Higher Airfares On the Way, WestJet CEO Warns

Rising fuel prices and WestJet’s first quarterly loss in 13 years could lead to higher airfares later this year, WestJet officials are warning.

Speaking to Canadian Press after Tuesday’s report of a $20.8 million loss in the second quarter of 2018, the company’s first quarterly loss after 52 profitable quarters, WestJet President and CEO Ed Sims said Canadians will face higher fares to make up for rising fuel costs.

“I think this is the way guests now need to think, is that airfares will be rising just as they did back in 2010, 2011 when we had the last major fare spike,” Sims said.

Those same rising fuel costs – more than 35 per cent in the second quarter of the year according to some estimates – could, of course, lead to higher prices from other Canadian carriers besides WestJet.

WestJet officials said rising fuel costs and the threat of a potential strike from unionized pilots in the second quarter were major factors in their profit streak coming to an end. The strike threat ended late in May when WestJet and the pilots’ union agreed to go to binding arbitration if they can’t negotiate a deal.

Having the pilots form a union was a blow to WestJet, which tries to keep a tight rein on costs. Then came word early Wednesday that WestJet cabin crew will now be represented by the Canadian Union of Public Employees (CUPE), a powerful union that will definitely push for higher wages and more benefits.

Adding 3,000 cabin crew to CUPE could certainly benefit employees, but it won’t do anything to help the company’s bottom line.

WestJet said the union ruling for cabin crew doesn’t include WestJet Encore or Swoop, their new, ultra-low-cost airline. The company also said it has until Aug. 10 to make submissions on which positions to exclude from the CUPE bargaining unit, Canadian Press reported.

“We are disappointed by this outcome,” Sims said in a statement. “But we respect the rights of our employees to choose their representation. We now shift our focus to working effectively with CUPE in the interest of success for WestJet as a whole.”

According to the CBC, a mass email sent by CUPE to flight attendants read: 'Congratulations, we did it!!!'

"This is an amazing step forward for WestJetters," the message said. "We knew that we could do it together. Now we begin the work of building our local and preparing to bargain our first collective agreement."