Federal Court orders second WestJet employee to testify in competition probe

Competition watchdog investigating WestJet and its budget subsidiary, Swoop, of predatory pricing

A Westjet Boeing 737-700 taxis to a gate after arriving at Vancouver International Airport in Richmond, B.C., on February 3, 2014. The Federal Court of Canada has ordered a second senior employee at WestJet Airlines Ltd. to testify under oath, the latest development in a predatory pricing investigation into WestJet and its budget subsidiary, Swoop, by Canada’s competition watchdog. (THE CANADIAN PRESS/Darryl Dyck)

The Federal Court of Canada has ordered a second senior employee at WestJet Airlines Ltd. to testify under oath in a predatory pricing investigation into WestJet and its budget subsidiary, Swoop, by Canada’s competition watchdog.

The inquiry, launched by the Competition Bureau in the fall, concerns allegations the two airlines used anti-competitive practices to crowd out B.C.-based upstart Flair Airlines from at least three routes last year.

Federal Court Chief Justice Paul Crampton has ordered WestJet corporate planning manager Michael Claeren to be examined by Canada’s commissioner of competition, citing Claeren’s former role as a “senior leader” of revenue and pricing at Swoop.

He is set to appear next month alongside WestJet vice-president John Weatherill, who the Federal Court previously ordered to come before a presiding officer to explain the airline’s tactics.

READ MORE: Westjet tries again to dismiss proposed class-action lawsuit alleging discrimination

The commissioner launched the inquiry “to investigate allegations the parties have abused their dominant position in the provision of air transportation services by engaging in predatory pricing practices on certain routes in Canada,” according to a March 27 affidavit from Xavier Mercier, a senior officer at the Competition Bureau.

Predatory pricing is when a company offers services below break-even costs to hobble a competitor, along with an expectation to recoup losses through future price hikes, according to Competition Bureau guidelines.

In this case the accusation applies to routes between Edmonton and the cities of Abbotsford, B.C., Hamilton, Ont., and Winnipeg. On the Hamilton route, Swoop advertised all-inclusive fares for as low as $69 starting last June, court filings state.

Flair Airlines chief executive Jim Scott has said the strategy cost his ultra-low-cost carrier about $10 million between mid-June and mid-October, placing it in jeopardy.

WestJet has said it is compiling information in response to the probe, which has seen piles of court-ordered documents and data from the two Calgary-based airlines handed over to the Competition Bureau.

Air Canada and WestJet control about 90 per cent of the domestic market and 70 per cent of the transborder market, says David Tyerman, an industry consultant who works with Enerjet, a charter airline aiming to launch as a budget carrier this year.

WestJet’s attempts to retain control over ultra-low-cost flights amount to “a pretty aggressive attempt to protect market share and keep new entrants out of the market,” Tyerman said in an interview.

The business models of Canada’s two largest airlines make ultra-low pricing on certain routes without incurring a loss tough to fathom, he said, pointing to the cost of premium seating and lounges.

“Both Air Canada and WestJet have limited their budget products to certain markets to avoid cannibalizing most of their full-price markets. In addition, it seems unlikely that Swoop and Rouge can achieve truly lowest costs, given labour costs at the incumbents and other potential cost differentials,” Tyerman said in an email.

He also noted the Competition Bureau does not have a mandated time frame for the WestJet investigation and called for prompt enforcement of anti-competitive rules.

Christopher Reynolds, The Canadian Press

Like us on Facebook and follow us on Twitter

Just Posted

Logging truck starts forest fire north of Nakusp

Traffic reduced to single-lane alternating as crews battle blaze

Smoke-free summer a boon for West Kootenay tourism

Tourism centres seeing numbers up

Elk River reclaims property as its own

Laws make it harder to protect private land than ever before says farmer, local government

Black Press Kootenay Career Fair underway in Cranbrook

Today, Thursday, August 22, around 40 employers will be waiting to meet potential new employees

Cannings to pedal through South Okanagan — West Kootenay riding

MP leaves from Nakusp on Aug. 23 and ends in Kaleden on Aug. 29.

Ethnic media aim to help maintain boost in voting by new Canadians

Statistics Canada says new Canadians made up about one-fifth of the voting population in 2016

BC SPCA overwhelmed with cats, kittens needing homes

Large number of cruelty investigations, plus normal ‘kitten season’ to blame

B.C. Hydro applies for rare cut in electricity rates next year

Province wrote off $1.1 billion debt to help reverse rate increase

Speculation tax forces sale of Greater Victoria’s iconic ‘Tulip House’

Bob and Jan Fleming selling their retirement home famous for its thousands of tulips

New police force in Surrey must avoid VPD, RCMP errors made in Pickton case: Oppal

Boots are scheduled to be on the ground by spring 2021

Man at centre of dropped HIV-disclosure case sues province and 10 cops

Brian Carlisle of Abbotsford says Mission RCMP defamed him and were ‘negligent’ in their investigation

Conan turns to the Property Brothers for tips on buying Greenland

Jonathan Scott suggests removing glaciers and mountains to bring in ‘more natural light’

Forests minister visits B.C. town rocked by multiple mill shutdowns

A third of Mackenzie turns out for rally, not much to cheer about

Most Read