Air Canada Adds New York Flights to Fend Off WestJet Threat

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Business Week
Frederic Tomesco

(Bloomberg) -- Air Canada will add flights to New York City to ward off discount competition as WestJet Airlines Ltd. prepares to enter the biggest U.S. aviation market.

Three daily non-stop flights between Toronto’s Pearson International Airport and New York’s John F. Kennedy International Airport will start May 3, the Montreal-based carrier said today in a statement. Air Canada will also increase to hourly its flights to LaGuardia Airport from Toronto, Canada’s biggest city and financial hub.

WestJet bid $17.6 million for eight slot pairs at LaGuardia in November, saying it planned to start offering “frequent, year-round service” to New York at a later date. The Calgary- based company is considering a plan to start a short-haul airline that would use turboprop aircraft and could begin operating as soon as next year.

“Clearly Air Canada is going to want to defend its share on the New York route,” Cam Doerksen, an analyst at National Bank Financial Inc. in Montreal, said in a telephone interview. “They are looking to remain competitive against a new competitor.” He rates the shares “sector perform.”

Air Canada will operate as many as 38 non-stop return flights a day between Canada and New York City starting in May, according to the statement. Air Canada is the only carrier from that nation to serve all three New York-area airports.

Connecting to Asia

The flights are timed so customers can connect at the carrier’s Toronto hub to Asian destinations such as Tokyo, Shanghai and Beijing, Ben Smith, executive vice president and chief commercial officer at Air Canada, said in today’s statement.

Vito Culmone, WestJet’s chief financial officer, said this month that the carrier may use the short-haul unit to boost service to New York City and attract business travelers. Gaining access to LaGuardia “dovetails nicely with potential regional,” he said.

WestJet will announce details of its LaGuardia service on Jan. 27, Jennifer Sanford, a spokeswoman for the company, said today in an e-mailed message.

Short-haul flights within Canada and on U.S. transborder routes represent an annual market of about C$2 billion ($1.98 billion), Culmone said last week. Costs at WestJet are 25 percent to 30 percent lower than at Air Canada, Doerksen said in a Jan. 23 note to investors.

WestJet probably will start serving New York City with its current fleet of Boeing Co. 737 jets and won’t wait to receive the turboprops it would use on the proposed short-haul unit, Doerksen said in the interview.

“My impression is WestJet will start the service to LaGuardia with the 737,” he said. “The question is whether they will operate that service solely out of Toronto, or whether other cities will be involved.”

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