WestJet is a fast-growing Canadian discount airline, headquartered in Calgary. It started in 1996 with three used aircraft targeting short trips in Western Canada (between Calgary, Edmonton, Kelowna, Winnipeg, and Vancouver). Clive Beddoe, one of the founders of WestJet, got the idea for WestJet after having to pay exorbitant fares to Air Canada for his frequent flights between Calgary (his hometown) and Edmonton and Vancouver, where he owned plastic manufacturing plants. According to Beddoe, "The key to expanding the market and luring masses of people who don't travel and those who drive is to charge them bargain-basement fares." He called this market the "visiting friends and relatives" market. To be able to offer low prices, WestJet needed to run low-cost operations. WestJet studied successful discount airlines in the United States such as Southwest Airlines and copied most of their operations principles.

How could WestJet have planned for an operating cost per available seat mile approximately half that of Air Canada? The initial principles of WestJet's plan were:

Short-distance flights

Single class of passengers (no first or business class)

No seat assignment

Use only one type of airplane: Boeing 737

Fly to smaller cities

Recruit young, enthusiastic employees who salary is slightly lower than the industry average, but who receive profit-sharing bonuses and can participate in an employee share-purchase program

Emphasize a "fun and friendly culture" and empower the employees

Use equity financing and tight financial controls

Use paperless tickets (WestJet was the first airline in North America to do so)

No connecting flights and no baggage transfers

No frequent flyer programs

WestJet gradually and carefully added to its flights. In 2000, WestJet expanded eastward to Hamilton, then to Windsor, Halifax, Montreal, Gander, and St. John's, and in 2002, to Toronto. Now, WestJet has flights to over 100 Canadian, U.S., Mexican, Caribbean, and European cities. The sun destinations flights (WestJet Vacations) are mainly seasonal, offered in the winter when travel inside Canada dips.

In concert with increasing flights, WestJet has been gradually adding to its fleet of Boeing 737 planes, simultaneously replacing the old 737-200 (with 125 seats) with new next generation 737s in three sizes: 737-600 (119 seats), 737-700 (136 seats), and 737-800 (166 seats). Now it has over 115 next-generation 737 planes, which are 30 percent more fuel efficient. New planes can be operated close to 12 hours a day, versus 10 hours for the old planes. Clearly, their maintenance cost is lower than the old planes had. The new planes have leather seats and individual live seat-back satellite TV (WestJet Connect) for each passenger. Recently, the legroom in the first three rows of seating (call premium economy) has been expanded.

West Jet is not afraid to spend money on useful technology. An example is the installation of blended winglets on the end of the wings of new planes, which will increase lift and reduce drag, thus increasing fuel economy by 4 percent. The $600,000 investment per plane pays back in four years.

WestJet has entered into 42 interline partnerships with international airlines, 16 of which involve code sharing. It has upgraded its online booking system at the cost of $40 million.

WestJet has started a regional subsidiary called Encore that uses 34 Bombardier Q400 turboprops on over 200 daily flights across Canada. In addition, WestJet now flies internationally from St. John's to Dublin, Ireland, and from Halifax to Glasgow, Scotland. With its four used Boeing 767s it has daily flights from Calgary and Toronto to London, England. WestJet is planning to expand its long-distance flights - it has ordered 67 new Boeing 767s to be received over the next 10 years.

The expansion strategy has resulted in many changes in its initial operations principles: WestJet is now flying some medium and long-distance flights (e.g. to Hawaii and the United Kingdom), assigning seats, using three types of airplanes, flying to big cities, having connecting flights and baggage transfers, and having a frequent flyer reward program and a MasterCard.

WestJet now employs over 10,000 employees (still non-unionized but mostly shareholders) and has approximately 35 percent of the air travel market in Canada. WestJet's revenue-passenger-miles was 24 billion in 2016, whereas Air Canada's was 76 billion (including overseas flights). WestJet has one of the best on-time (within 15 minutes of the scheduled time) arrival and departure performances and is one of the most profitable airlines in North America. Its load factor (percentage of seats occupied) has been increasing from 70 percent in the late 1990s to 80-83 percent now, and its revenue is over $4.1 billion.

Question-

1.What market segment did WestJet originally compete it?