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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Trail family rallies for Ronald McDonald House

“We always described it as our oasis in the middle of the desert.”

Powerful thunderstorms called for the West Kootenay this weekend

Environment Canada issued a special weather statement Thursday afternoon.

RDKB launches survey to address housing needs in the district

Communities in the district include Trail, Grand Forks, Rossland and Fruitvale

Trail chamber sources PPE for local businesses

Trail businesses can purchase PPE through their local chamber of commerce

‘I knew what he wanted’: Man recalls black bear chasing him up tree in Slocan Valley

Francis Levasseur is no stranger to the outdoors, but a recent run-in with a bear caused quite a scare

Only four new COVID-19 cases, 228 active across B.C.

Health officials watching as activities ramp up

Feds looking at ways to reunite families amid COVID-19 border restrictions with U.S.

Some families with members of dual-citizenship have become separated due to the pandemic

Condition in kids with possible COVID-19 link being studied in Canada

This month, the U.S. Centers for Disease Control and Prevention issued an alert to doctors about MIS-C

COVID cancelled their wedding plans, so they married on a BC mountaintop

Ceremony was live streamed to friends and family around the world

Trudeau acknowledges racial unrest in U.S.; ‘We also have work to do in Canada’

‘Anti-black racism, racism, is real; it’s in the United States, but it’s also in Canada,’ Trudeau says

State of Local Emergency declared for Boundary as communities brace for river flooding

Warm weather and heavy rain could cause sections of Kettle River system to swell beyond 2018 levels

Large cruise ships barred from Canadian waters until end of October: Garneau

Last year 140 cruise ships brought more than two million visitors to Canadian ports

Minneapolis cop who knelt on man’s neck charged with murder

Arrest comes after three days of protests, which escalated in violence as demonstrators torched a police precinct

Police watchdog recommends charges against five Mounties in Prince George man’s death

Police used pepper spray on the man, who then had trouble breathing before dying at the scene

Most Read