Decision No. 387-P-A-2014

October 22, 2014

COMPLAINT by Mark Churman against Air Canada also carrying on business as Air Canada rouge.

File No.: 
M4370/14-50257

COMPLAINT

[1] On April 10, 2014, Mark Churman filed a complaint with the Canadian Transportation Agency (Agency) alleging the unreasonableness of the fares offered by Air Canada also carrying on business as Air Canada rouge (Air Canada) for transportation between Toronto and North Bay, Ontario.

[2] In Decision No. LET-P-A-35-2014, dated June 2, 2014, the Agency opened pleadings and advised the parties that section 66 of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA) sets out the Agency’s jurisdiction over complaints concerning fares and inadequate ranges of fares applied by air carriers in respect of domestic services. More particularly, both parties were advised that, pursuant to subsections 66(1) and (2) of the CTA, the Agency may, under certain circumstances, take certain remedial action following receipt of a fare complaint.

[3] The Agency also advised the parties of the results of its preliminary analysis of alternative domestic services, and similar domestic services (Montréal and Val-d’Or, Quebec; Québec, and Sept-Îles, Quebec; and St. John’s and Deer Lake, Newfoundland and Labrador) that are similar to those operated by Air Canada between Toronto and North Bay, and requested Air Canada to provide to the Agency its concurrence with the Agency’s preliminary findings, or to suggest alternatives for consideration.

[4] In a submission dated June 30, 2014, Air Canada filed its comments regarding the Agency’s preliminary analysis and its answer to the complaint; however, the answer did not include the fare data required in Decision No. LET-P-A-35-2014. On July 11, 2014, Air Canada submitted the required data, and on July 31, 2014, pleadings closed.

ISSUES

[5] The issues to be addressed are:

  1. Whether Air Canada was the only person providing a domestic service between Toronto and North Bay within the meaning of section 66 of the CTA on April 10, 2014; and if so,
  2. Whether the fare published or offered by Air Canada in respect of the service between Toronto and North Bay was unreasonable on April 10, 2014?
  3. Whether the range of fares offered by Air Canada in respect of its service between Toronto and North Bay was inadequate on April 10, 2014?

LEGISLATIVE FRAMEWORK

[6] Section 66 of the CTA sets out the Agency’s jurisdiction over complaints concerning fares applied by air carriers in respect of domestic services. Pursuant to subsections 66(1) and (2) of the CTA, the Agency may take certain remedial action following receipt of a complaint where the Agency finds that:

  1. the air carrier who published or offered the fare which is the subject of the complaint is a licensee who, including its affiliated licensees, is the only person providing a domestic service between two points; and
  2. the fare published or offered by the licensee in respect of the service is unreasonable; and/or
  3. the licensee is offering an inadequate range of fares in respect of that service.

[7] Pursuant to subsection 66(4) of the CTA, the Agency’s jurisdiction over complaints concerning fares may be extended to domestic routes served by more than one licensee where the Agency is of the opinion that none of the other services between two points provides a reasonable alternative. In assessing such reasonable alternatives, the Agency takes into consideration the number of stops, the number of seats offered, the frequency of service, the flight connections and the total travel time.

[8] Pursuant to subsection 66(4.1) of the CTA, the Agency shall not make an order under subsection 66(1) or 66(2) in respect of a licensee found by the Agency to be the only person providing a domestic service between two points if there exists another domestic service that is not between the two points but is a reasonable alternative taking into consideration the convenience of access to the service, the number of stops, the number of seats offered, the frequency of service, the flight connections, and the total travel time.

[9] Further, pursuant to subsection 66(3) of the CTA, when determining whether a fare published or offered in respect of a domestic service between two points is unreasonable or that a licensee is offering an inadequate range of fares in respect of a domestic service between two points, the Agency may take into consideration any information or factor that it considers relevant, including:

  1. historical data respecting fares applicable to domestic services between the two points; and
  2. fares applicable to similar domestic services offered by the licensee and one or more other licensees, including terms and conditions related to the fares, the number of seats available at those fares; and
  3. the competition from other modes of transportation; and
  4. any other information that may be provided by the licensee, including  information that the licensee provides under section 83 of the CTA.

