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Unfair pricing aims to stop new airlines from competing and lowering Canadian airfares

7 1 50

Canada’s air travel industry is a mess, with 87 per cent of the domestic market controlled by two carriers and Canadians enduring some of the highest airfares in the world. We actually fly less and see less of our own country compared with citizens of other countries precisely because it’s so expensive. We deserve a better system and, believe it or not, Canada’s Competition Bureau is working to make sure we get it.

The bureau is investigating whether Swoop, the WestJet-owned discount carrier, used “predatory pricing” to undercut new entrant Flair Airlines. Flair alleges it was forced to stop flying its Edmonton-Hamilton route after Swoop sold tickets for $69, a price that includes taxes and airport fees, or $28.59 without those extra costs.

Under Canada’s competition laws, predatory pricing occurs when an incumbent with market power sets its prices below avoidable costs (meaning costs that could have been avoided had the airline chosen not to offer the service). There is an important distinction between price cuts that reflect a firm’s genuine efforts to enhance value or performance to better serve customers, and predatory pricing to drive out the........

© Financial Post