WestJet operational overview and business model

WestJet

Businesses throughout the world are often confronted with various legal issues in the course of carrying out business operations. Various laws have been created to protect consumers and companies from harm. When adherence to these laws does not take place there can be serious legal and business consequences. The purpose of this discussion is to describe the impact of the legal system, risk management, torts, and contracts on WestJet.

Westjet is a low costs commercial airline carrier and the company is a member of the commercial airline industry. Clive Beddoe and his partners founded WestJet in 1996 (WestJet). Beddoes and his partners created the airline on the premise that low coast airlines should provide service compatible with the higher costs airlines. At the company's inception they had only three aircraft and only service five destinations. In addition the company only had 220 WestJetter (WestJet)s. Today the company has grown tremendously and boasts 7,800 WestJetters and 88 Boeing Next-Generation aircraft (WestJet). The destinations the company travels to have also expanded with 71 destinations throughout Canada, the U.S., the Caribbean and Mexico (WestJet).

This particular industry was chosen because of the nature of the services that it provides fro consumers and the level of risk management that companies in the industry confront. WestJet was chosen because it is relatively young but it has grown substantially in the years since it was founded. As such the company has seen a gradual increase in the amount of risks that it has to handle.

Tort Risks

Tort law is defined as "A body of rights, obligations, and remedies that is applied by courts in civil proceedings to provide relief for persons who have suffered harm from the wrongful acts of others. The person who sustains injury or suffers pecuniary damage as the result of tortious conduct is known as the plaintiff, and the person who is responsible for inflicting the injury and incurs liability for the damage is known as the defendant or tortfeasor ("Tort Law")."

For WestJet and companies in the airline industry in general, Tort Risks are substantial. The very nature of the business, which is to transport passengers via aircraft to various destinations around the world, has an inherent danger. Obviously negligence on the part of the airline is the most common and the most catastrophic type of tort risk that WestJet faces. This negligence can materialize in many forms and most often involve failure to protect passengers from known or perceived risks. This is often the type of liability that an airline would face after a plane crash.

Since West Jet is an international carrier it is also subject to the laws set forth by the Warsaw Convention, which govern international air travel. The conventions asserts that "If the passenger's journey involves an ultimate destination or stop in a country other than the country of departure the Warsaw Convention may be applicable and the Convention governs and in most cases limits the liability of carriers for death or personal injury and in respect of loss of or damage to baggage." The Warsaw agreement also sets limitations on the amount of liability that a carrier can have if injury or death does occur. For instance,

"Passengers on a journey involving an ultimate destination or a stop in a country other than the country of origin are advised that the provisions of a treaty known as the Warsaw Convention may be applicable to the entire journey, including any portion entirely within the country of origin or destination. For such passengers on a journey to, from or with an agreed stopping place in the United States of America, the Convention and special contracts of carriage embodied in applicable tariffs provide that the liability of certain carriers, parties to such special contracts, for death of or personal injury to passengers is limited in most cases to proven damages not to exceed U.S.$75,000 per passenger, and that this liability up to such limit shall not depend on negligence on the part of the carrier. For such passengers travelling by carrier not a party to such special contracts or on a journey not to, from, or having an agreed stopping place in the United States of America, liability of the carrier for death or personal injury to passengers is limited in most cases to approximately U.S.$10,000 or U.S.$20,000 ("Warsaw Convention")."

The convention is important because it is designed to protect both passengers and airlines. It protects passengers because airlines are aware of the convention and it causes them to adhere more closely to safety protocol. In addition the airlines are protected because there are instances when accidents occur that are totally out of the control of the airline. In addition, the convention guarantees that there is some sort of limit to the liability that an airline will have. This might seem unfair and in some instances it is, but the reason for the cap is to guarantee that the industry will not collapse because of liability claims that are uncapped.

Another WestJet passenger's safety torts risks is, food poisoning that might lead to costumer sickness. Proper food preparation is extremely important because people can face serious health issues and even death as a result of acquiring food borne illnesses. With this understood food safety is a vitally important issue that the company must address as it pertains to risk management.

To prevent such risk to the costumers foods should be changed and inspected every each flight. If the food seems in any way expired or not good to serve it will immediately replaced. Second, passenger's property, which is very important to passenger privacy for example, passenger's luggage that is WestJet should be responsible for it.

Another form of negligence is customer privacy tort, which WestJet should secure the costumer privacy. Westjet's privacy policy, with their passengers to being "required by authorities" to disclose certain information, was nonetheless a warning to passengers. For passengers purchasing tickets from the airline privacy is extremely important. This is particularly true as it pertains to sensitive information such as credit card numbers and addresses. Privacy also involves exposing or sharing the purchasing habits of consumers. This is a form of data mining that is then utilized to advertise products to the consumers based on their buying habits. Many consumers do not want companies to know this information because it is private.

