WestJet Airlines is considering charging passengers for checked baggage in an effort to offset some of the cost pressures associated with the falling loonie.

CEO Gregg Saretsky said in a conference call Tuesday that no decision has been made, but that implementing a “fee for first checked bag” is a possibility.

He said he doubted WestJet would lose customers as the result of such a move, adding the majority of airlines that WestJet competes with in the U.S. already charge baggage fees and don’t appear to be suffering.

“All our competitors on trans-border are operating with load factors similar to ours. It’s hard to see that we’re getting any advantage in the market by not charging for a bag,” he said.

Saretsky cautioned WestJet would only institute such a measure if its booking system could be adapted to give certain customers exemptions. Many airlines that charge for baggage will waive the fee for frequent flyers and those who have purchased upgraded fares, and WestJet would want to do the same.

“If the IT team and our outside suppliers come back and can’t deliver a solution that is commercially feasible, reasonable, and competitive, we wouldn’t go forward,” Saretsky said.

Will you change your flying habits if WestJet charges for checked baggage?



Saretsky’s comments came the same day WestJet announced record 2013 earnings. The company’s full-year earnings were $268.7 million, up 11 per cent over the year before, while its fourth quarter net income was $67.8 million, up from $60.9 million in the same period in 2012.

WestJet will boost its quarterly dividend by 20 per cent to 12 cents per share, and stated that airline employees will receive record 2013 bonuses — the equivalent of approximately six weeks’ pay per employee — through the WestJet employee profit-share program.

But behind all the good news, WestJet is concerned about the weakness of the Canadian dollar. The company says that for each cent the Canadian dollar falls, it faces an additional $13 million in operating costs — $11 million of which is directly related to fuel purchases south of the border.

To offset the costs, the airline last week introduced a two per cent fare hike across the board, choosing to go that route rather than implement a “currency surcharge” like many of its rivals have done.

Saretsky said it wasn’t something WestJet wanted to do, but was necessary.

“We’re running WestJet like a business,” Saretsky said. “If it makes sense that we need to offset some of the input costs increases as a result of the change in foreign exchange, we’ll make whatever changes are smart for the business.”

WestJet also plans to announce a deal with an inflight Wi-Fi provider by the end of this month. Pending Transport Canada approval, the move would make WestJet the first airline to offer its passengers Internet connectivity over Canadian airspace.

Saretsky said its first planes would be outfitted with Wi-Fi connectivity by the end of the year, with a gradual rollout to follow. He said the Wi-Fi service could begin generating revenue for WestJet by 2015.

The tight margins in the airline industry mean companies are working hard to find ancillary sources of revenue, said independent aviation analyst Robert Kokonis of AirTrav Inc.