Air Canada adds $120 fuel "surcharge". Where is the government?

[Ben Kenobi]

Did you not read this thread at all. Honestly, Ben, sometimes I wish I could reach out and smack you upside the head.

Sometimes I feel like doing the same to you. Westjet is a much better airline, they are usually cheaper and they don't dock you for everything that Air Canada does.

I don't see why it's an issue. Maybe several years ago yes, but WestJet has expanded coverage. I would have a very hard time justifying flying Air Canada for anything unless I had money to burn.

[Starchild]

The Canadian airline market is ****ed. Always has been and unless some major restructuring takes place. Its too small a market, too big a country to have a national airline and keeps out unwanted competition by insisting that only Canadian airlines can fly internal Canadian flights. I dunno, maybe the solution is to break Air Canada up into an 'Air Canada International' and then several regional Air Canada to cover the major hubs of the West, Central and Eastern Canada.

Meanwhile in aggressive competitive (for air travel) Europe, I flew from London to Austria for around C$100 after tax was included. The actual tickets cost me C$10.

/me has a certain level of insider knowledge about the workings, and failings, of the Canadian airline industry.

[VetLegion]

Now that you mention it in Europe it is also commonplace to quote a price for a flight without airport taxes, baggage fees, processing charges... $10 can easily become $100 that way. It's a pretty decieving practice if you ask me.

[Wezil]

Originally posted by Starchild
The Canadian airline market is ****ed. Always has been and unless some major restructuring takes place. Its too small a market, too big a country to have a national airline and keeps out unwanted competition by insisting that only Canadian airlines can fly internal Canadian flights...

If you are familiar with the Cdn industry then you will know why this is and what the fear is.

If wide "open skies" comes into effect the worry would be international carriers coming into Canada and undercutting the domestic carriers on the proftable routes (larger city traffic) while not serving the smaller markets. Once Cdn carriers are out of business these smaller markets would then be unserved.

[Starchild]

Originally posted by Wezil


If you are familiar with the Cdn industry then you will know why this is and what the fear is.

If wide "open skies" comes into effect the worry would be international carriers coming into Canada and undercutting the domestic carriers on the proftable routes (larger city traffic) while not serving the smaller markets. Once Cdn carriers are out of business these smaller markets would then be unserved.

Yep. This falls under the 'too big a country, too small a market' problem. Dunno what the solution should be. Maybe insist that every airline operating in Canada serves a certain number of smaller routes as a requisite for access to the bigger routes. Or fiddle with airline ticket taxes so the more profitable routes help subsidise access to the out-of-the-way ones.

Or, I dunno, tear down, burn and salt the earth of these middle of nowhere villages like Red Fort, ThunderBay, Calgary, etc and forcible relocate their populations (well, any survivors) to proper cities like Toronto. There they can work in our underground syrup mines until, eventually, their pale and warped descendants forget what the sun even looked like.

[Wezil]

Originally posted by Starchild


Yep. This falls under the 'too big a country, too small a market' problem. Dunno what the solution should be. ...

Yeah, I figured you understood. I was more concerned that those that didn't understand this realise that it's not just a knee-jerk protectionist sort of issue.

Or, I dunno, tear down, burn and salt the earth of these middle of nowhere villages like Red Fort, ThunderBay, Calgary, etc and forcible relocate their populations (well, any survivors) to proper cities like Toronto. There they can work in our underground syrup mines until, eventually, their pale and warped descendants forget what the sun even looked like.

You lost all credibility. Toronto is a "proper city"?

[Starchild]

Originally posted by Wezil
You lost all credibility. Toronto is a "proper city"?

Its still got a soft place in my heart after five years there. Sure, other cities are prettier, more exciting, more cultured, less up themselves, up themselves but for better reasons, better planned, with better public transport and facilities, world renowned, have better public spaces, greener, fresher air, better looking people, better food, etc but Toronto is...um. Toronto has...err....hmm. I like the CN tower.

[Asher]

Originally posted by Ben Kenobi


Sometimes I feel like doing the same to you. Westjet is a much better airline, they are usually cheaper and they don't dock you for everything that Air Canada does.

