News from The Globe and Mail
Air Canada scales back fuel charges
Thursday, May 15, 2008
Air Canada has reduced two of its recent fuel surcharges by 25 per cent to match WestJet Airlines Ltd.'s new fee on medium and long-haul trips.
Last Friday, Montreal-based Air Canada introduced a $40 one-way surcharge for flights between 484 kilometres and 1,609 km, and $60 one-way for 1,610 km or more for travel within Canada, or between Canada and the United States.
WestJet responded with a $30 fee for medium haul, and a $45 charge for long routes, which took effect Tuesday, forcing Air Canada to reassess the competitive landscape and match WestJet's lower surcharges on the longer-distance flights, analysts say.
Air Canada and WestJet are sticking with their one-way fuel surcharge of $20 for short-haul flights of 483 km or less.
The country's two largest carriers eliminated domestic fuel surcharges in 2004, opting to try to recover fuel bills through increases in base fares. But with jet fuel prices soaring and eroding airlines' finances, Air Canada and Calgary-based WestJet opted to reintroduce fuel surcharges more than four years after cancelling them. "We have adjusted some surcharges and we will continue to monitor the market to ensure we remain competitive in every market we serve. Like the cost of fuel, airfares and surcharges are expected to remain dynamic," Air Canada spokesman Peter Fitzpatrick said yesterday.
Robert Kokonis, president of airline consulting firm AirTrav Inc., said Air Canada couldn't make the two higher surcharges stick, and didn't like the prospect of losing bookings to WestJet, heading into the busy summer holiday travel season.
"Air Canada faced losing revenue if the fuel surcharges remained uncompetitive," he said. Both carriers are testing to see whether consumers will continue to buy tickets at the same record pace as last summer's travel season, Mr. Kokonis said. He predicted that if there is a softening of advance bookings, the airlines will lower their advertised base prices to stimulate demand.
Porter Airlines Inc. also shaved one of its fuel surcharges, lowering it to $30 from $40 one-way for flights from Toronto to Montreal, Quebec City and Halifax.
Travellers are growing tired of the series of fees - from fuel surcharges and security fees to airport charges and airline levies - that makes the final ticket price more than double the base fare in some instances, consumer advocates say.
Consumer watchdogs have complained about Air Canada's move to start charging for checking in a second bag, effective July 15, if the passenger has a Tango or Tango Plus ticket within North America, but the airline notes that 80 per cent of people in those lower-fare categories don't even have a second bag to check.
Michael Janigan, executive director of the Public Interest Advocacy Centre, is asking the Canadian Transportation Agency to force Air Canada to withdraw its optional On My Way "travel assistance" fee of $25 to $35. Air Canada argues that the service protects travellers, with the airline providing meal and hotel vouchers if there are weather-related delays. It isn't fair for Air Canada to virtually ignore those who don't pay the fee, should poor weather arise, Mr. Janigan said in an interview yesterday.
Air Canada points out that it will continue to help travellers disrupted by schedule changes due to issues such as mechanical delays, which are within its control.
AIR CANADA (AC.B)
Close: $8.46, down 13¢
Close: $15.95, up 8¢
© The Globe and Mail