POSITIONS OF THE PARTIES

General

[10] Mr. Churman states that Air Canada is the only air carrier operating a domestic service between Toronto and North Bay and maintains that “it is a monopoly route and the pricing is unfair.” Mr. Churman provides examples of Air Canada fares for two round trips offered on the same date between Toronto and North Bay and Toronto and Sudbury with respective fares (before surcharges) of $500 and $251. According to Mr. Churman, the only difference between the routes, besides the fact that Toronto is farther from Sudbury than from North Bay, is that Porter Airlines Inc. (Porter) flies from Sudbury while there is no competition on the service between Toronto and North Bay.

[11] Air Canada submits that Mr. Churman suggests that the services between Toronto and Sudbury and between Toronto and North Bay are comparable markets, based notably on the fact that the distance between each city pair is similar. In this regard, Air Canada argues that these markets are vastly different on numerous points and that according to the Air Passenger Origin and Destination, Domestic Report, 1999, published by Statistics Canada, the service between Toronto and Sudbury was one of the ten Canadian markets that had seen the largest increase in air passenger traffic in 1999. Air Canada submits that the service between Toronto and Sudbury had an approximate origin-destination passenger volume that was almost three times larger than the service between Toronto and North Bay and that given the size difference between these markets and the different passenger mix, the services between Toronto and Sudbury and Toronto and North Bay are not comparable.

Reasonable alternative domestic services between Toronto and North Bay

[12] In its answer, Air Canada provided two examples of what it believes to be reasonable alternative services. According to Air Canada, the first service consists of travelling on Bearskin Lake Air Service LP, as represented by its general partner, Bearskin GP Inc. carrying on business as Bearskin Airlines (Bearskin) between North Bay and Sudbury and connecting on Porter to Toronto, with a layover of 1 hour and 55 minutes in one direction and 3 hours and 20 minutes in the other, at a one-way cost of $245.50 ($274.74 return). Air Canada also submitted examples of fares and connection times from Bearskin and Porter that demonstrate a total flight time, on Bearskin, of 30 minutes between North Bay and Sudbury and Sudbury and North Bay, and a total flight time, on Porter, of 60 minutes between Toronto and Sudbury and 55 minutes between Sudbury and Toronto. The second service proposed by Air Canada consists of driving to Sudbury from North Bay and travelling on Porter to Toronto, at a one-way cost of $92.80 (plus the cost of driving.) Air Canada argues that the first service is comparable to Air Canada’s lowest direct fare between Toronto and North Bay of $267(weekday) and $247(weekend). Air Canada argues that the second service provides an option given that the combined travel time would be three hours.

[13] Air Canada submits that in taking into consideration the criteria set out in subsections 66(4) and 66(4.1) of the CTA, the alternative services it provided are valid when compared to the service between Toronto and North Bay as there is only one stop, the number of seats offered and the frequency of service are comparable, and the flight connections and total travel time are acceptable.

Similar domestic services offered by Air Canada and one or more licensees

[14] Air Canada submits that the services between Montréal and Val-d’Or and Québec and Sept‑Îles are relatively comparable to the service between Toronto and North Bay; however, Air Canada argues that the service between St. John’s and Deer Lake has very different load factors and passenger mix and requests that the service between St. John’s and Deer Lake be rejected as a similar domestic service.

[15] Air Canada disagrees with the Agency’s conclusion in Decision No. 484-P-A-2005 that the inclusion of additional factors would either severely limit the domestic services that could possibly meet the more restrictive criteria or conclude that each domestic service offered by a carrier is essentially unique and, therefore, there are no truly comparable services. Air Canada argues that while the factors chosen by the Agency impact fares, these factors are insufficient to properly analyze similarity in domestic services between two points as they provide an incomplete and inaccurate picture of the markets in question.

[16] Air Canada submits that factors pertaining to the size of catchment area, network contribution, passenger mix, the nature of the market (the proportion of leisure versus business travel and local traffic versus flow traffic), consumer behavior, travel patterns, seasonal fluctuations, peak travel periods, overall demand, and market size, would, if analyzed from one route to the next, inevitably flag similarities between markets. Air Canada points out however that these factors often affect load factors and revenue, which in turn, and along with costs, affect service profitability and fares. Air Canada argues that the load factors can be used as an additional criterion in establishing comparable services, as it reflects a number of factors that are used to set fares on a service, are readily analyzed and would not be restrictive to such an extent as to conclude that each domestic service is essentially unique. Air Canada believes that load factors and in some cases costs and passenger mix, when added to criteria considered by the Agency, would lead to a more accurate identification of comparable services.

