Westjet 2001 Annual Report Download - page 28

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were online. We expanded the distribution of
our product midway through 2001 through
our partnership with the worldwide
distribution system, Sabre, and by year’s end
5% of our sales originated through this
system. Travel agents have always been a
key part of WestJet’s distribution strategy,
and through the Sales Super Centre, Sabre,
and the Internet, they account for
approximately 38% of our bookings.
General and administration costs increased
16.7% on a per ASM basis. This category of
expenditure includes facilities costs,
professional fees, and insurance. Following
the events of September 11th, the aviation
insurers levied a charge to airlines of U.S.
$1.25 per passenger. This increased our
insurance cost in the fourth quarter by $1.9
million, and accounted for approximately one
third of our cost per ASM increase. WestJet,
like most airlines, has passed this increased
cost on to our guests in the form of a
surcharge, which is included in our revenues.
Year over year, our facilities costs for the new
hangar and the new call centre/headquarter
building in Calgary are much higher; however,
these are necessary components of
WestJet’s infrastructure to facilitate our
future growth.
In 2001, we spent an increased amount on
professional fees for our complaint and the
subsequent hearings by the Competition
Bureau – spending we deemed necessary to
be involved in the process of establishing
rules for effective competition in the airline
industry. In the fourth quarter of 2001, we
also retained our legal and tax advisors to
assist in our corporate reorganization of
WestJet Airlines Ltd. to create three wholly
owned subsidiary corporations, two of which
have formed an operating Partnership known
as ‘WestJet.’ The costs related to this
restructuring were necessary to create the
platform where risks and liability associated
with ownership of large dollar capital assets
such as aircraft, hangars, and flight simulators
were segregated, and as much as possible,
separated from the operation of the airline.
This is especially important for the future with
our planned purchases of the much larger
dollar 737-700 aircraft. There are also ancillary
tax benefits, which may accrue to WestJet in
future years as a result of this reorganization.
The wholly owned subsidiaries have been
consolidated in WestJet’s financial
statements.
MANAGEMENT’S DISCUSSION AND ANALYSIS
New Destination
YQQ - Comox, British Columbia
WestJet's second Vancouver Island destination came on board
March 3, 2001. The Comox Valley is a bustling part of Vancouver
Island, and the catchement area includes several major
communities. With six flights a week non-stop from Calgary,
Comox is quickly becoming a great getaway destination, with
golf and skiing year round. WestJet has great support from the
local community, and is pleased to bring the people of Comox an
all-jet, all-value travel option.