every decision behind that goal. Canada can do the same.”

Go to www.westjet.com for more.