Express Yourself

About anything and everything on the planet

March 4, 2009

WestJet Airlines: Critical Success Factors – From Marketing Point of View

WestJet Airlines, Canada’s leading airline was founded by Clive Beddoe, Tim Morgan, Donald Bell and Mark Hill. This group of entrepreneurs embarked the idea of creating an airline using the low cost model that was already in practice by Southwest airlines. Since its journey started in 1996, WestJet has become nothing but a success story. There are many success factors contributed to WestJet’s success. However for this article we will concentrate on three critical success factors for WestJet.

Very early in there start up, WestJet have identified the attractiveness of the opportunities in travel business. We can see that in light of “seven domains of attractive opportunities” model. When WestJet airline tried to find market attractiveness, they found out that there are buyers for cheap air travel options. Industry attractiveness came in light when they tried to researched and found out that they can offer cheaper price for air fare and they will have buyers as their guest to purchase it. They then targeted people who visit friends and family and later they went on identifying more attractiveness in to business travelers, into north American travelers and in the future they may move to global travelers. Their sustainable advantage would be one of their critical success factors as well which is extra ordinary corporate culture of brining out the best in people. Their mission is to provide extra ordinary environment to fly in. They are also connected up and down there value chain that is why they have made there employees the owners who are also directly interacting with the guests by empowering them with the authority to exercise some sort of decision making to allow guest experience more enjoyable. All these components come together to play a vital role in WestJet’s ability to execute the critical success factors.

It is very clear from all the research, articles, press releases, interviews with local WestJet employees is that the three main critical success factors from WestJet airline are the employees, then the customers and then the logistics.

Employees are also the owners. That is the message that WestJet embarks corporate wide. “The entire environment is conducive to bringing out the best in people, it is the culture that creates the passion to succeed,” said Clive Beddoe, previous CEO of WestJet Airlines. Westjet Culture is such that they believe if employees are happy, the customers will be too, and keeping customers happy means return on investment for the investors. This kind of culture was coming from top down in the organization. It’s executives are not afraid to roll up their sleeves and get to work literally. Mr. Beddoe is famous for helping clean the plans that he flies in. Pilots also do there part by helping cleaners help the plane. There is no traditional job description in place keeping the option to do almost anything employees want to do. Siobhan Vinish, director of public relations and communicates, described the culture at WestJet as a very relaxed, fun, youthful environment in which creativity and innovation are rewarded. For example in the call where people take bookings, the representatives had the authority to override fares, make decisions not to charge fees for cancellations and bookings, and waive fees for unaccompanied minors, on a case-by-case basis. Senior management trusted the front line employees and trained them to understand the ramifications of each decisions they are allowed to make. Additional training and coaching was provide for anyone who was lacking in making the right decision. Pilots were considered as managers and were encouraged to think with the executive team to run WestJet Airlines. As a result of this, they have implemented a cost saving idea which is saving significant fuel by taxiing with one engine instead of two. All these ideas were great, however if employees are not seeing the perceived value of becoming a part of WestJet they would not enjoy it, as a result WestJet came with stock purchasing plan and profit sharing plan. This highly motivated employees to work hard and go the extra mile to make the guests happy which in turn made them loyal and returning clients. Their critical success factor also includes employees managing themselves instead of being managed by the top management. “What occurred to me is we had to overcome the inherent difficulty of trying to manage people and to ho hone the process into one where people wanted to manage themselves,” said Beddoe. Thus they made the company managed from the bottom up. Mr. Vinish pitched in by saying, “The flight attendants are asked to serve customers in a caring, positive and cheerful manner; how they do that, however, is left up to them. Resource books are provided for them to refer to, and there is a team of people who continually updates these books.” WestJet executives will not try to direct instead persuade its employees. All these steps were taken to make the employees happy who are the first and foremost crucial success factor for WestJet.

Low fare model is another crucial success factor for WestJet. Since its start, the founders of WestJet realized that there was an opportunity to satisfy the need in Western Canada for affordable air travel coupled with good service by starting an airline. From MMRE1 we know that, WestJet Airlines, interestingly enough, is competing with family vehicles. As they grow they are competing with other travel agents such as expedia.com or Travelocity.com or any other travel agents people book a packaged vacations. Very recently they are competing to capture the business of people who travel for business. To capture and make them loyal customers, WestJet is relying on low cost fare model. There are few factors that came into play to maintain this low fare model. Some of them are:

a. Lower staff cost. Pilot salaries are 75% of the industry average where staff salaries are 95% of industry median. The employees are staying with them because of their profit sharing model. WestJet uses 75 employees to support one of its aircraft where, its competition Air Canada uses 180.

b. Maintenance and training costs are low for WestJet because they are using one type of airplanes which is Boeing 737. As a result stocking cost of parts and training employees are significantly lower than that of it’s competition Air Canada.

c. WestJet implement direct consumer phone bookings and electronic ticketing system. This also includes online booking, self checking at kiosks and online check in. Ticketing costs and distribution overhead is lower as a result of this.

d. Efficient Flight schedule and service model. They use one destination to another destination model rather than a web and spokes model. Higher infrastructure and logistical costs are involved with web and spokes model which accumulates people in hub cities to get them to the spokes, which are smaller destinations. WestJet’s destination one to destination two helps them keep the cost lower which in turns helps them keeping the price of tickets lower for it’s customers.

Every business sector has a price leader, who however, can be challenged by new comers introducing artificial low cost to gain market share. This practice is not sustainable over the long run. WestJet’s critics were critical about this factor when they first started their journey. The truly successful business are those who has internal and superior low cost practice and strategy in place. West Jet seems to do just that to save money at the end for its customers.

How WestJet is managing its strategies are also very crucial to it’s success. Simple thing, such as seat selection option for a small fee, allowing guest to choose where they will be seated at the time of booking, or up to 24 hours before their scheduled flight is very popular among its loyal customers. Bob Cummings, WestJet’s executive-vice President of guest experience and marketing, said, “We know that this will be very popular for families and groups who want to make sure they can sit together, especially on long flights. It’s also going to be a big hit with guests who like to stretch their legs in the emergency exit row.” The strategy of managing same type of aircraft to keep the low structure model is also one of the success stories of WestJet. They also have spent over $500,000 for roughly 6.000 hotel rooms on behalf of stranded travelers during the holiday season in December of 2008. They also have given away 25000 meal vouchers valued at $220,000 and also have chartered planes to help restore its flight schedule that was hampered by bad weather. They reason they have done it is to gain customer loyalty. They showed that they care as a result the have secured repeated customers. It is a small price to pay for some repeated customers who in turn will be doing advertising of their good deeds to their friends and families bringing more business to WestJet. Competent people are at the helm of WestJet which is a crucial success factor as well. When Sean Durfy, president of WestJet was asked, “How do you differ in your approaches?” He answered, “We’re very complementary. Clive is more entrepreneurial. I’ve been a professional leader and manager for my career, so it’s a bit different there. He’d say I’m more process-driven. That’s a good mix when you get a larger company, because you never want to lose your entrepreneurial spirit and drive. At the same time, man, you’ve got to put good processes in place so they’re repeatable and people understand them as you get bigger, or you get yourself in trouble.”

In summary, we can see that WestJet’s crucial success factors are its employees who are happy which in turn makes the customers happy, it has sustainable low cost structure, and its execution of strategies.

Similar Posts:

Incoming search terms for the article:

Post a Comment