WestJet or Air Canada?

Airline analysts have speculated for months about the possibility of Air Canada filing for bankruptcy protection.

Airline analysts have speculated for months about the possibility of Air Canada filing for bankruptcy protection.

If that happens, the company will surely be restructured to fly another day, but it certainly begs the question: why is Air Canada in so much financial trouble today?

WestJet Airlines continues to post relatively good numbers and is apparently making money with fuel costs having declined considerably since last summer.

The firm’s focus on low-cost flying is a good fit for the current economic recession, perhaps a better fit than Air Canada’s attempt to be all things to all people.

New Air Canada CEO Calin Rovinescu, with barely a week in the job, promises to improve labour relations and streamline operations, while striving to avoid bankruptcy protection.

But industry experts note he’ll be hard pressed to do that given the company’s $3.2-billion pension deficit, expiring labour contracts and $5.4 billion of debt.

As well, fierce domestic competition from WestJet is expected to be hard on Air Canada.

Admittedly, the airline industry is extraordinarily competitive and even in the lucrative American market, many of the players have gone under.

But if you want to get a sense for why Air Canada is in such trouble, it’s useful to consider why WestJet has been so successful.

The Calgary-based carrier recently rolled out a lowest-price guarantee to lure cash-strapped consumers back to the skies.

During the Christmas season, it made a lot of friends by spending $2 million in six days to care for guests stranded across the country by winter weather.

Air Canada, on the other hand, basically told its stranded passengers that they were on their own with no prospect of a food voucher or free hotel room.

WestJet was not required to provide meal vouchers or hotel accommodations for passengers delayed by inclement weather, but it did so anyway.

As part of the $2 million, it paid for more than 6,000 hotel rooms, provided 25,000 meal vouchers and spent $250,000 on taxis and buses to assist passengers.

Furthermore, it chartered airplanes from third-party airlines to ensure its passengers got home for Christmas.

One can only hope Air Canada CEO Rovinescu learns a thing or two from WestJet. If he doesn’t, his company may end up filing for bankruptcy protection for the second time in six years.

Rovinescu recently issued a cheerful memo to employees downplaying the possibility of the airline going bankrupt.

No doubt, he’s under tremendous pressure to reassure customers who are fearful of buying tickets from an airline that may fail financially.

On routes served by both Air Canada and WestJet, it’s hard to imagine why anyone would fly Air Canada.

WestJet treats its passengers like valued guests and appears willing to go out of its way to assist them.

Air Canada, on the other hand. . . . Well, if you’ve flown Air Canada in the past few years, you already know enough about its service.

Lee Giles is an Advocate editor.

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