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

BC Ferries crew member taken to hospital after getting struck by bow doors

Two sailings between Horseshoe Bay and Departure Bay were cancelled

City of Nanaimo staff recommend delaying Cranberry Connector project to 2027

Proposed road would link Cranberry Road with Tenth Street

LETTER TO THE EDITOR: NDP advertising was misleading

Quotations in ads were sound bites taken out of context, says letter writer

Nanaimo firefighters train to save themselves

Fire Ground Survival Program teaches firefighters to stay alive when structure fires turn perilous

Greens want climate protection added to international trade agreements

Green Party leader Elizabeth May campaigns in Nanaimo-Ladysmith

ELECTION 2019: It’s so close, it could come down to who turns out to vote

Black Press Media’s polling analyst on the origins of predictive seat modelling in Canada

Jack’s Devils beat Quinn’s Canucks 1-0 in NHL brother battle

New Jersey youngster scores first career goal against Vancouver

Two charged after owner’s wild ride through Kamloops in his stolen truck

Crystal Rae Dorrington, 37, and Derrick Ronald Pearson, 32, facing multiple charges

Judge orders credit union’s bank records for Kelowna social worker facing theft allegations

The man is accused of negligence, breach of contract, fraud and a conspiracy with Interior Savings

Leaders pour it on with rallies, boosts for candidates as campaign reaches peak

The federal election campaign has reached a crescendo

Allegations of racism lead to ministry investigation at Vancouver private school

St. George’s School was contacted over what the school describes as ‘deeply offensive behaviour online’

Not a political question: Thunberg calls for climate action in Alberta

Edmonton police estimated the size of the crowd at about 4,000

City of Nanaimo planning to build new boathouse at Long Lake by 2023

$1.35-$2-million project would be used by local rowing, canoe and kayak clubs

Lantzville’s Pottie ‘walking away’ from derelict hotel in Port Alberni after one week

WorkSafe B.C. issues stop work order; owner says cost to continue too high

Most Read