Westjet 2002 Annual Report Download - page 30

30 2002 WestJet Annual Report
resources), as well as senior manage-
ment salaries and benefits.
AIRCRAFT LEASING
An additional six 737-700s were leased
in 2002 for a total of 10 Next-
Generation aircraft financed through
operating leases, while only two of our
21 737-200s are under operating leases.
In 2002, WestJet renegotiated and
extended the lease terms on two 737-
200 aircraft resulting in their treatment
as capital leases, which were formerly
treated as operating leases in 2001. The
two 737-800 aircraft that WestJet leased
were for a short time period, and Boeing
compensated WestJet for this more
expensive bridge until more of our own
737-700s were delivered, which replaced
these aircraft. The compensation
received was offset against the 737-800
lease cost, leaving minimal net effect on
aircraft leasing expense for 2002.
Most of our $20.5 million increase in
aircraft leasing cost in 2002 relates to
the 737-700 additions. The 737-700s
that arrived in 2002 are the final six of
a total of 10 leased aircraft, all of which
are on 14-year operating leases. The
monthly lease cost of each aircraft is
approximately US $240,000 compared
with US $108,000 for our average
monthly 737-200 lease costs.
four flight attendants. Therefore, we
changed to four flight attendants on
every flight in order to provide consis-
tency for workforce scheduling and to
increase revenues during peak seasons
by selling the additional five seats on
our 737-200 fleet.
RESERVATIONS
Bookings on the Internet at westjet.com
increased from 40% at the end of 2001
to approximately 55% by the end of
2002, resulting in a 27% decrease in
reservations cost per ASM over 2001.
Our focus on technology has enhanced
our platform for e-commerce and has
improved our online service for both
the public and the travel agent com-
munity, and has resulted in this
substantial increase in Internet book-
ings year over year.
The cost savings derived from
Internet bookings, complemented by
improved techniques of workforce man-
agement, has enhanced productivity in
our Calgary call centre, resulting in a
25% decrease in this cost category.
FLIGHT OPERATIONS
AND INFLIGHT
These two expense categories relate to
the cost of WestJetters onboard our air-
craft – our pilots and flight attendants,
their salaries, wages, and training costs.
This category also includes the cost of
training new pilots and flight attendants
necessary for our growth. We also
include in this category the costs of the
supporting infrastructure for those
flight crews such as our dispatch, oper-
ations control, and crew-scheduling
functions.
In 2002, we achieved productivity
improvements by reducing per-unit
costs that are more fixed in nature. This
resulted in slight cost per ASM
improvements in flight operations;
however, the cost per ASM for inflight
increased slightly as WestJet started
crewing all flights with four flight atten-
dants in March.
In previous years, we crewed our
737-200 fleet with just three cabin per-
sonnel in order to comply with
Transport Canada’s regulation of one
flight attendant per 40 guests. Although
our 737-200 aircraft do have 125 seats,
with only three flight attendants on
board, we were only able to sell 120 of
these seats. The 737-700 aircraft have
140 seats, and as such are crewed with
Dollars & Sense
Gloria Tang keeps others in the People Department
motivated with her infectious attitude.
Our focus on technology...
has improved our online
service for both the
public and the travel
agent community...
Gilbert Leblanc multitasks in
Moncton as a CSA/SSA.