Comments on: Air Canada Gets a Gold Star for Rolling Back Fees

By: Air Canada Reverses Fees On Fuel Drop, United Can’t | Flight Wisdom

Air Canada Reverses Fees On Fuel Drop, United Can’t | Flight Wisdom — Wed, 24 Sep 2008 19:50:21 +0000

[...] Air Canada Gets a Gold Star for Rolling Back Fees [...]

By: Scott

Scott — Mon, 22 Sep 2008 20:17:04 +0000

AC are rolling it into the base fare for a number of reasons;
1) to try and ward off the consumer protection groups. A ‘fuel surcharge’ is only added in other industries when it’s difficult to change a price,but in the airline industry prices change every hour hence that argument isn’t going to stand up in court and there are already a bunch of small court cases in the works
2) Their competition (WS) also did it. AC is battling for domestic superiority over WS, they need a niche marketing item

HOWEVER;
They’re still slimy enough to charge the fuel surcharge on an award ticket, quite how I have no idea.

By: Benji

Benji — Sun, 21 Sep 2008 02:23:01 +0000

How about we get Continental to follow suit?

By: Saturday Links #11 at Things in the Sky

Saturday Links #11 at Things in the Sky — Sat, 20 Sep 2008 14:48:05 +0000

[...] Linking to Brett again here…Air Canada is rolling back the second checked bag fee, and WestJet is eliminating its fuel surcharge! Yay! Will the Americans follow? One hopes. [...]

By: Carter's Liver Pills

Carter's Liver Pills — Sat, 20 Sep 2008 02:37:21 +0000

Classic game theory dilemma….

AC lowers price on an important revenue source in an attempt to gain market share.

WJ matches to retain market share.

Result…..Both competitors worse off. Return to previous pricing structure made more difficult.

Price moves down very easily in airline industry….it’s much more difficult to increase prices…..because all competitors must agree to do so.

If you cut your prices…..you “force” your competitor to match “in-kind”…leaving both competitors worse off than if they’d done nothing.

Supply and Demand have little to do with this type of game theory action. And you wonder why the airlines are always broke.

I know……let’s blame the pilots!

Yes………Kudos to all you CEO geniuses.

Looking forward to driving a stake into the heart of this wretched industry for good!

By: Court

Court — Fri, 19 Sep 2008 22:50:41 +0000

I don’t think it’s a matter of who was first, rather more an issue of who did more, and who has who by the short and curlies. AC is clearly being kicked all over Canada by Westjet, and this latest attempt by AC to gain market share was quickly trumped once again.

I still hold by the original comment that if AC maintained the pricing power, they wouldn’t have eliminated the extra charges. Just like WestJet didn’t initiate it because they didn’t have to. The difference is WestJet controls Canadian pricing, and will always (well, almost always) be able to trump AC.

Regardless, WestJet clearly comes out as the good guy here. I mean, seriously, dropping a second bag charge and rolling fuel surcharges into base fares compared to getting rid of the surcharge completely?

“Because we said we would.”

They even out-PR’d AC.

By: CF

CF — Fri, 19 Sep 2008 22:06:08 +0000

Not quite, Court. Air Canada made their moves first. Their press release went out at 7a ET yesterday. At 1235p, WestJet called a press conference for 3p when they announced the surcharges were going away. Could this have been in the works and AC found out and stole their thunder? Maybe, but that’s not how it appears.

AC only rolled the surcharge in to the base fare while WestJet eliminated it. So, had AC known was WestJet was doing, they probably would have beat them to the punch.

I think AC deserves a lot of credit here.

By: Court

Court — Fri, 19 Sep 2008 19:51:28 +0000

Would this have happened if Air Canada didn’t perceive Westjet as a viable threat? Most likely not. The news item should read “Westjet drops fuel surcharge, Air Canada forced to play catch-up”