11/20/2012 11:08 EST | Updated 01/20/2013 05:12 EST

WestJet passengers may get entertainment on their own tablets, phones

MONTREAL - WestJet Airlines plans to test a new entertainment system next year that will allow passengers to use their tablets, computers and smart phones to access in-flight television and connect to the Internet, CEO Gregg Saretsky said Tuesday.

A prototype is expected to fly some time in the first half of 2013. The new system could eventually lead the Calgary-based airline to do away with seat-back systems and shed weight from each aircraft.

"It will remove about 1,200 pounds (544 kilograms) from the aircraft and with the cost of fuel that's a significant cost savings to us," he told the Scotiabank transportation and aerospace conference.

He said the new system would improve the passenger experience because content would be beamed to personal devices giving passengers the ability to select what they watch.

The current system plays 24 live TV channels and four channels with stored content. However, the system has run into satellite problems because of problems when the planes travel outside Canadian airspace.

WestJet (TSX:WJA) began last summer to rent out pre-loaded tablets for about $10 on some flights as an interim solution.

The new permanent entertainment system will allow passengers to hook up their own devices to a network with about 1,000 movies, Internet connectivity and a few live channels for sports and business.

Saretsky said WestJet is still working through the business model, including potential charges. It also has to decide whether to have the entertainment system communicate with towers on the ground or a second satellite downlink. He said the airline has already had discussions with vendors.

At rival Air Canada's (TSX:AC.B), the airline's entertainment system operates independently in each aircraft and is available at each seat back, instead of offering live TV.

It was introduced in 2005 with the arrival of its new Embraer and Boeing 777 aircraft. The Montreal-based airline has said it was considering the introduction of Wi-Fi services and other changes as it improves the in-flight experience.

In May, it expanded its content by offering twice as many movies and more TV shows with up to 600 hours of free digital entertainment at each seat.

"Our complimentary seatback entertainment scores very high with customers," said spokeswoman Isabelle Arthur.

She said the in-flight service has won several awards and contributed to Air Canada being selected by an industry survey as the best airline in North America for three years in a row.

Meanwhile, Saretsky said the addition of premium economy seating will change the airline's egalitarian philosophy by giving some passengers refundable tickets, priority boarding, onboard amenities and more leg room.

He wouldn't say how much additional revenue WestJet expects to realize but pointed to U.S. carrier JetBlue, which experienced a $150 million bump from a similar change.

The additional leg room in premium economy will be accommodated by shrinking space in some economy rows by one inch.

WestJet's premium economy section will include 24 seats per plane once the fleet has been reconfigured. Density will increase on the 737-800 series jets only, which will go from 166 seats to 174, the company said.

Saretsky said focus groups that saw a prototype of the changes couldn't distinguish the difference and new seat technology with thinner seats will give passengers the illusion that space has actually increased.

WestJet is preparing for the launch next year of its regional service. It is also starting to look at whether to add widebody aircraft to its fleet of 100 Boeing 737s.

Meanwhile, Air Canada's chief financial officer told the conference that the airline's new low-cost carrier is part of the strategy to improve profits by reducing the 25 to 30 per cent cost advantage enjoyed by non-unionized WestJet.

"We don't expect to bridge that gap because we do run a different business model," Michael Rousseau said pointing to its two business classes.

"As long as we continue to have a RASM (revenue per available seat mile) premium versus what we consider to be the cost difference to run the business model that's different than our competitors we believe we're making the right choice."

On the Toronto Stock Exchange, WestJet's shares gained 28 cents at $18.86 in afternoon trading Tuesday. Air Canada's shares were up two cents at $1.86.