WestJet, fresh off a year of record profits, is close to unveiling new inflight entertainment (IFE) and Wi-Fi connectivity plans and expects to begin rolling out the services by year’s end.
President and CEO Gregg Saretsky says the carrier “will be in a position to make an announcement” by the end of February, after WestJet employees preview the carrier’s IFE choice. “There is a lot of detail we want to work together with our team on before we go public on that announcement,” he told analysts on a Feb. 4 earnings call.
Meanwhile, the carrier is planning a “measured” rollout of its Wi-Fi offering starting sometime in the second half of the year, says EVP Sales & Marketing Bob Cummings, suggesting a multi-tiered approach that will include at least some period of free connectivity. “When we do announce [Wi-Fi], we’ll go through the business model with respect to what’s paid and what’s free and what that looks like,” he adds.
WestJet currently offers live TV within Canada and tablet rentals on some longer flights. It does not offer Wi-Fi.
The carrier hasn’t discussed potential suppliers, but one possibility is Gogo, which announced last month that its Canadian air-to-ground network was being rolled out during the first quarter. The network will allow customers “seamless” inflight Internet services both within Canada and on flights between the U.S. and Canada – both of which would obviously appeal to WestJet.
Saretsky says that certain variables, such as certification time frames, mean that some options on the new system – most likely IFE elements – could be rolled out before connectivity is available.
Regardless, the carrier isn’t projecting any significant revenue bumps from the initiatives until 2015.
Meanwhile, the airline plans to leverage the IFE and connectivity upgrade process to help manage capacity. WestJet plans to grow seat miles by 4%-6% in 2014, in part by taking seven new-800s between June and December while disposing of five 737-700s – all in the September-December time frame – as part of a previously announced deal with (DAILY, Aug. 30, 2013).
It also renewed one leased 737 and now plans to renew leases on two more that were earmarked for return this year. CFO Vito Culmone says the carrier negotiated “favorable” renewal rates and plans to use the two additional aircraft as spares during the IFE and connectivity upgrades, which are projected to last through 2017.
“As we move into the installation period and on to [an] inflight entertainment and connectivity solution, we will be parking planes to facilitate those conversions,” Saretsky says. “So we have a lever that we can pull with respect to managing capacity subject to what we are seeing for demand in the market.”
WestJet reported a new annual record net profit of C$268.7 million ($251.2 million) in 2013, up 10.9% from 2012. Full-year revenue increased 6.9% year-over-year to C$3.7 billion, while operating expenses totaled C$3.3 billion, also up 6.9%. Operating profits were C$400 million, up 6.3%. Capacity increased 8.6%.