Battle of the brands: Air Canada vs. West Jet

With Jetsgo out of the picture, Air Canada and West Jet duke it out for air supremacy.

It's no surprise that Michel Leblanc's upstart airline Jetsgo ranked first in the worst-managed brand category in our 2005 survey. After all, the low-cost carrier, once known for its chipper staff, bright green happy-face logo and incredible deals (a buck to fly to Florida? wahoo!) grounded its entire fleet in early March, leaving thousands of Canadian travellers stranded and furious. Then Jetsgo Corp. declared bankruptcy in mid-May. You can't get much worse than that.

Leblanc's bit player is now out of the picture. What's emerged from Jetsgo's very public flame-out, however, is an increasingly intense brand battle between Canada's remaining large commercial carriers. WestJet still ranks among Canada's Top 10 best-managed brands, but this year only 13% of those surveyed heaped on the high praise, compared with 18% last year. Meanwhile, Air Canada continues to have a sizable number of folks slagging it–but 16 percentage points fewer than in 2004, when it was under bankruptcy protection. Our branding survey reveals that, over the past 12 months, some significant changes in public perception regarding the two carriers have occurred. “Air Canada has repositioned itself very successfully,” says Ricardo Pilon, professor of airline management and marketing at the John Molson School of Business at Concordia University. It used to be a David and Goliath story, Pilon explains, in which “everybody felt sorry for WestJet, and Air Canada was always perceived as the big bad boy.” But not anymore.

Air Canada has spent the past couple of years slimming down, attempting to shake its image as a lumbering corporate giant burdened with too much infrastructure, a labyrinthine bureaucracy and uncompetitive fares. The Montreal-based airline has transformed itself into a more consumer-friendly entity, first and foremost by revamping its pricing; fares are now on par with WestJet and other low-cost carriers. “It took a while,” says George Reeleder, senior director of marketing for Air Canada, “but I think we broke through and got the message out there that we have a competitive cost structure.”

Air Canada has also adopted new uniforms and a new light blue colour scheme, introduced to the public with the help of superstar Céline Dion last October. Other innovations–such as self-serve check-in kiosks, curbside baggage drops, the ability to print your boarding pass at home off the web, and discounts for buying in bulk–are also earning Air Canada more respect. The proof: 14 consecutive months of record load factors.

While Air Canada has been busy cutting costs, Calgary-based WestJet has been scaling up, transitioning from a low-cost local carrier to a truly national airline. The expansion has not been entirely smooth. Competing in the east, where the WestJet brand is still relatively unknown, the airline is increasingly targeting saturated markets that Air Canada is eager to protect, such as the Toronto-Montreal route. In 2004, WestJet recorded a loss for the first time in five years. The first quarter of 2005 hasn't been any kinder.

In March, Sean Durfy, WestJet's newly appointed executive vice-president of marketing and sales, made the decision to abandon Calgary-based advertising firm Creative Intelligence Agency that the airline had relied on for years, and hired Toronto-based Taxi, an agency known for pushing the status quo. “I suspect,” says Pilon, “they are re-strategizing how they want to position the airline.”

WestJet's entrepreneurial spirit originally won it lots of passengers. But so did its cheap fares. Now that Air Canada offers the same prices, the veteran is hoping to edge out the challenger by highlighting its heritage. “We are Canada's flag carrier,” boasts Reeleder, “and we have a very important place in the Canadian psyche.” But WestJet's success proves that Canadians like ambitious newcomers, too. The last thing either airline wants is a fare war, a battle of corporate egos that destroys profit margins. Instead, expect to see this fight play out in the marketing and advertising arenas, as the two carriers duke it out for the hearts–and dollars–of Canadian travellers.