WestJet takes flyer on pricing; Airline plans premium seating for those willing to pay for more space

WestJet Airlines Ltd. is creating a new premium economy-class section, hoping to lure more business travellers who are willing to pay more for a little bit more legroom.

But to do that, the airline will have to shrink the legroom of the remaining seats in the rest of the airplane.

It's not a new concept. It was pioneered by Virgin Atlantic in 1992, and adopted by other airlines in Europe, Asia and the United States.

President and CEO Gregg Saretsky thinks business travellers as well as affluent vacationers will be willing to pay more for personal space during their flight, as well as other amenities such as priority boarding.

WestJet won't reveal what those amenities are, though officials say they are looking at complimentary meals and drinks, allowing tickets to be refundable or easily changed, and possibly someday Wi-Fi Internet service if it becomes feasible,

Starting this month, the airline is revamping all coach seats in its Boeing 737 fleet to set aside four rows at the front of every plane for this premium economy class.

These seats will have a 36-inch pitch - the distance from any point on one seat to the exact same point on the seat in front of or behind it.

Most WestJet seats are currently 31 or 32 inches in its older planes, but in the new Boeing 737-800 series, they range from 33 to 34 inches. On those newer planes, WestJet will add eight additional seats in regular economy, where the pitch will be cut to 31 or 32 inches.

"I don't expect our guests to feel any impact from that reconfiguration, but we'll certainly see the revenue benefit," Saretsky said, adding its new planes on order will eventually have thinner seats, which should offer more legroom.

Porter Airlines, which caters to the business crowd, says its seats on the Bombardier Q-400 turboprop have a 34-inch pitch.

It also has four premium seats at the two front rows, for which passengers can pay an additional $15 to $30, depending on the fare paid.

On an Air Canada Airbus A320, which is comparable in size to a Boeing 737, the economy seat pitch is mostly 31 to 33 inches. In executive class, the pitch is 38 inches.

"There's a value proposition to sit yourself in a space that has a 36-inch pitch, roughly equivalent to what the other guy is flying in a business cabin, but to pay less than 50 per cent (of the fare)," said Saretsky during a conference call Wednesday.

"We think it is a value proposition that is pretty hard to resist," he added. "Fifty-per-cent cost savings - I hope every CFO in the country is listening."

While WestJet isn't offering specific details on pricing, Saretsky said he gets the 50-per-cent cost savings by looking at WestJet's prices on a longer-haul route and a business-class ticket on Air Canada for the same route, and uses the midpoint of the two.

WestJet reported strong second-quarter results Wednesday with net profits of $42.5 million, or 31 cents per diluted share, up from $25.6 million, or 18 cents per diluted share, reported in the second quarter of 2011.

It said it is boosting its dividend in September to 8 cents per common share, up from 6 cents.

The airline is also starting a low-cost regional airline next year, aimed at smaller markets currently not served by WestJet. Premium economy class will not be available on these mostly short-haul runs.

WestJet has firmed up orders for 20 Q400 Bombardier turboprop planes for the regional airline, with options for an additional 25. It will take seven planes next year, with the remainder to come in stages until 2016.

Executives have visited 30 airports, which they are considering to start operations.

WestJet expects to announce specific destinations in January, when it will start accepting bookings for the latter half of 2013.

It has also begun hiring for the regional airline, which will have as many as 1,800 employees.

WestJet shares closed down 59 cents on Wednesday at $15.99