WestJet and Air Canada engaged in game of 'airfare chicken'
$19 fares from Toronto to Montreal and $59 Vancouver to Calgary top new price lists
Bruce Constantineau, Vancouver Sun
Published: Thursday, July 03, 2008
AIRLINES - Canadians can expect more airline seat sales this year after WestJet and Air Canada served up $19 Toronto-to-Montreal and $59 Vancouver-to-Calgary fares Wednesday.
Airline industry analyst Rick Erickson said those are the sharpest domestic discounts the industry has seen in two years and expects there's more to come.
"What we can take from this is that demand is off and high prices and fuel surcharges are a big part of that," he said in an interview.
"Carriers' forward bookings can't be that strong, otherwise they wouldn't be doing this."
WestJet's regular price for a Vancouver-to-Calgary flight in early August was $195 on Wednesday.
Erickson noted the monthly load factor - the percentage of seats that are filled in a plane - at WestJet fell from 86.6 per cent in March to 79.5 per cent in May, still a healthy figure but the decline is a worrying trend.
"A drop of six or seven per cent doesn't sound like much, but that's a lot when you consider almost all of that [lost] traffic is absolute gravy to the carrier that goes straight to the bottom line," he said.
WestJet fired the first seat-sale shot Wednesday, offering $19 fares for flights between Toronto and Montreal and between Toronto and Ottawa. The airline also announced a $59 fare for flights between Calgary or Edmonton and Vancouver or Abbotsford.
Flights must be booked by today for travel until Sept. 30, and the number of seats at the discounted fare is limited.
The one-way fare price does not include taxes, fees and surcharges, so the $59 Vancouver-to-Calgary fare works out to $133.
Air Canada quickly matched the WestJet prices.
"We aim to be price competitive in all markets we serve and we are responding with competitive fares on select flights," Air Canada representative Angela Mah said in an interview. "The airline business is very competitive and we have always said we will offer competitive low-fare options."
WestJet representative Richard Bartram said the airline is pleased with its recent load factors and is adding capacity into the market.
"A few times a year, we will have a significant discount into the market to help stimulate travel for a particular time and that's what we're doing here," he said in an interview.
Bartram said seat sales will continue as the airline tries to strike a balance between profitability and stimulating demand by allowing people to travel at reasonable rates.
He said WestJet remains very concerned about the negative impact of high fuel surcharges.
"We're confident people will continue to travel but we know they will look for that low-fare leader or that cost advantage when they book their seats and I think that bodes well for WestJet," Bartram said.
While Air Canada recently cancelled several domestic and international routes to cut costs, Erickson noted WestJet recently announced the addition of new routes, including Calgary to Kamloops.
"It's also continuing its strategy of adding sunspot destinations and I don't see that being as badly hurt this winter," he said. "The strong Canadian dollar means we can still get reasonable value on a trip to the Caribbean or Latin America."
The Air Canada cutbacks are expected to slash up to 2,000 jobs across Canada. Mah said the airline is discussing "mitigation options" with unions. Details of the job cuts are still not available.
The Air Canada route cancellations and suspensions include Calgary-Prince George, Calgary-Comox, Vancouver-Sacramento, Vancouver-Osaka and Toronto-Kelowna.
[email protected]
As long as they don't go bankrupt like the long list of Canadian airlines before them......
Prev
) would be far worse. Air Canada is a business, not a Canadian PR company. 
Linear Mode
