| December 11, 2009 | | JRShaw School of Business
JR340 Business and it’s EnvironmentDoug KennedyBy:Andrew Hamilton, section 51 |

[West Jet: An analysis of Non-Market Strategies] | |

Contents History 3 Nonmarket Environment 3 Public perception 4 Private politics 5 Public politics 6 Court or regulatory scrutiny 7 Integrated Strategy 8 Leaders’ Responsibility 9 Conclusion 10 Bibliography 12

History
West Jet was founded in 1996 by 5 entrepreneurs who believed they could succeed as a low-cost carrier in the western Canadian market. With a fleet of only three Boeing 737 aircraft and just over two-hundred employees, West Jet served Calgary, Edmonton, Kelowna, Vancouver and Winnipeg. West Jet went public in 1999, allowing for greater access to capital and potential for growth. In 2000 market share was expanded to eastern Canada. By 2004 West Jet began to access the U.S. and in 2006 started international flights. West Jet continues to grow into new markets and is now in position to become a major competitor among international carriers. The low cost “no-frills” service and corporate culture have been the praise of West Jet success. To use market share as a measure, West Jet began with none and now has approximately 33% Canadian market share with plans for this to increase.
Nonmarket Environment
West Jet has developed a very strong market position in a short period of time. They certainly have a strong marketing strategy and low-cost structure that promotes strong margins. The non-market environment can nullify any market advantages such as price and product attributes, so it is crucial to the long term success of an organization to identify and act on issues. Here I have identified some non-market issues that WestJet either currently faces or has faced in the past, I will briefly analyze each to determine WestJet’s non-market strategy.
Public perception
Public perception is extremely important in a consumer driven industry such as air travel. Clients are primarily concerned with and very sensitive to safety, cost and convenience. In this industry, an incident that is not dealt with correctly can destroy the livelihood of any firm. West Jet has worked to develop a strong public perception of its safety standards, and is proud to have a near perfect incident history, it is praised in the industry for this.
Interests
Safety is a concern for everyone, passengers want to ensure they arrive at their destination without incident and West Jet is interested in minimizing liabilities. Employees, such as stewardess, depend on the safety of the airline on a day-to-day basis. Management wants to keep employees and passengers happy and safe; therefore safety is a big concern for them.
Institutions
Transport Canada is the main government administrative agency that oversees the transport industry, by introducing legislation as well as investigating airlines and air navigation services. Any time there is an incident regarding an aircraft in Canada; Transport Canada is responsible for investigating the event. West Jet uses the Transport Canada incident reports as part of an ongoing effort to improve safety through prevention.
Information
Since it is impossible for consumers to ensure the safety of the aircraft they fly in it is the responsibility of West Jet to know if there are any problems. Whether it is maintenance, air emergency, unruly passenger situations or any number of difficulties it is imperative that the executive team is aware. Applying a strong corporate culture that encourages team participation and communication has allowed for West Jet to react quickly and effectively to safety concerns.

