West­Jet priC­ing proBed

Calgary Herald - - FRONT PAGE - CHRISTO­PHER REYNOLDS

Flair Air­lines chief ex­ec­u­tive Jim Scott says preda­tory pric­ing and sched­ul­ing by ri­val West­Jet Air­lines Ltd. placed his bud­get car­rier in jeop­ardy, as a “David and Go­liath” bat­tle over the past six months has cul­mi­nated in an in­ves­ti­ga­tion by Canada’s com­pe­ti­tion watch­dog.

On Tues­day, the Fed­eral Court of Canada’s chief jus­tice or­dered a West­Jet vice-pres­i­dent to ap­pear be­fore the Com­pe­ti­tion Bu­reau to ex­plain the air­line’s tac­tics, the lat­est devel­op­ment in a probe launched in the fall.

Scott said West­Jet and low-cost off­shoot Swoop used anti-com­pet­i­tive prac­tices to crowd out Flair from sev­eral smaller mar­kets in­clud­ing Saska­toon, Thun­der Bay, Ont., and Kam­loops, B.C.

“When­ever we go into a mar­ket, West­Jet or Swoop will go into the same mar­ket with a lot of in­ven­tory, low-cost,” he said.

The ul­tra-low-cost car­rier lost about $10 mil­lion be­tween mid-June and mid- Oc­to­ber as a re­sult, he claimed. “This is a case of David and Go­liath. We’re here try­ing to pro­vide a ser­vice to Cana­di­ans, and the en­trenched in­cum­bent is ba­si­cally try­ing to keep a new player out of the mar­ket­place.

“If the Cana­dian govern­ment didn’t step in in such a timely man­ner, it would have been very dif­fi­cult for us to con­tinue,” Scott added. “It has to end.”

West­Jet said in an email it is “com­pil­ing in­for­ma­tion” in re­sponse to the probe.

The Fed­eral Court has or­dered the Cal­gary-based car­rier along with Swoop to pro­vide the Com­pe­ti­tion Bu­reau with de­tailed pric­ing and other records in­clud­ing emails.

In­terim com­pe­ti­tion com­mis­sioner Matthew Boswell states in a Dec. 5 mo­tion that he “has rea­son to believe that the par­ties have en­gaged in a con­duct that con­sti­tutes an abuse of dom­i­nant po­si­tion,” in vi­o­la­tion of the Com­pe­ti­tion Act.

He states that West­Jet and Swoop “are en­gag­ing in preda­tory anti-com­pet­i­tive prac­tices, more specif­i­cally preda­tory pric­ing, by sig­nif­i­cantly de­creas­ing the prices of their pas­sen­ger tick­ets to a level that ap­pears to be be­low their avoid­able costs,” lead­ing to less com­pe­ti­tion.

The ac­cu­sa­tion ap­plies to three routes that West­Jet and Swoop “sub­stan­tially or com­pletely con­trol” — Ed­mon­ton-Ab­bots­ford, Ed­mon­ton-Hamil­ton and Ed­mon­ton-Win­nipeg routes — ac­cord­ing to the com­mis­sioner.

Boswell notes that West­Jet cre­ated an Ed­mon­ton-Hamil­ton route only af­ter Flair did, and then ramped up ca­pac­ity via Swoop’s 14 flights per week ver­sus Flair’s seven. Swoop ad­ver­tised all-in­clu­sive fares for as low as $69 start­ing in June, com­pared to West­Jet’s $149 fares the sum­mer prior.

Flair’s CEO said his ri­val’s pric­ing and sched­ul­ing prac­tices forced his air­line to drop all ser­vice at the Hamil­ton air­port in Oc­to­ber. On flights be­tween Ed­mon­ton and Ab­bots­ford, mean­while, West­Jet flight of­fers start­ing at $39 cost Flair $2 mil­lion be­tween June 20 and Oct. 15, Scott said.

West­Jet vice-pres­i­dent of pric­ing and rev­enue man­age­ment John Weather­ill is slated to ap­pear be­fore the com­mis­sioner in 2019.

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