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Competition Body Seeks Tribunal to Force Carrier off Eastern Routes
Canada's Competition Bureau on March 5 culminated eight months of investigation and accused Air Canada (AC) of potential predatory behavior, and announced plans to ask the Competition Tribunal to ban Air Canada from what it perceives as anti-competitive actions against WestJet (WJA) and CanJet.
Competition Commissioner Konrad von Finckenstein told World Airline News that based on information the bureau received from all three carriers, CanJet was losing money on the routes in question. And the one route disputed by WestJet, Toronto-Moncton, was the least profitable in the low-cost carrier's operations.
According to Finckenstein, part of the bureau's argument centers on the traditional nature of Air Canada's product, which is distinctly different from the low-cost operations of WestJet and CanJet. "Air Canada is the dominant carrier with 80 percent of the market share. Their cost structure is different. They have a business class, serve meals and offer frequent flyer miles. It's high cost. If you say you can match those costs of carriers that offer no meals of frequent flyer points, and maintain it can be done, than it is not predatory pricing. But there's no business rationale to sell way below cost at those prices when you have the majority of the market share," he said.
Although Air Canada is the country's dominant carrier, the current competitive landscape and softening economy led the carrier to declare a CAD$82 million (U.S.$52 million) loss on Feb. 1, 2001. Air Canada's fiscal problems led some analysts to question how the carrier can be...