Regulators have dismissed a handful of complaints from Air Canada passengers accusing the airline of gouging customers with higher fares since it acquired Canadian Airlines International Ltd. a year ago.
Although the Canadian Transportation Agency threw out the complaints, they underscore the delicate tightrope Air Canada must walk in its pricing policies, now that it accounts for 80 per cent of the country's domestic traffic.
On one side, customers are complaining that Air Canada's near monopoly allows the carrier to charge as much as it wants. The airline raised domestic fares by 6 per cent on Jan. 1.
On the other, competitors continue to come forward with accusations that Air Canada is using its muscle to force little guys out of the skies with "predatory" low fares.
"If you price too low, it's predatory. If you price too high, it's gouging," said Air Canada spokeswoman Laura Cooke.
In dealing with complaints from five customers in recent weeks, the CTA did not actually address the question of whether Air Canada's fares were too high.
In one case, a complaint was dismissed because it related to a return fare, not a one-way fare, as legislation requires. The CTA dismissed the other four complaints because Air Canada has competition on the routes.
The Canadian Transportation Act allows Ottawa to regulate "unreasonable" fares, but only when an airline has no competition on the routes in question.
"I sent them an e-mail saying I think they missed the entire point," said Peter Varsek, a Richmond, B.C., resident who filed a complaint about high fares on Air Canada's Vancouver-Kelowna route.
"As soon as Air Canada bought Canadian Airlines, they raised fares. Exactly what the government said wouldn't happen -- happened."
Ms. Cooke said the Montreal-based airline provided evidence to the CTA to show that it did not raise domestic fares between November, 1999, and January, 2001.
But observers say that while the airline did not impose across-the-board fare increases, it did reduce the percentage of discounted fares available.
While customers are worried about fares being too high, competitors are worried about fares being too low. The federal Competition Bureau is investigating complaints from three airlines accusing Air Canada of abusing its market dominance by offering predatory prices designed to hurt smaller competitors. The allegations have not been proven.
The most recent complaint came last week from Hawkair Aviation Services Ltd. of Terrace, B.C., which says Air Canada subsidiary Air BC Ltd. lowered fares from about $460 to $293 after Hawkair introduced fares at $296.
Air Canada says the fare is part of a system-wide seat sale and is not route specific.
Calgary-based WestJet Airlines Ltd. and CanJet Airlines, a division of Halifax based IMP Group Ltd., have also filed complaints with the competition bureau. At least two other airlines have also brought forward complaints about predatory pricing by Air Canada, but these have been quietly resolved.
Air Canada, meanwhile, recently filed a pricing complaint of its own, accusing KLM Royal Dutch Airlines of offering fares not listed on its tariff file with the Canadian government. KLM discontinued the fares after Air Canada's complaint.
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