Conducting Business Ethically and Responsibly: Westjet

Topics: Airline, Southwest Airlines, Avianca Pages: 10 (3774 words) Published: January 27, 2013
Westjet came into the air travel business in 1996, offering fares up to 50% cheaper than there competition. They strived for an excellent relationship between the employee and the employer by creating an ecstatic, friendly work environment. Westjet is one of the most successful airlines as it did start out with the most start up capital any airline has ever experienced, as well as keeping their debt to a minimum. With such commercial success, Westjet was questioned with their actions towards Air Canada as one of the founders employed a travel agent to find out certain information about Air Canada which gave them a competitive advantage so they knew exactly what price would be a noticeable difference, which would attract more customers towards Westjet. In this paper we will talk about Westjets history, the travel/airline industry, services Westjet offers, there recent financial and stock information, employee strategy, any unethical practices Westjet might of taken part in, and their ethical performance. We chose to give Westjet an ethical rating of "B" due to the fact that they have given a lot back to communities, however; they have taken part in some shady practices over the years. WEST JET'S HISTORY

Clive Beddoe came to Western Canada from England as the president of Hanover Group where he made a fortune on developing commercial real-estate . In 1994 he went on to purchase Western Concord Manufacturing Ltd., which brought him into the flying business. It was here where Beddoe realized how expensive air travel was, as the companies executive air travel bills cost them approximately $ 3, 000 a week (Jarvis, 2006). Due to these extremely high costs, Beddoe made the business decision to purchase his own twin engine Cessna 421 and flew it himself which resulted in the company saving thousands on fuel costs and pilot fees. When the jet was not in use, he leased it to other companies via the local charter operation Morgan Air Services Co. Ltd. During this business venture Mr. Beddoe met the president of Morgan Air Services Co. Ltd., Tim Morgan and investors Don Bell and Mark Hill (Jarvis,2006). Together they came up with an idea to create a discount airline which eventually became West Jet. Mr. Hill wrote the original business plan, later becoming the director of strategic planning, while Morgan and Bell were named vice-presidents in charge of operations and customer service, and Mr. Beddoe was the chairman and chief executive officer because he was the one who came up with the original idea. The new company was named West Jet Airlines Ltd. in May 1995, as it accumulated 8.5 million dollars in capital with the help of David Greene who successfully ran a Salt Lake City based airline which he sold to Southwest Airlines in 1993 (Jarvis, 2006). David Greene agreed to provide 5% of the start up capital himself, and attracted investors such as Ronald Greene from Renaissance Energy Ltd. With the help of Research Capital Corp., West Jet had $20 million in stock with other private investors by January, 1996 (Jarvis, 2006). This made West Jet one of the most heavily capitalized airline start-up companies in decades. However; no scheduled airline had successfully competed against the market leaders, Air Canada and Canadian Airlines. West Jet had 2 major issues to overcome. First they had to deal with the fluctuations in fuel prices, which is the highest cost of an airline company. Second, Western Canada lacked large population centres therefore people questioned if there was room for them in the market place (Jarvis, 2006). West Jet continued to penetrate the market because there plan was to expand the market by lowering fares to a point where a new class of travellers could fly. Mr. Beddoe called it the "Visiting Friends and Relatives model" as it would compete with cars and buses as well as planes. Stock purchase and profit sharing plans helped provide motivation, and the company used a casual...
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