Reasonableness of the fare between Toronto and North Bay

[17] With respect to the scope of the complaint, Air Canada argues that in his initial complaint, Mr. Churman generally compares pricing on the service between Toronto and Sudbury with that between Toronto and North Bay. Further, Air Canada points out that the complaint is not directed toward a specific fare. Air Canada contends that the complaint concerns the adequacy of the range of fares rather than the reasonableness of a specific fare.

Inadequacy of the range of fares between Toronto and North Bay

[18] Air Canada argues that the range of fares between Toronto and North Bay has been systematically lower or comparable to those on services that Air Canada agrees are comparable, in spite of considerably higher costs on the service between Toronto and North Bay. Air Canada points out that the annual average fare between Toronto and North Bay was lower than the lowest published fares for April 10, 2012, 2013 and 2014, and states that it regularly offers seat sales on this service. Air Canada maintains that the range of fares between Toronto and North Bay do not support Mr. Churman’s allegation that the “pricing is unfair”.

[19] Air Canada submits that the range of fares it offers between Toronto and North Bay is adequate and is comparable to the range it offers on the similar domestic services chosen by the Agency, particularly with the two services that Air Canada agrees are comparable (between Montréal and Val-d’Or and Québec and Sept-Îles).

ANALYSIS AND FINDINGS

Reasonable alternative domestic services between Toronto and North Bay

Whether Air Canada was the only person providing a domestic service between Toronto and North Bay within the meaning of section 66 of the CTA on April 10, 2014

[20] The Agency has reviewed the information available to it with respect to the domestic service between Toronto and North Bay.

[21] The Agency notes that according to the OAG Flight Guide (OAG)Note [1], at the time of the complaint, the Air Canada flight time between Toronto and North Bay was 64 minutes, and the flight time between North Bay and Toronto was 59 minutes. Air Canada submits that the total flight time between North Bay and Sudbury and Sudbury and North Bay, on Bearskin, is 30 minutes, and the total flight time, on Porter, between Toronto and Sudbury is 60 minutes and between Sudbury and Toronto is 55 minutes.

[22] Based on the information found in the OAG and in Air Canada’s submissions, the total direct travel time for the first alternative domestic service proposed by Air Canada, taking into account the layover, would be approximately 3 hours and 25 minutes in one direction and 4 hours and 50 minutes in the other direction. Regarding Air Canada’s second proposed alternative domestic service, the travel time would be approximately three hours in one direction and 2 hours and 55 minutes in the other direction.

[23] Based on the above information, the Agency is of the opinion that the two alternative domestic services are unreasonable given that the total travel time for both is unreasonable when compared to the service between Toronto and North Bay. The Agency is also of the opinion that the second alternative domestic service is not convenient given that it requires the traveller to use a vehicle.

[24] In light of the foregoing, the Agency finds that Air Canada was the only person providing a domestic service between Toronto and North Bay within the meaning of section 66 of the CTA on April 10, 2014. Accordingly, the Agency is of the opinion that the complaint falls within the Agency’s jurisdiction under section 66 of the CTA.

Fare related issues

Whether the fare published or offered by Air Canada in respect of the service between Toronto and North Bay was unreasonable on April 10, 2014.

[25] Based on the submissions, the Agency is of the opinion that Mr. Churman did not provide evidence to support that the fare, in respect of the service between Toronto and North Bay, was unreasonable as no fare was specifically identified. Therefore, the Agency rejects this part of the complaint on the basis of lack of evidence. As a result, there is no need for the Agency to make a finding in respect of its jurisdiction.

Whether the range of fares offered by Air Canada in respect of its service between Toronto and North Bay was inadequate on April 10, 2014

[26] The Agency, as required by subsection 66(3) of the CTA, has considered historical and current data respecting fares applicable to domestic services offered on the service between Toronto and North Bay as well as the fares applicable to the similar domestic services offered by Air Canada and one or more other licensees, including terms and conditions of carriage.

Similar domestic services offered by Air Canada and one or more licensees

[27] Section 66 of the CTA requires a comparison of the subject carrier’s fares offered on routes on which there is no, or only limited, competition, with the fares that the same carrier offers on similar competitive routes. The Agency is of the opinion that the intent of section 66 of the CTA is to ensure that travelers on routes on which there is no, or only limited, competition are offered fares that are broadly comparable in level and range (not “identical” as alleged by Air Canada) to those offered to travelers on similar competitive routes.

