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Friday, March 26, 2010

New WestJet chief eyes global flight path
Scott Deveau, Financial Post

Canwest News Service
When Gregg Saretsky was just out of university, working in the financial sector in the early 1980s, the woman who would eventually become his wife asked him what his ambition in life was. Without missing a beat, the Montreal native, who put himself through university as a flight attendant for Air Canada, told her, "I want to run my own airline."

His wife, Deb, reminded him of that conversation last Monday, 25 years after he returned to the business, when the board of WestJet Airlines Ltd. unexpectedly appointed Mr. Saretsky, 50, its new chief executive less than a year after joining the airline and only five months after becoming its head of operations.

While his rapid rise at Canada's No. 2 carrier is notable for his own career, it's also a pivotal horse-for-the-course transition that WestJet's board hopes will finally allow the carrier to shed the stagnant low-cost model it adopted from Southwest Airlines 14 years ago to become a true global player.

"It's a great opportunity for me, to be in the seat I have, to really help write the next chapter in our story," Mr. Saretsky said in an interview Friday.

Paramount in making WestJet a major player in the North American market will be the successful implementation of several strategic partnerships with international carriers. These so-called code-share deals have been made possible after the rather rocky transition to WestJet's new SabreSonic reservation system in recent months. The problems implementing the new system contributed to the unexpected departure of Sean Durfy as its chief executive effective April 1.

Code-share deals will allow WestJet to seamlessly pass its passengers onto the planes of its international partners, and help fill its domestic flights with other airlines' customers.

WestJet has been laying the groundwork for such a deal with Air France/KLM and China Airlines. Before it fully implements those deals, WestJet appears to be prioritizing a partnership with a U.S. carrier due to the high amount of traffic crossing the border, Mr. Saretsky said.

Fitting WestJet's new ambition, Mr. Saretsky said it is now more likely it will first partner with U.S. legacy carrier Delta Air Lines rather than the expected deal with Southwest Airlines. While WestJet has often strived to be the Canadian version of Southwest, the U.S. low-cost carrier lacks a reservation system capable of code-sharing.

A deal with Delta has been made all the more probable now that WestJet is also lined up to receive five daily slots at New York's LaGuardia airport as an offshoot of a slot swap between Delta and U.S. Airways. The deal is subject to regulatory approval. (FTB note: regulatory approval is available for sale, just contact your congressman and Senators and everyone elses and tell them you're willing to buy it or to pay to keep someone else from getting it.)

The slots would allow WestJet to reinstate its Toronto-New York service after a five-year hiatus, and a deal with Delta could see it expand to Atlanta, Boston, and Washington, D.C., all locations where the Atlanta-based carrier has a strong presence, Mr. Saretsky said.

"[Delta] has an interest. They have a capability. We like the Southwest partnership, but they've signalled to us that they're not going to be ready," Mr. Saretsky said.

"We're going to move on and tee things up with another partner."

Analysts estimate that such code-share arrangements could contribute up to $1-billion in annual revenue for WestJet in the years ahead. They will also be pivotal, in addition to its recently announced loyalty and credit card program, in reaching its goal of capturing 50% of the domestic market by 2013, up from an estimated 37% last year.

Mr. Saretsky, unlike his predecessor, has ample experience implementing these complex deals. During his 10 years as the head of marketing at Alaska Airlines, Mr. Saretsky helped usher in deals with American Airlines, Delta, Continental, Qantas, Air France/KLM, British Airways, LAN Chile, and Cathay Pacific, several of which have expressed an interest in code-sharing with WestJet.

In addition to Air France and Delta, WestJet has a memorandum of understanding signed with British Airways, and Cathay Pacific has also expressed interest in a deal.

Fortunately, WestJet is in a position to pick and choose who it partners with because of Air Canada's ties to the Star Alliance.

"If you're not part of the Star Alliance, Air Canada's alliance, you're pretty much shut out of the country," Mr. Saretsky said. "There have been a long list of carriers that have come to us seeking access to the Canadian market."

scdeveau@nationalpost