I don't see why it's an issue. Maybe several years ago yes, but WestJet has expanded coverage. I would have a very hard time justifying flying Air Canada for anything unless I had money to burn.

Because WestJet is going to probably follow suit. Many people are idiots, and to such idiots doing superficial comparisons Air Canada now looks like it's the same cost as WestJet. Then when you actually start booking, at the end in the fine print the actual cost goes way up with "surcharges".

The issue is, even though WestJet is a far better airline (as I've said in this thread explicitly, which is why I want to smack you for posting still about this), Air Canada is the market leader and this kind of behaviour will hurt WestJet in superficial price comparisons...it's a bad precedent.

[Asher]

Originally posted by Starchild


Yep. This falls under the 'too big a country, too small a market' problem. Dunno what the solution should be. Maybe insist that every airline operating in Canada serves a certain number of smaller routes as a requisite for access to the bigger routes. Or fiddle with airline ticket taxes so the more profitable routes help subsidise access to the out-of-the-way ones.

Or, I dunno, tear down, burn and salt the earth of these middle of nowhere villages like Red Fort, ThunderBay, Calgary, etc and forcible relocate their populations (well, any survivors) to proper cities like Toronto. There they can work in our underground syrup mines until, eventually, their pale and warped descendants forget what the sun even looked like.

I know it's a troll, but Calgary is the 4th busiest airport in the country. And this year it'll be the 3rd busiest, overtaking Montreal. It saw over 12 million passengers last year, should be 13-ish this year.

It's already 3rd busiest in terms of aircraft movements.

[Starchild]

Originally posted by Asher


I know it's a troll, but Calgary is the 4th busiest airport in the country. And this year it'll be the 3rd busiest, overtaking Montreal. It saw over 12 million passengers last year, should be 13-ish this year.

It's already 3rd busiest in terms of aircraft movements.

The syrup mines will need computer scientists. Mostly for food.

[Asher]

See, Ben, now WestJet and Porter have switched to fuel surcharges.

http://www.thestar.com/Business/article/424681

Once one does it, the others have to follow suit or otherwise their prices don't match up in ads.

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Sample fare summary, Toronto-Vancouver return (.pdf)

U.S. WON'T SELL ITS OIL RESERVES

WASHINGTON–The White House said yesterday it won't sell crude oil from the U.S. Strategic Petroleum Reserve to help boost available oil supplies and lower prices.

"The president, as the person responsible for the safety and security of the American people, would resist any calls to start selling off Strategic Petroleum Reserve oil, and we don't think it would have that big of an impact on prices," White House press secretary Dana Perino told reporters. "It's like the fire extinguisher in case of an emergency," she said.

Past attempts to influence energy prices by using the oil stockpile have not been successful, she noted.

Perino also rejected new calls from Congress for the administration to stop adding oil to the reserve and divert those deliveries to the market, a move many lawmakers say would ease oil prices that hit a record $126.40 (U.S.) per barrel yesterday before losing steam.

Reuters News Agency

WestJet, Porter hike fares

WestJet Airlines Ltd. and Toronto's Porter Airlines have become the latest North American carriers to add fuel surcharges to their airfares in a bid to combat the soaring price of jet fuel – a phenomenon that's expected to cause industry wide upheaval if it continues.

Calgary-based WestJet, which launched as a no-frills discount service more than a decade ago, said yesterday it would begin charging an additional $20, $30 or $45 per one-way ticket for short, medium and long-haul flights beginning today.

Richard Bartrem, a WestJet spokesperson, said the airline had been "kicking around" the idea of a fuel surcharge for several weeks alongside other options such as charging extra for a second piece of checked luggage, a change Air Canada recently adopted for some trips.

"We decided to take the approach that was the most transparent and worked," Bartrem said.

He added that the airline is committed to reviewing the surcharge periodically and may remove it or increase it as warranted.

Similarly, a Porter spokesperson said yesterday the upstart airline, based at Toronto's island airport, would add a surcharge of $20 one-way on flights between Toronto and Ottawa and $40 one-way on its other routes from Toronto to Montreal, Halifax and New York.

