Is WestJet’s New Calgary Hub Viable?

DALLAS - WestJet Airlines (WS) has announced plans for a major investment in its home base at Calgary International Airport (YYC). In a press release, the airline, in partnership with the Government of Alberta, has pledged to work to significantly advance aviation across the province.

According to the release, the airline will designate YYC as its global connecting hub and will base all of its intercontinental wide-body flights out of Calgary. WS also seeks to grow its network across Canada and strengthen its position in the leisure travel market.

The airline plans to double capacity out of Calgary before the end of the decade and will commit seven billion dollars of aircraft assets to the Calgary base, including its entire Boeing 787(B789) Dreamliner fleet augmented with some of its newly purchased Boeing 737-10 MAX aircraft.

This announcement fits nicely with WS' strategic plan, set out in June 2022, which advocates shifting and significantly growing resources to make WestJet the undisputed home-team carrier of Western Canada.

While the commitment of seven billion dollars of aircraft assets and the doubling of its capacity at Calgary is a bold move and fits the company’s strategic plan, will it be viable?  There may be a series of hurdles that WS will have to overcome if they are to be successful.

A Western Canadian Hub

Located in the southwest of the country, on the Canadian prairie, Calgary, with its population of 1.6 million people, offers a rather limited market upon which to draw. In fact, the entire province of Alberta has a population of only 4.5 million, and there is another international airport located in Edmonton, the provincial capital.

In terms of passenger traffic loads, building a hub in Calgary may prove challenging. Of Canada’s gateway airports, Calgary International Airport (YYC) ranks fourth in passenger volume.

According to Statistics Canada, in 2019, the last year before the COVID global pandemic for which complete statistics are available, the total number of passengers enplaned and deplaned at YYC was 17.2 million.

While YYC's numbers may be respectable, it faces stiff competition from Canada’s other gateway airports. Neighboring Vancouver International (YVR) enplaned and deplaned 25.7 million over the same period, Toronto’s Lester B. Pearson Airport (YYZ) saw 41.1 million, and Pierre Elliot Trudeau Airport (YUL) in Montreal handled 19.5 million.

Will Passenger Travel due East?

Given its location and passenger traffic numbers, committing the entire Dreamliner fleet to a Western Canadian hub at YYC could be risky. The airline currently operates a fleet of seven Boeing 787 Dreamliners, which it uses primarily for transatlantic services. It may be difficult to convince passengers in eastern Canada to fly west to YYC in order to connect to an eastbound transatlantic service.

The same may be true for returning passengers. With the multitude of transatlantic services available to Canadians, there may be fairly limited demand for outbound and inbound transatlantic connections at YYC.

Since its inception in 1994, WestJet has prided itself on being a low-cost carrier, and YYC has always been its home base. However, the airline landscape at YYC has changed considerably. In addition to a full slate of legacy carriers, new low-cost competitors have appeared on the scene.

Canadian JetLines (AU) Flair Airlines (F8) and Lynx Air (Y9) will all be competing in the same Southern Alberta market. Creating a hub at YYC will have its challenges.

Featured image: WestJet C-FZWS Boeing 737-700. Photo: Kochan Kleps/Airways