Air Canada Gets a Gold Star for Rolling Back Fees

Air Canada, Fares, Gold Star, Westjet

Those of you who live in Canada got a nice dose of gold star-worthy airline goodness yesterday when Air Canada announced it was rolling back some fees and other airlines followed with reductions of their own. Fuel prices are down, so it’s always nice to see an airline actually repeal something that it had previously said was put in place because of high fuel prices. Something tells me we won’t see that happening here in the US very often, if at all.

goldstarLet’s get a little more specific here. Air Canada announced that it would stop charging the $25 second bag fee that it put into place in May due to high fuel costs. It was also announced that the fuel surcharges would be rolled into the base fare going forward. Lastly, the airline said that excess bag fees would be simplified to be a flat $75 per piece for oversized or overweight (or both) and $100 per excess bag (which would not require additional payment if it was oversize or overweight). This is a reduction from the current $100 fee for each limit that is violated. (This is confusing. Get the details here.)

If that wasn’t enough to make the Canadians happy, WestJet (and Porter) decided to one-up Air Canada by eliminating their fuel surcharges altogether. WestJet said it best . . . “WestJet eliminates fuel surcharge – because we said we would.”

Well, how’s that for a round of good news? I have to say that it’s rare we see several airlines actually keep their word here. I know that some airlines institute these baggage fees because they want to change their business model to a more a la carte-style. That’s fine, and I wouldn’t expect those to change. But for those airlines that make changes while blaming high fuel prices, they really should act responsibly and reduce those fees when oil prices come back down. Unfortunately, most of them won’t, but kudos are certainly due to the Canadians.

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8 comments on “Air Canada Gets a Gold Star for Rolling Back Fees

  1. 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”

  2. 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.

  3. 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.

  4. 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… “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!

  5. 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

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

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