The moves followed a similar decision late last week by Air Canada to implement a one-way surcharge of $20, $40 or $60 to tickets sold within Canada and to the United States. Air Canada, the country's largest airline, had already been using fuel surcharges on overseas routes.

Industry watchers say the airlines have little choice but to pass along the extra costs if they want to avoid flying in the red.

"With oil sitting at $125 (U.S.) a barrel, these fuel surcharges are justified," said Robert Kokonis, president of airline consultancy AirTrav Inc.

He added that fuel surcharges are commonplace in Europe and that several major U.S. carriers, including AMR Corp.'s American Airlines, UAL Corp.'s United Airlines and Delta Air Lines Inc., have added them to their tickets in recent weeks.

Fuel surcharges are an attractive, if somewhat misleading, way for airlines to increase their ticket prices because they allow them to continue advertising lower base fares. As well, fuel surcharges have the added benefit of raising customer awareness about an airline's costs, increasing the chance that the market will absorb the higher prices.

Analysts say fare hikes, by contrast, have a tendency to be eroded by seat sales or other promotions in a competitive market.

The downside is that customers will inevitably suffer "sticker shock" after they learn that a $378 round-trip from Toronto to Vancouver on Air Canada could set them back as much as $750 once taxes, fees and extra services such as meals and flight cancellation protection are included.

What remains to be seen, analysts say, is whether the most recent price increases by Air Canada and WestJet will curtail demand by forcing price-sensitive travellers to cancel travel plans or look for alternative forms of transport such as driving or taking the train.

"Although demand has remained remarkably resilient thus far, and air travel has in ways moved from a luxury to a necessity in many cases ... we nonetheless remain concerned over the actual efficacy of the surcharge increase, with the potential for base fare discounting, load factor slippage and market de-stimulation," wrote David Newman, an analyst at National Bank Financial.

An even bigger question mark hangs over the potential impact of further increases in the price of oil on the airline industry.

"Some major carriers are saying that $150 (U.S.) per barrel is the tipping point," said Kokonis of AirTrav.

At that price, several big airlines may have no choice but to raise their fares to levels that turn away a significant number of price-sensitive passengers, forcing a re-evaluation of existing business models, Kokonis said.

That could mean smaller fleets, fewer routes and an increased focus on so-called "premium" traffic such as business travellers.

Ironically, Kokonis said, the same low-cost carriers that turned the industry on its head a decade ago by popularizing the concept of cheap, no-frills flying may be the first to feel the pinch since their low-fare business models tend to be the most inflexible.

[Ben Kenobi]

Because WestJet is going to probably follow suit.

Not if there is enough outcry about the surcharges.

Many people are idiots, and to such idiots doing superficial comparisons Air Canada now looks like it's the same cost as WestJet.

Hardly. The route I would mostly use is much cheaper under WestJet.

The issue is, even though WestJet is a far better airline (as I've said in this thread explicitly, which is why I want to smack you for posting still about this), Air Canada is the market leader and this kind of behaviour will hurt WestJet in superficial price comparisons...it's a bad precedent.

Well some people don't rely on the 'superficial' price comparisons. I've flown and been shafted by Air Canada before, and found WestJet much better. I was flying with WestJet before they even had a dedicated spot in Vancouver, back when it was a single gate. Now, they have a significant portion. In Prince George, the situation is reversed, there are more who fly westJet then Air Canada.

I see the move, it's a mistake for WestJet. It would be better to simply raise the seat price and take the hit there.

[Kuciwalker]

Not if there is enough outcry about the surcharges.

Bad timing.

[LordShiva]

[Asher]

Originally posted by Ben Kenobi
I see the move, it's a mistake for WestJet. It would be better to simply raise the seat price and take the hit there.

It's a mistake for the industry, but once one makes the move the others need to follow in lock-step or risk appearing uncompetitive. When the "low-cost carrier" has higher "airfares" than Air Canada, that tarnishes their image of being the cheaper airline even if it's still cheaper once you actually take into account random fees/surcharges.