[28] In determining whether a particular service between two points is similar to the service that is the subject of a section 66 complaint within the meaning of paragraph 66(3)(b) of the CTA, the Agency will consider the following factors:

  1. whether there are other licensees offering a domestic service between the two points;
  2. the type of aircraft used by the licensee that is the subject of the section 66 complaint to operate its service between the two points;
  3. the air mileage between the two points; and
  4. the origin-destination passenger volume between the two points.

[29] With respect to the service that is the subject of the section 66 complaint, the Agency has determined that:

  1. on April 10, 2014, Air Canada operated its domestic service between Toronto and North Bay using small aircraft;
  2. according to the OAG, the distance between Toronto and North Bay is approximately 299 air kilometres; and
  3. the origin-destination passenger volume between Toronto and North Bay was approximately 26,540 passengersNote [2].

[30] The Agency conducted the same analysis with respect to 22 domestic services to identify domestic services on which Air Canada competes with one or more air carriers and which have characteristics similar to those of the service Air Canada provided between Toronto and North Bay. Based on its consideration of the factors outlined above, the Agency identified the following similar domestic services to those Air Canada offered between Toronto and North Bay within the meaning of paragraph 66(3)(b) of the CTA:

  1. Montréal and Val-d’Or;
  2. Québec and Sept-Îles; and
  3. St. John’s and Deer Lake

[31] The determination of similarity is based on the following reasons:

  • In addition to the services operated by Air Canada on April 10, 2014, using small aircraft:

• Pascan Aviation Inc. (Pascan) and Air Creebec Inc. operated domestic services between Montréal and Val-d’Or using small and medium aircraft;

• Air Inuit Ltd., Pascan, Sky Jet M.G. Inc. and PAL Airlines Ltd. carrying on business as Provincial Airlines (Provincial) operated domestic services between Québec and Sept-Îles using small and medium aircraft; and;

• Provincial operated a domestic service between St. John’s and Deer Lake using a small aircraft.

  • According to the OAG, the distance between Toronto and North Bay is approximately 299 air kilometres; and:

• the distance between Montréal and Val-d’Or is approximately 424 air kilometres;

• the distance between Québec and Sept-Îles is approximately 542 air kilometres; and

• the distance between St. John’s and Deer Lake is approximately 382 air kilometres.

  • The Toronto to North Bay route is approximately:

• 29 percent shorter in distance than the Montréal to Val-d’Or route;

• 45 percent shorter in distance than the Québec to Sept-Îles route; and

• 22 percent shorter in distance than the St. John’s and Deer Lake route.

  • The Air Passenger Origin and Destination, Domestic Report, 1999 reflects that the origin‑destination passenger volume between:

• Toronto and North Bay was approximately 26,540 passengers;

• Montréal and Val-d’Or was approximately 27,560 passengers;

• Québec and Sept-Îles was approximately 21,280 passengers; and

• St. John’s and Deer Lake was approximately 33,360 passengers.

[32] The Agency, in relating to Air Canada the results of its preliminary analysis, requested the carrier to comment on the Agency’s selection of the services operated on the Montréal-Val‑d’Or, Québec-Sept-Îles, and St. John’s-Deer Lake routes as similar domestic services.

[33] Air Canada agrees that the services between Montréal and Val-d’Or and Québec and Sept-Îles are relatively comparable to Toronto and North Bay; however, it is of the view that the service between St. John’s and Deer Lake has very different load factors and passenger mix and requested that the service between St. John’s and Deer Lake be rejected as a similar domestic service.

[34] Additionally, Air Canada states that it disagrees with the Agency’s conclusion in Decision No. 484-P-A-2005 regarding the inclusion of additional factors when determining similar domestic services, and argues that the factors chosen by the Agency are insufficient to properly analyze similarity in domestic services. Air Canada also submits that a number of additional factors that affect load factors and revenue, which in turn, and along with costs on a specific market, affect service profitability and fares. Air Canada argues that load factors and in some cases costs and passenger mix, when added to criteria considered by the Agency, would lead to a more accurate identification of comparable services.

[35] The Agency has considered Air Canada’s arguments respecting whether load factors and in some cases costs and passenger mix should be considered to provide a reasonable determination of similar domestic services and is of the opinion that it does not consider these factors when identifying similar domestic services. The Agency notes Decision No. 484-P-A-2005 which reflects that the four factors considered in analyzing similar domestic services represent the basic characteristics of a domestic service taken into consideration by the air travel consumer and provide the Agency with a consistent standard against which all domestic services can be assessed. In this regard, the Agency is satisfied that the factors currently considered by the Agency are sufficient for determining similar domestic services, and maintains its preliminary analysis with respect to the similar domestic services selected for assessing the inadequacy of the range of fares between Toronto and North Bay.

