WestJet to charge fee for first bag on some flights
Posted September 15, 2014 8:40 am.
This article is more than 5 years old.
VANCOUVER (NEWS1130) – The cost of flying is increasing for millions of Canadian passengers after WestJet Airlines announced it will start charging some economy fare customers a fee to check their first bag on flights within Canada and to the United States.
The new fee, ranging between $25 and $29.50 depending on provincial taxes, will apply to all new bookings made starting today for travel on WestJet and its regional airline Encore as of Oct. 29.
WestJet (TSX:WJA) said the new charge — to be paid at check-in or up to 24 hours online before travel — is expected to affect one in five of its travellers, or some 4.4 million passengers a year.
Different baggage allowances will apply to those in other fare classes or those using its new loyalty program, also launched today.
WestJet’s Flex fares avoid the first baggage charge, while Plus fares provide more leg room, boarding and two free checked bags. WestJet RBC World Elite MasterCard holders and up to eight guests travelling on the same reservation won’t pay the first checked bag fee.
Passengers flying to international destinations will continue to be able to check a first bag at no charge.
Baggage allowances for military personnel, infant and child equipment, mobility devices, and those travelling in connection with other airlines are not affected.
Despite the new baggage fee, the Calgary-based airline said its fares allow customers to purchase the services they want.
Air Canada (TSX:AC.B) is expected to follow suit and charge for first checked bags on flights within Canada, as it does for service to the United States. Porter Airlines began charging $25 for the first bag and $35 for a second bag checked on domestic travel as of May.
Walter Spracklin of RBC Capital Markets estimates the new baggage fee will generate more than $100 million in annual pre-tax operating profits (EBITDAR), representing $4.81 per share.
With the new charge, WestJet is catching up to other North American carriers which on average generate at least $20 per passenger in ancillary fees. The first bag fee is expected to add $6 to the $10 per passenger WestJet currently receives.
“The key is that WestJet continues to have opportunities to close this gap including on-flight media fees and other ancillary revenue opportunities,” he wrote in a report.
WestJet’s baggage announcement boosted the share prices of the country’s two largest airlines. On the Toronto Stock Exchange, WestJet’s shares hit an all-time high of $32.88, and were up $1.69 or 5.49 per cent at $32.48 in later morning trading. Air Canada’s shares were up 52 cents or 6.13 per cent at $9.
