About six months after the breakdown of its marriage to Air Canada, Transat AT joined forces with WestJet with an agreement aimed at placing its network in complementarity with that of the Alberta carrier – the type of partnership at the heart of the new strategy of the Quebec tour operator.
This codeshare agreement, unveiled on Friday and which concerns transatlantic routes, will allow partners to offer connecting routes. They want to fill their planes more easily.
For example, WestJet could route travelers from Western Canada to Montreal-Trudeau Airport, where they will board an Air Transat plane to fly over the Atlantic – a niche that is one of the strengths of the Quebec company. The traveler will only have one ticket and their luggage will be checked in until arrival. The collaboration will also take place from Europe to Canada.
“This is probably one of the most interesting developments in their relationship,” said Chris Murray of Toronto-based ATB Capital over the phone. The deal offers both companies unique opportunities. ”
The analyst believes that the parent company of Air Transat will be able to increase its volume of passengers from the domestic market, which it is struggling to achieve at present.
With the exception of the announcement of a collaboration, the two partners did not offer many details. The deal is expected to be in effect “early in 2022” and the links will be announced later. In the transatlantic market, Transat AT and WestJet overlap on destinations such as Paris, London and Amsterdam.
Aviation expert and McGill University lecturer John Gradek believes that WestJet is particularly interested in routes offered by the Quebec tour operator to France, such as Nice, Marseille, Bordeaux, Nantes, Lyon and Toulouse, as well as in Spain, Portugal and Greece.
“Transat does not want to abandon Western Canada, but it is more profitable for the company to concentrate in Montreal and Toronto rather than sending its aircraft across the country,” believes Mr. Gradek.
The tour operator currently plans to operate 250 flights per week to 44 destinations next summer, including 24 to Europe and five to the United States.
More discussions
This is the first commercial alliance announced by Transat AT since the arrival of Annick Guérard at the helm last June. It had buried the hotel chain project in sunny destinations, at the heart of the company’s latest strategic plan, to focus on airline activities from eastern Canada.
The agreement with WestJet allows it to expand its network and eventually increase its passenger volume. The reverse applies in the case of the Calgary company.
“However, the volume of the domestic market remains insufficient for Transat with regard to its flights to sun destinations and its new routes in the United States,” warns Cameron Doerksen, of National Bank Financial, in a note.
The analyst also believes that in the longer term, WestJet could be tempted to reduce the scope of the partnership if the Alberta carrier wishes to develop its own international network.
A spokesperson for Transat AT, Christophe Hennebelle, recalled that the tour operator was also seeking to seal other alliances of the kind.
“What we are trying to do is to strengthen our network,” he explained in a telephone interview. We are having discussions in this direction. It is not at all excluded that there are others. ”
The partnership comes as competition intensifies in the domestic market, where Air Canada and WestJet accounted for about 80% of capacity before the COVID-19 pandemic.
In October, Doerksen estimated that the ambitions of carriers like Porter Airlines, Flair Airlines and Canada Jetlines would result in the addition of 20,000 seats. The analyst’s calculations were made before the arrival of Lynx Air, which is due to receive its first three planes in early 2022.
“Air Transat will see that its future is international and not on the domestic market,” says Mr. Gradek. She does well to place her pawns. ”
Transat AT is due to release its fourth quarter and full year results on December 9. On the Toronto Stock Exchange on Friday, the company’s stock rose 9 cents, or 1.8%, to $ 5.06.