[36] Consequently, the Agency’s analysis of the range of fares offered on the service between Toronto and North Bay will include a comparison to the fares published by Air Canada for the three routes identified above.

Data respecting fares applicable to domestic services between Toronto and North Bay and on the similar domestic services

1. General overview

[37] When considering whether there is an inadequate range of fares in the market, which is the subject of a complaint, the Agency has traditionally compared that market to markets that constitute similar domestic services on the basis of the following elements: the span of fares, the number of fares, the distribution of discounts off the Y-class fare, the fare booking classes offered, and the historical range of fares.

2. Span of fares

[38] The following tables compare the difference between the highest and lowest fare over three years on each route and the difference in relative value between the Toronto and North Bay service and each of the similar domestic services in terms of fares, revenue per kilometre (RPK) and percentage. The fares are base fares submitted by Air Canada.

Table 1: Span of fares calculated for April 10, 2012
Service Highest Fare Lowest Fare  Highest minus Lowest Fare  Difference in Highest fare Toronto-North Bay vs. similar route  Difference in Lowest fare on Toronto-North Bay vs. similar route Difference in Span of fare Toronto-North Bay vs. similar route
Fare  RPK  Fare RPK  Fare  Fare  RPK  Fare  RPK
Toronto-North Bay $851  $2.85  $210  $0.70  $641          
Montréal-Val-d’Or  $781 $1.84 $207 $0.49  $574  $70  $1.00 $3 $0.21  $67
9%  55%  1%  44%  12%
Québec-Sept-Îles  $1,014  $1.87  $341 $0.63 $673 -$163 $0.98 -$131 $0.07  -$32
-16%  52%  -38% 12%  -5%
St. John’s-Deer Lake $855  $2.24  $202  $0.53  $653  -$4 $0.61 $8  $0.17  -$12
 0%  27%  4%  33%  -2%
 
Table 2: Span of fares calculated for April 10, 2013
Service Highest Fare Lowest Fare  Highest minus Lowest Fare  Difference in Highest fare Toronto-North Bay vs. similar route  Difference in Lowest fare on Toronto-North Bay vs. similar route Difference in Span of fare Toronto-North Bay vs. similar route
Fare  RPK  Fare RPK  Fare  Fare  RPK  Fare  RPK
Toronto-North Bay  $701 $2.34 $233 $0.78 $468          
Montréal-Val-d’Or  $644  $1.52  $230  $0.54 $414  $57  $0.83  $3  $0.24  $54
9%  54% 1%  44%  13%
Québec-Sept-Îles  $835 $1.54  $351 $0.65 $484 -$134  $0.80  -$118 $0.13  -$16
-16%  52%  -34%  20%  -3%
St. John’s-Deer Lake  $705 $1.85  $224 $0.59 $481 -$4  $0.50 $9  $0.19  -$13
-1%  27% 4% 33%  -3%
 
Table 3: Span of fares calculated for April 10, 2014
Service Highest Fare Lowest Fare  Highest minus Lowest Fare  Difference in Highest fare Toronto-North Bay vs. similar route  Difference in Lowest fare on Toronto-North Bay vs. similar route Difference in Span of fare Toronto-North Bay vs. similar route
Fare  RPK  Fare RPK  Fare  Fare  RPK  Fare  RPK
Toronto-North Bay  $786  $2.63 $221  $0.74  $565          
Montréal-Val-d’Or  $675 $1.59  $219  $0.52 $456  $111  $1.04  $2  $0.22  $109
 16%  65%  1% 43%  24%
Québec-Sept-Îles  $873  $1.61 $184 $0.34 $689  -$87 $1.02  $37 $0.40 -$124
-10%  63%  20%  118%  -18%
St. John’s-Deer Lake  $720 $1.88 $169  $0.44 $551  $66  $0.74  $52  $0.30  $14
 9% 39%  31%  67%  3%
 

