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WestJet confirms deal is in-the-making

Posted by Jeff on December 9, 2010 at 8:46 PM

The Calgary-based airline is now one step closer to becoming an international player. What it means for travellers


Lauren Krugel, The Canadian Press, On Wednesday December 8, 2010, 4:26 pm EST

By Lauren Krugel, The Canadian Press

CALGARY - An interline deal between WestJet Airlines Ltd.'s and British Airways brings the Calgary-based budget carrier one step closer toward becoming a bona fide international player, an industry analyst said Wednesday.

The agreement will allow the airlines to work together on baggage handling and other tasks, making it easier for travellers to transfer from one carrier to the other.

Interline pacts often pave the way for code-share deals, which enable airlines to sell seats on one another's planes using the same two-digit code.

WestJet (TSX:WJA) spokesman Robert Palmer confirmed an interline agreement has been signed with British Airways, but that the sale of seats won't begin until early next year.

WestJet's fleet of Boeing 737s does not have the range for overseas flights, so interline and code-share deals are a key way for the company to expand its market reach.

But Rick Erickson, of RP Erickson & Associates, said he's convinced WestJet is setting the stage to eventually leap onto the international scene itself.

Such a move would involve a departure from its single-aircraft strategy by adding larger planes to its fleet, likely Boeing 787s.

"I do think that WestJet is going international. It's probably 30 months off, 36 months off before they make the announcement. And it could be another year or two after that before they actually do it. But I do think that they are going to go international," Erickson said.

Aside from the revenue boost, another reason WestJet is chasing alliances with other airlines is to gain experience in the international arena, he added.

WestJet has code-share deals with Air France-KLM and Hong Kong-based Cathay Pacific, and an interline pact with American Airlines .

With British Airways now in the mix, there aren't many more pieces WestJet needs to complete the puzzle, Erickson said.

"When you look at the world travel map as to where Canadians tend to want to get to, they've pretty much got it covered off now," he said.

WestJet is reportedly in talks with Emirates Airline about a potential deal, which would "certainly close off one of the last secondary markets," Erickson said.

WestJet shares rose about 1.4 per cent, or 20 cents, to $14.70 on the Toronto Stock Exchange Wednesday.

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