Another tort risk involves business-to-business tort such as passing off. Passing off is simply the act of representing ones goods as something that they are not. For WestJet this is not much of an issue because all tickets are purchased through the company and there is no avenue for tickets to be resold. One area that may create a passing off tort involves food that is served on the plane that is expired. This problem is solved rather easily by having the flight attendants check the food and beverages before they are served to ensure that nothing expired is given to passengers. Though this step is rather simple it is crucial that it is taken because it would only take one instance of serving expired food to severely damage the reputation of quality and customer service that WestJet has spent so long developing.

In regards to Business-to-Business tort it involves defaming either a competitor or the competitor's products. Defamation is the public utterance of a false statement of fact or opinion that harms another's reputation. There are several consequences associated with defamation are the suing of the company responsible and again the tarnishing of a company's reputation.

Westjet's reputation and customer loyalty could be destroyed if the public defamed their services that they give, for example, if so many of Westjet passengers complained about how the crew and staff are treating them while they are flying. Westjet can manage the tort of defamation either by qualified privilege, which is a defence to defamation based on the defamatory statement being relevant, without malice, and communicated only to a party who has a legitimate change in receiving it, or if the plaintiff can prove actual monetary loss as a result of the defamation. Again, I do not believe that there is much to be improved on the methods for managing the tort of defamation.

Each of the risks described can have severe consequences for WestJet these consequences might eventually effect the bottom line of the company. As it pertains to the issue of negligence, the company could face serious problems as it pertains to laws suits. Although the Warsaw convention establishes certain caps for what a family or an individual can be awarded in case of injury and death, WestJet may still have to pay considerably more than the cap established in the convention. This issue exists because there are certain practices that some airlines use to circumvent the limitations established by the convention which allow families to collect much larger awards.

"attempts by airlines to enter into private agreements to waive the liability limitations of the Warsaw Convention. These waiver agreements were a response to pressure from the public to eliminate the $75,000 damage limit imposed by the Convention, which is grossly inadequate when compared to typical wrongful death and/or personal injury awards given by American juries (Long, 2004)."

Another consequence of not properly managing risks is the destruction that liability claims and lawsuits have is it pertains to destroying WestJets reputation. Passengers want to know that they are safe when flying with an airline. Although some risks is assumed in any type of travel, companies who have a reputation of negligence are less likely to be able to attract passengers. This could cost the company a great deal of money and ultimate lead to the demise of the company.

In addition defaming the name or business reputation of another company could also be quite detrimental to WestJet. Although defamation is difficult to prove, once it is proven the penalties for engaging in defamation can be devastating to a company. In most cases once defamation is proven, the company that was defamed can receive a substantial monetary award. Additionally if WestJet participates in the defamation of another airline passengers may choose to purchase tickets from WestJet's competitors.

To manage these risks the airline has taken safety very seriously and adheres to all of the established protocol for having planes inspected. These inspections are needed because they ensure that the aircraft is safe and that it can be flown safety. In addition the company is constantly attempting to find ways to make air travel safer and therefore reducing the risk that something catastrophic will happen.

In addition the company has made a concerted effort to guarantee that food is prepared properly so that foods borne illnesses do not occur. In addition the airline has policies related to food handling and as an aspect of the company's policy all employees handling food must wash their hands prior to food handling. The company also pays careful attention to expiration dates and has an organized system whereby food products with the nearest expiration date are always used first. Additionally, when a flight attendant or other member of the staff sees that a product has expired they are to dispose of it immediately and not serve it to passengers.

The company is also committed to properly representing the products that it offers. The company's marketing department carefully details the services that the company provides and when advertising the department guarantees that the products and services are properly represented. In addition the company makes a concerted effort to ensure that the product and services offered are consistent with their description. This means that if a flight is scheduled to have one lay over and two meals this is what the passengers can expect and this is what they will receive. In doing this the company will be able to avoid the liability that would come if they misrepresented the products or services that they offered.

Although the company has been active in trying to reduce the change of having a plane crash, the events do happen even to carriers who have pristine records as it relates to accidents and crashes. If the company is sued it has enlisted a competent team of lawyers and WestJet has insurance that will compensate families in case of injury or death. Managing the risks in this way creates some protection for WestJet in case an accident does happen and families need to be compensated for injury or death.

The company is also adamant about not defaming other airlines. The company recognizes the serious issues that can come about if it were to face a defamation lawsuit. As such the company desires to simply offer passengers the best flight experience that it can for the lowest cost. In concentrating on what WestJet is accomplishing as it relates to the service provided to passengers, the company will not have time to defame the practices or policies of other airlines.

WestJet has entered into several types of contracts that decrease the risks associated with negligence. The major contracts that WestJet have are associated with the purchase and maintenance of their aircraft, employment contracts with various unions and employees, fuel contracts, travel agencies, and passengers. Contracts associated with the purchase of aircraft is important because some of the safety issues that some airlines have faced have to do with the age of their fleets. Contracts with aircraft makers such as Boeing guarantee that WestJet can get new aircraft at specific times so that the fleet can be kept in good condition. Contracts with maintenance companies are vitally important to decreasing risks because it ensures that the aircraft are working properly. Many accidents over the years involving airplanes could have been avoided had the aircraft had the proper maintenance. These contracts assist WestJet in mitigating risks associated with flying damaged or broken aircraft.