The Calgary-based airline says demand remains strong so far.
"However, we are concerned that a prolonged period of low oil prices could have an impact on our energy driven economy which in turn could in the long term impact travel expenditures," spokesman Robert Palmer said Wednesday after the airline reported its December and 2014 traffic numbers.
Analysts expect airlines to cut ticket prices as fuel costs drop, which should spur overall passenger demand and offset the negative impact of a lower Canadian dollar on operating costs. But, they also fear WestJet's greater exposure to Alberta and its oil-fuelled economy could see it to lose ground against Air Canada.
Analyst David Tyerman of Canaccord Genuity said the Western Canadian economy is a "wild card" for WestJet.
"There's a fear I think out there — and I would share it — that WestJet will be more negatively impacted by the lower oil prices because of lower demand in Western Canada," he said in an interview Wednesday.
Shares of WestJet (TSX:WJA) have underperformed Air Canada (TSX:AC) in the last few months.
Air Canada's shares have gained 74 per cent since mid-October to reach $11.75 on Wednesday, while WestJet's shares are up 20 per cent over the same period to $32.38.
While many factors may have contributed to the stock gains, Tyerman said the December and fourth-quarter traffic data may reinforce investor concerns and could be an early indicator of the relative performance differences between the two airlines.
Robert Kokonis, president of airline consulting firm AirTrav Inc., said it's premature for any large impact on WestJet's demand in Western Canada, but the airline could take a hit if large energy projects are disrupted over the next 12 months.
Small airlines in B.C. and Alberta that service the energy sector would feel it more quickly, he added.
WestJet said its passenger traffic measured as revenue passenger miles last year was up 6.3 per cent from 2013 as capacity at its main airline and new Encore service measured as available seat miles grew by 6.7 per cent. The airline said its load factor dipped slightly to 81.4 per cent in 2014, a decline of 0.3 percentage points.
In December, WestJet's load factor was 80.9 per cent, down 0.8 points from a year earlier, while capacity was up 6.1 per cent and traffic increased 5.1 per cent.
Kokonis said Air Canada's strong results, especially on flights to the U.S. demonstrate the benefits of a resurgent economy south of the border.
Traffic between Canada and the United States was up 16.2 per cent in December and 13.1 per cent for the year.
Overall, Air Canada passenger traffic was up 8.5 per cent last year compared with 2013, while capacity increased 7.8 per cent. Air Canada's 2014 load factor was a record 83.4 per cent, up from 82.8 per cent in 2013.
In December, Air Canada's traffic was up 8.3 per cent from a year before, while capacity grew by 8.5 per cent. The airline's load factor in December was 82.6 per cent — down from 82.7 per cent a year earlier.
Follow @RossMarowits on Twitter