Private politics
Green business practise is a must in modern markets. West Jet is very aware of the need to address environmental issues. There are two primary benefits; the positive public relations will help potential customers when making carrier choice and costs can be reduced by being more efficient. It is easy to see why West Jet is a contributor to environmental standards for the industry.
Interests
The environment is a concern for everyone, we all share the same world; both in the sense that we all contribute to pollution and it is our responsibility to try to improve our habits to maintain the environment. Environmentalists may target corporations that pollute too much.
Institutions
The International Civil Aviation Organization (ICAO) and Transport Canada work with the industry to reduce emissions. West Jet is also a member of American Society for Testing and Materials International (ASTM), which is a voluntary organization that helps share information on new standards development.
Information
The amount of actual environmental impact is nearly impossible to determine. The airlines are privy to the information crucial to calculating real pollution. Staying informed by being a member of ASTM allows WestJet access to the data that helps them operate at high efficiency standards.
Public politics
The industry advocacy group that speaks for West Jet, among other carriers, is lobbying in Ottawa to stop a new bill of rights for passengers. While West Jet and others believe that the concept of the bill is fundamentally sound, there are certain details that must be addressed. There are supposed safety concerns with the new legislation, but critics say these claims are unfounded.
Interests
This new legislation addresses problems such as flight cancellations, delays and overbooking; allowing passengers recourse. Lobbyists for airlines like WestJet oppose this particular bill of rights, as there are fears that they will be unfairly punished for circumstances beyond their control. In the House of Commons, politicians are using this issue as an opportunity to play politics; to gain popularity or ruin others.
Institutions
The primary venue for this issue is certainly the House of Commons. Legislation can greatly affect how WestJet operates; participating in a lobbyist group provides access to this arena. Politicians have their own agenda, but can be convinced to assist in passing or stopping legislation.
Information
The proposed Canadian bill of passenger rights is essentially in response to similar legislation in the E.U. Some MPs point to a Flight Rights campaign that was intended to help educate passengers on their rights. It has been shown that only $3640 has been spent on the initiative, information is only available on the internet. Airline lobbyist John Mckenna testified that passenger and crew safety could be undermined because of rushed pilots if monetary penalties are placed for flight delays. It was also mentioned that sometimes the events are caused by agencies which airlines have no control over such as Canadian Border Services Agency and other airport authorities.
Court or regulatory scrutiny
In 2004 Air Canada filed a lawsuit against West Jet alleging corporate espionage. In a countersuit WestJet, they dismiss the case as an attempt to blemish reputation and accused Air Canada of stealing confidential information. WestJet was certainly interested in avoided paying the $220 million damage claim, not to mention the potential public relations fiasco that could ensue from the claims.
Interests
WestJet needed to ensure that its reputation remained intact and that legal costs weren’t too high. Air Canada felt threatened by the activities of WestJet, they felt as though the information that was accessed was causing harm and gave unfair competitive advantage to WestJet.
Institutions
This case was taken to federal court, although most of the “action” played out between the lawyers outside of court, and the both parties came to an agreement. AirCanada also hired private investigators. This story was big in the news media, it appears that it was just as important for WestJet to maintain a positive image.
Information
As with any other litigation, this case was not one sided, and much of the information was very subjective. WestJet was accused of, and admitted to, logging on to an AirCanada employee website that granted them load data (number of passengers per flight). It was alleged that because of this information WestJet was able to strategically price and time flights in certain markets to undercut AirCanada. In an attempt (some say successful) to undermine the case against them, WestJet alleged that AirCanada also committed espionage in stealing shredded documents from an executives home.
Integrated Strategy
WestJet joined the Canadian retail airline market with a very strong marketing perspective, they were (and are) the low cost, no frills carrier that offers great customer service. WestJet has continued to add value-added products to its line up such as Web check-in, online flight tracker and of course service to more markets. They have had a focus on growing by constantly adding new markets to its line up. Certainly the strong marketing of WestJet can be attributed to much of the success of this airline, however the non-market strategies, like the strong organizational culture, affiliation with industry associations and use of lobbyist and lawyers has ensured that WestJet will not only maintain but improve current market share and profitability. When there are incidents involving WestJet, public relations is almost non-existent, WestJet demonstrates in the media that they work with Transport Canada. They not only follow direction given but also implement feedback to improve how Transport Canada deals with incidents. As a consumer, knowing this as a consumer gives me a sense of security. Concerning the environment, WestJet plays a big role in creating and implementing its own standards, for others to follow or improve upon. In an industry that relies heavily on energy consumption it is imperative that WestJet continues researching and communicating with the scientific and avionic communities to stay an industry leader in emissions.
Leaders’ Responsibility
The executive team at WestJet seems to be very aware of both the market and non-market environments in which they operate. The corporate culture in the organization is praised by industry groups, both in the fact that employees tend to be happy, and the fact that the culture allows the business to operate very effectively in the environment. WestJet has a new CEO as of 2007, Sean Durfy, who worked his way up the organization. There is a strong case for corporate integrity, original founders are still board members. WestJet works with industry lobby groups to improve the environment they operate in, such is the case with the passenger bill of rights. The executives want to make sure that regulations pertaining to their industry are relevant, while encouraging appropriate behaviour. In the case of corporate espionage, it was one of the executives who perpetrated the acts, he resigned. The CEO of the time, Clive Beddoe, offered to step down, disavowing any knowledge but taking responsibility. The executive team knew that if that case was not handled appropriately there could be serious repercussions, legally and from market sentiment. It is a fair argument that much of the success of WestJet can be attributed to the executive team making informed decisions, using any resources available to them; lawyers, lobbyist, employees, industry groups and government organizations
Conclusion
WestJet is an example of a company that is getting it right, in terms of market and non-market strategies. It is certain that other organizations in the industry use the same non-market techniques (they in fact use the same lobbyist). In order for WestJet to compete with the virtual monopoly of AirCanada, it was imperative that they adopt such strong strategies, in other words to swim with the sharks they needed the killer instinct. To use market share as a measure bodes well for WestJet in terms of success, from 0 to 33% of Canadian market share in just over 10 years. As WestJet grows into a larger, more international carrier, these and new non-market environment issues will continue to be a challenge. If WestJet continues with this trend we can expect to see this once small regional carrier become one the world’s leading airlines.

Bibliography
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