After announcing WestJet’s new baggage fee policy on Monday, September 15th, their stock value instantly skyrocketed. This rise was matched by Air Canada before they even followed suit.
WestJet’s stock activity from Sept 13th-19th, 2014. (Source: Yahoo! Finance)
Air Canada’s stock activity from Sept 13th-19th, 2014. (Source: Yahoo! Finance)
Comes to show how competitors in the market have a great influence on one another! As “change is inevitable and a leader must be willing to embrace change rather than resist it” (Ries and Trout), it only made sense for Canada’s largest full-service airline to keep up with their competitor and the rest of North America’s airline carriers.
While the concept faced much criticism by the CBC News Community who claims that WestJet’s plan will back fire, I doubt that this will happen. Air Canada and WestJet are the two biggest airline companies in Canada and while they’re head to head with competition, consumers are limited in their options. The baggage fee will be unavoidable for consumers wanting economy-class airfare.
While it is a clever marketing strategy, things sound a little suspicious…seems like price collusion doesn’t it?
Meanwhile, Southwest Airlines Co. will have higher ground by “outperform[ing] rivals with advantages they can preserve” (Harvard Business Review). They have decided to opt out of the policy and will be the more desirable choice when making travel plans.