[39] Based on the above tables, on April 10, 2012, the highest fare offered by Air Canada on the service between Toronto and North Bay was nine percent higher than the highest fare between Montréal and Val-d’Or and was lower than the highest fares on the remaining similar domestic services. On the same day, the lowest fare offered between Toronto and North Bay was one percent higher than the lowest fare between Montréal and Val-d’Or, was 38 percent lower than Québec and Sept-Îles, and was four percent higher than the service between St. John’s and Deer Lake. On April 10, 2013, the differences in the highest and lowest fares offered by Air Canada between Toronto and North Bay, when compared to the similar domestic services, were almost identical to those seen on April 10, 2012. On April 10, 2014, the differences in the highest fares offered by Air Canada between Toronto and North Bay compared to the similar domestic services were not significantly different than those seen on April 10, 2012 and 2013. Of note however, is that on April 10, 2014, the lowest fare between Toronto and North Bay was priced 20 percent and 31 percent higher than the lowest fare between Québec and Sept-Îles and St. John’s and Deer Lake respectively, due to the introduction of a lower fare on each similar domestic service.

[40] The absolute and percentage differences in the span of fares offered by Air Canada between Toronto and North Bay and the similar domestic services were relatively stable from April 10, 2012 to April 10, 2014. However, from April 10, 2013 to April 10, 2014, the difference in the span of fares doubled between Toronto and North Bay versus Montréal and Val-d’Or where the difference increased by $55 or 102 percent. It is noted that this increase was at the highest end of the range, not at the lowest end where the fares were comparable.

3. Number of fares

Table 4: Number of Fares
Service April 10, 2012
Number of Fares
April 10, 2013
Number of Fares
April 10, 2014
Number of Fares
Toronto-North Bay 24 30 12
Montréal-Val-d’Or 21 30 14
Québec-Sept-Îles 23 30 18
St. John’s-Deer Lake 32 41 14
 

[41] On April 10, 2012 and 2013, the number of fares offered by Air Canada on the service between Toronto and North Bay compared to the similar domestic services was similar, the exception being between St. John’s and Deer Lake, where Air Canada offered eight and 11 additional fares in each year respectively.

[42] On April 10, 2014, the number of fares offered by Air Canada on all services dropped consistently between all services due to a change in Air Canada’s fare structure on December 31, 2013. It is noted, however, that each similar domestic service offered a higher number of fares versus the service between Toronto and North Bay, and in the case of the service between Québec and Sept-Îles, six additional fares were offered.

4. Distribution of discounts off the Y-class fare

Table 5: Distribution of discounts off the Y-class fare
Service April 10, 2012 April 10, 2013 April 10, 2014
Highest Discount off
Y-class fare (%)
Lowest Discount off
Y-class fare (%)
Highest Discount off
Y-class fare (%)
Lowest Discount off
Y-class fare (%)
Highest Discount off
Y-class fare (%)
Lowest Discount off
Y-class fare (%)
Toronto-North Bay 75 9 67 1 72 13
Montréal-Val-d’Or 73 6 64 1 68 4
Québec-Sept-Îles 66 5 58 2 79 3
St. John’s-Deer Lake 76 2 68 2 77 17
 

[43] Over the three years under consideration, the distribution of discounts off the Y-class fare was similar or competitive for the service between Toronto and North Bay versus the similar domestic services.

5. Fare booking classes

[44] On April 10, 2012 and 2013, Air Canada offered travellers three classes of fares: Latitude, Tango Plus and Tango. As of December 31, 2013, the fare classes consisted of Latitude, Flex, and Tango. The following table shows the number of fares for 2012, 2013 and 2014.

Table 6: Fare booking classes
Service April 10, 2012 April 10, 2013 April 10, 2014
No. of classes:
Latitude
No. of classes:
Tango Plus
No. of classes:
Tango
No. of classes:
Latitude
No. of classes:
Tango Plus
No. of classes:
Tango
No. of classes:
Latitude
No. of classes:
Flex
No. of classes:
Tango
Toronto-North Bay 2 13 9 8 20 2 4 5 3
Montréal-Val-d’Or 2 11 8 7 17 6 4 5 5
Québec-Sept-Îles 2 13 8 8 20 2 4 9 5
St. John’s-Deer Lake 4 18 10 14 25 2 4 7 3
 

[45] On April 10, 2012 and 2013, the fare classes offered on the service between Toronto and North Bay and the similar domestic services were comparable, the exception being on the St. John’s‑Deer Lake service, where Air Canada offered an additional eight fares in 2012 and 11 fares in 2013. On April 10, 2014, the fare classes offered were comparable between Toronto and North Bay and Montréal and Val-d’Or, but were slightly higher on the services between Québec and Sept‑Îles and St. John’s and Deer Lake, where four and two additional Flex fares were offered on a respective basis.

