AVCANADA

Air Canada, Westjet pledge higher fares

Canadian Press


Monday, March 14, 2005

OTTAWA (CP) -- Top executives at Air Canada and WestJet say consumers can count on paying more now that their discount competitor Jetsgo has been forced into bankruptcy.

Robert Milton, CEO of Air Canada's parent company ACE Aviation Holdings Inc., said Sunday the Jetsgo failure is an example of what happens when an air carrier doesn't charge enough to cover its operating cots.

"This was inevitable," MIlton told CTV Question Period. "When the fares are $49, or $1, it is too good to be true, and this is going to happen."

MIlton said fares in the industry are sure to rise in future because they have been so artificially low for so long -- an assessment shared by Clive Beddoe, CEO of WestJet.

Beddoe insisted, however, that the increases will be modest.

"Ultimately you have to make a profit," he told CTV. "So costs to the consumer will climb somewhat, but in my view it doesn't have to climb very much for the consumer to be able to provide an adequate fare to the airline."

Beddoe was critical of Jetsgo for continuing to sell tickets right up to the eve of bankruptcy, when there was little chance they would ever be honoured.

"I suspect that the whole operation of Jetsgo was funded on advance ticket sales," he said. "There is a question whether or not there should be regulations to prevent that.

"It would certainly lead to a much more healthy industry. We would certainly be one that would support that."

Milton said he's "open to almost anything" to make sure travellers aren't stuck with worthless tickets if an airline goes belly up.

"If a fund was to be set up (or) whatever it might be to protect the consumer, we're fine with that."

He added, however, that any such move should be coupled with cuts in airport rents and security fees paid by air carriers if Ottawa wants to restore the health of the industry.

Transport Minister Jean Lapierre has been lobbying for rent and fee reductions but failed to convince his cabinet colleagues to take action in the recent federal budget.

Lapierre also came under fire when he admitted last week that he had contacted other airlines the day before Jetsgo declared bankruptcy but never warned the general public that anything might be afoot.

Lapierre has insisted he didn't know, when he spoke to Milton and others last Thursday, that Jetsgo would actually declare bankruptcy. Milton confirmed Sunday the minister didn't speak directly of an impending bankruptcy but was vague on exactly what he did say.

Beddoe said he didn't hear from Lapierre until after the bankruptcy was announced Friday, when the minister called to thank WestJet for helping to rescue stranded Jetsgo passengers.

Meanwhile, Prime Minister Paul Martin sympathized on Sunday with the thousands of passengers left stranded by Jetsgo and said "Air Canada and WestJet and everybody is trying to do their best."

When asked at the annual St. Patrick's Day parade in Montreal whether he could pass on the luck of the Irish to Jetsgo passengers, Martin said: "I tell you that's pretty tough."

Montreal Mayor Gerald Tremblay said the city will lose about 400 unionized jobs with the closure of the airline, founded by Montrealer Michel Leblanc.

© Trail Daily Times 2005

WestJet may dip into pool of jobless Jetsgo employees

CALGARY - The airline industry is bracing for a flood of up to 1,200 job seekers after Montreal-based Jetsgo suddenly grounded its planes this week amid massive financial losses

Airfares take off after Jetsgo's demise: report

CTV.ca News Staff


Ticket prices for domestic routes have taken off since Jetsgo ceased operations last week, according to an analyst's report.

The Globe and Mail reports that Desjardins Securities found the average price of a ticket for a WestJet flight bought one week in advance has gone up by close to 50 per cent, compared to tickets bought the previous Monday.

The Montreal-based brokerage company also found that the price of a WestJet ticket bought three weeks in advance during the same period has gone up 20 per cent.

As for Air Canada, seat prices for a three-week advance ticket have gone up by a third. A one-week advance ticket is up 16 per cent, the report says.

The data was taken from the company's websites, and appear in today's issue of Airfare Pulse, the securities firm's weekly survey.

Study co-author Chris Couprie told The Globe fares appear to have gone back to levels seen in June, when Desjardins Securities began the survey.

Robert Milton, CEO of Air Canada's parent company ACE Aviation Holdings Inc., warned ticket prices at the airline could go up in the wake of Jetsgo's demise.

Speaking on CTV's Question Period on Sunday, Milton said Jetsgo's bargain basement prices seemed "too good to be true."

He said that if other airlines chose to raise their prices, Air Canada would as well, saying Air Canada "will not be undersold."

However, Air Canada spokeswoman Laura Cooke told The Globe that the airline has not raised its prices. She said any changes in fares are a reflection of greater demand for seats.

Ottawa facing criticism

The Consumers' Association of Canada is being critical of Ottawa in the wake of the failure of Jetsgo. And the man taking most of the heat is Transport Minister Jean Lapierre.

The group says Lapierre should resign, and are demanding to know what he knew about Jetsgo before it ceased operations early Friday morning.

"We don't know what he knew, when he knew it, what his involvement was," said Mel Fruitman, vice-president of the Consumers' Association of Canada.

"And he certainly has not stepped up to the plate to offer any condolences, consolations to consumers or any suggestions that he is going to take any action that he is going to prevent this from happening again," Fruitman told CTV's Canada AM.

Fruitman said there is no way the average consumer would have been able to tell that Jetsgo was going to fall, and that the government should take action to protect consumers.

"When you're going up to make a purchase, you're usually just looking for the best price, the best deal you can get

"You are not analyzing the situation, you're not saying 'how can they do this. I wonder if they're making money on it.'"

He said Ottawa needs to introduce a mechanism, if not legislation, to ensure airlines set aside funds to either cover the cost of flights being picked up by another airline, or for customers to get refunds.

"The industry itself needs to have some kind of contingency fund in place to help them fill the vacuum in the event of a failure like this," Fruitman said.

Airline had been running on fumes

Jetsgo had not been doing well for some time. The airline was in so much trouble, it was paying bills with unearned revenue, according to a recent report in The Globe.