WestJet and Air Canada Announce Bag Fees. Is JetBlue Next?


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Last week WestJet, the low cost carrier that is affectionately known as ‘the Canadian Southwest (Airlines)’ said it would begin charging $25 for the first checked bag. Global News reported that Air Canada responded a couple days later with their own $25 first checked bag fee…

“We’re matching the market. We took a couple days to think through it,” said Mike Rousseau, Air Canada’s head of finance, said at a conference on Thursday.

Global News went on to report that CIBC transportation stock analysts say this new fee could generate as much as $70 million annually for WestJet and $37 million annually for Air Canada.

Meanwhile, last week south of the US-Canadian border, JetBlue announced that current President Robin Hayes will be the airline’s next CEO, replacing CEO Dave Barger on Feb. 16 2015, the day after Barger’s contract ends.

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This is significant because of the speculation that incoming CEO Hayes might be more likely to announce a checked bag fee AND increase the number of seats per aircarft.

“I think the market wanted JetBlue to be more aggressive in their fee structure and adding seats to their planes as a means of increasing their financial performance,” Joseph Denardi, an analyst with Stifel Nicolaus & Co told Bloomberg. “There was a view that Dave wasn’t necessarily willing to take the steps to get there.”

Bottom Line

In July we asked Will JetBlue Start Charging Checked Baggage Fees?  We may have overlooked the fact that our airlines transporting our ‘neighbors to the north’ didn’t charge bag fees … until now.  All of these announcements last week seem like a logical progression towards JetBlue adding a bag fee.  Stay tuned, because maybe the next question we will be asking is Will JetBlue Add Seats To It’s Fleet?  What do you think?

 

 

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