Competition Bureau sets out policy on airfares

[Blastor]

Competition Bureau sets out policy on airfares

MONTREAL (CP) — The federal Competition Bureau is clearing the way for Air Canada to cut its fares to match those of low-cost competitors, as long as it doesn't reduce prices to below the competitors' levels.

In a letter sent to airlines today, the bureau said it will come down on a "dominant carrier" that undercuts the fares of a smaller competitor, or floods the market with more capacity.

"As a general principle, where a dominant carrier's response to competition consists only of reducing fares to levels which match, but do not undercut those of a competitor (`fare matching'), the bureau will not take enforcement action," Sheridan Scott, Commissioner of Competition, said in her letter.

"However, if such fare reductions were accompanied by a significant increase in capacity or a significant increase in the number of seats offered at the lowest price, this `safe harbour' would not apply."

The bureau found Air Canada guilty in July 2003 of offering fares at below its cost on two routes in Atlantic Canada, acting on a complaint by WestJet Airlines of Calgary as it attempted to expand in Eastern Canada.

Air Canada argued that it had lowered its prices to remain competitive.

The Competition Bureau said Air Canada violated the Competition Act by cutting prices below its cost or by adding capacity on several eastern routes to drive its smaller rivals out of the business.

Air Canada's appeal of the ruling was stayed pending its bankruptcy protection, which is to end next week.

The Competition Bureau noted in its letter that the landscape has changed considerably since Canadian Airlines was taken over by Air Canada in 1999.

New competition has emerged, particularly in the Montreal-Ottawa-Toronto triangle, and discount airlines have developed their own loyalty programs.

It also notes that consumers are using the Internet to buy tickets, breaking down former restrictions on booking last-minute fares.

http://www.thestar.com

[LT]

Competition Bureau sets out policy on airfares

It's a good thing those ass holes have my best interests at heart...

God forbid they do anything about the gas prices.. Good thing my tax dollars are spent so wisely..

[Panama Jack]

What do you want them to do about gas prices? Bring them to European levels?

[LT]

Seein as they don't have a problem letting Jetsgo sell tickets for $1.. I have no clue what they're complaining about when Air Canada sells it's tickets for cheap..

I don't thin it's possible for Air Canada to even Sell tickets at a lower rate..... AC > JetsGo..

So now these clowns what me to pay $10000's of dollars because the other guys can't compete???

ROFL..

I guess that's why I'm paying $1/litre off gas, because the other guys would sue the guy who would sell it for 60 cents..

Free market my arse..

[sprucemonkey]

Blow me and my Ceasers Pizza bag Jack. If that would help, yes!