[46] It is noted that while there were slight variations over the classes in each of the years under review, none of the additional fares offered were significantly different than those offered between Toronto and North Bay.

6. Historical changes

[47] The following table sets out the percentage change in the highest and lowest fares offered by Air Canada on the service between Toronto and North Bay and each of the similar domestic services between the dates of April 10, 2012 and April 10, 2014.

Table 7: Historical changes
Service April 10, 2012 April 10, 2014 2014 vs 2012
Highest fare Lowest fare Highest fare Lowest fare Change in Highest fare Change in Lowest fare
Toronto-North Bay $851 $210 $786 $221 -8% 5%
Montréal-Val-d’Or $781 $207 $675 $219 -14% 6%
Québec-Sept-Îles $1,014 $341 $873 $184 -14% -46%
St. John’s-Deer Lake $855 $202 $720 $169 -16% -16%
 

[48] As seen above, from April 10, 2012 to April 10, 2014, the change in the highest and lowest fares offered by Air Canada on the service between Toronto and North Bay was relatively similar to the change observed on the similar domestic services, with the exception being the change in the lowest fare for Québec-Sept-Îles. On that service, a significant decrease was recorded due to the addition of a low price Tango fare.

7. Summary

[49] In each year under consideration, travellers were offered similar, and in some cases, lower fares on the service between Toronto and North Bay at the highest and lowest end of the fare range, with the exception being on April 10, 2014, where travellers between Toronto and North Bay were offered higher, though not unreasonable, fares versus those offered between Québec and Sept‑Îles and St. John’s and Deer Lake.

[50] The absolute and percentage differences in the span of fares offered by Air Canada on the service between Toronto and North Bay and the similar domestic services were relatively stable from April 10, 2012 to April 10, 2014. However, from April 10, 2013 to April 10, 2014, the difference in the span of fares doubled on the service between Toronto and North Bay versus the service between Montréal and Val-d’Or.

[51] On April 10, 2012 and 2013, the number of fares offered by Air Canada on the service between Toronto and North Bay was not significantly different from the service between Montréal and Val-d’Or or Québec and Sept-Îles; however, on the same dates, there was a significantly larger number of fares offered on the service between St. John’s and Deer Lake. Due to the change in Air Canada’s fare structure, by April 10, 2014, the number of fares offered had decreased significantly and resulted in a similar number of fares being offered on the service between Toronto and North Bay versus the similar domestic services, with the exception being six additional fares offered on the service between Québec and Sept-Îles.

[52] In each year under consideration, the distribution of discounts off the Y-class fare was similar or competitive on the service between Toronto and North Bay versus the similar domestic services. Therefore, with respect to discounts, the routes were treated almost uniformly by Air Canada.

[53] While there was some variety in the fare classes offered in each year under review, the number of fares offered in each class on the service between Toronto and North Bay were reasonably similar to the number of fares offered on the similar domestic services. Upon review of the additional fares offered to travellers on the similar domestic services, the fares were broadly comparable to those offered to travellers on the service between Toronto and North Bay.

[54] Finally, an examination of the historical range of fares offered by Air Canada on the service between Toronto and North Bay compared to the similar domestic services shows that from April 10, 2012 to April 10, 2014, the change in fares on all routes was generally similar. The only exception was a significant decrease in the lowest fare on the service between Québec and Sept-Îles fare in 2014; however, the fare was only 20 percent lower than the corresponding fare on the service between Toronto and North Bay, which is an adequate lower limit in the comparable range.

8. Agency finding

[55] In light of the foregoing, the Agency finds that the range of fares offered by Air Canada in respect of its service between Toronto and North Bay on April 10, 2014 was adequate.

CONCLUSION

[56] Based on the above finding, the Agency dismisses the complaint.

Notes

Note 1

Information obtained from the OAG Flight Guide - Worldwide, vol. 15, No. 10 (OAG Aviation Worldwide Limited, April 2014).

Return to reference 1

Note 2

The origin and destination figures are based on the most recent data available to the public from the Air Passenger Origin and Destination, Domestic Report, 1999 (Ottawa, Canada: Minister of Industry for Statistics Canada, 2001).

Return to reference 2

Member(s)

Sam Barone
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