The Canadian competition watcher looks to see if WestJet freight in Swoop has been offering aviation tickets lower than the cost only to push out competitors.
As noted first by the political announcement based on Ottawa, Blacklock's Reporter, the Canadian Bureau Competition has started an investigation to see if Swoop has engaged with what the bureau is in called "prey pricing" – selling tickets for less than it costs to fly, with the hope to drive other competitors on that route out of business.
Swoop was launched with many films earlier this year, with low prices between Canadian cities including Halifax, Edmonton, Winnipeg, Hamilton, and Abbotsford, BC, along with a handful of sunny destinations in the United States, Mexico and the Caribbean .
Some of those routes were already served by other small carriers from Canada, including Flair Air, when Swoop started an aggressive price war which saw one way prices to fall below $ 40 in some cases.
After that, Flair allowed some of his paths, because they could not make any money on them, but they were outstanding in Swoop's tactics and complained to the office.
"We are pleased that the Competition Office has taken our concerns seriously and has launched an inquiry into the pricing practices of one of the key competitors," said chief executive of Flair Airlines, Jim Scott.
"Our efforts to bring sustainable low payments to Canada have been blocked by these anti-competitive pricing practices," adding that the airline is willing to participate fully in the office investigation.
WestJet owns Swoop. Responding to a request for comments from the WBQ News, WestJet's spokeswoman Lauren Stewart said: "WestJet and Swoop are currently collecting information when answering the office inquiry and will not give further attention at this time."
Altacorp Capital analyst, Chris Murray, commented that WestJet manager's comments on conferencing calls and during investor submissions for not allowing another market permit to come back to feed the company now.
"Any perception could create a monetary penalty or influence the sustained supply of its low-cost Swoop company for cost transport, affecting growth and earnings in 2019 and beyond," he said.
Even if the investigation does not lead to negative perceptions against the company, it is likely that it will hang over the business in the short term, he said.
"We see this impact as negative as cost and highlight the actions that add to the company's challenges in the coming year," he said.