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

Sylvan Lake’s north water reservoir project to proceed with larger price tag

Council approved the tender and budget increase for the construction of the reservoir

Town of Sylvan Lake passes 2019 tax rate, estimates education tax

Sylvan Lake and all municipalities have been left without an education tax from the Province

Town of Sylvan Lake to replace old water meters to streamline monthly billing

Town Council also approved replacing old water meters to the current technology

Drivers reminded impairment and driving don’t mix

National Road Safety Week May 14 to 20

Former Sylvan Lake resident launches latest book

Talena Winters will launch her book at the Sylvan Lake Municipal Library on Friday

Killer of Calgary mother, daughter gets no parole for 50 years

A jury found Edward Downey guilty last year in the deaths of Sara Baillie, 34, and five-year-old Taliyah Marsman

Crackdown on money laundering does not include federal public inquiry: minister

An independent report commissioned concluded $7.4 billion was laundered in B.C. last year

Trudeau’s action plan on climate change brings B.C. politician out of retirement

Terry Lake, a former B.C. health minister, is running for federal office in Kamloops-Thompson-Cariboo

Survey finds minimal progress in Canadian military’s fight against sexual misconduct

1.6 per cent of regular-force members — 900 military personnel — reported having been victims of sexual assaults over past year

Body of missing snowmobiler recovered from Great Slave Lake

Police confirm the body is that of one of three missing snowmobilers

Is vegan food a human right? Ontario firefighter battling B.C. blaze argues it is

Adam Knauff says he had to go hungry some days because there was no vegan food

Winds helping in battle against fire threatening northern Alberta town

Nearly 5,000 people have cleared out of High Level and nearby First Nation

Federal government funds millions to help B.C. police spot drugged driving

Many police departments have expressed wariness about using the only government-approved roadside test

Judge: Mississippi 6-week abortion ban ‘smacks of defiance’

The new law would prohibit most abortions once a fetal heartbeat can be detected

Most Read