Jazz Air CEO warns of high fees
Nov 16, 2009 - (Source: CP, By LuAnn LaSalle) - Travellers shouldn't have more costs passed on to them or the Canadian industry could become less competitive globally, warns the CEO of Halifax-based Jazz Air Income Fund.
November 16, 2009 By Carey Fredericks
Nov 13, 2009 – (Source: CP, By LuAnn LaSalle) – Travellers shouldn't have more costs passed on to them or the Canadian industry could become less competitive globally, warns the CEO of Halifax-based Jazz Air Income Fund.
Several airports will begin paying rent and policing costs to the federal government and some airports are passing on the costs to travellers, Jazz CEO Joseph Randall said during a conference call Friday.
“At the end of the day, it's airline passengers that will bear these costs and, as a result, our industry could become less competitive on the global stage,'' he told analysts while discussing the company's third-quarter results.
Randall noted that the Ontario government has also proposed an aviation fuel tax while a federal excise tax on fuel already exists.
“We are doing our part, as are many carriers, to reduce our costs and improve efficiency. We need all stakeholders to make the same commitment,'' Randall said.
However, McGill professor Karl Moore said consumers are the “cash cow'' not just for airport authorities and governments, but also for airlines that are all looking for ways to either make or save money.
“All three players, governments, airport authorities and airlines, are all under enormous pressure because of the recession,'' said Moore, who teaches at the university's Desautels Faculty of Management.
Bruce Cran of the Consumers Association of Canada said both airport authorities and airlines hit consumers with fees that end up adding to the cost of travelling.
“Between the airports, the government fees for security and the airlines nabbing us for little bits and pieces, that's got a very solid effect on the end price of a cheap ticket,'' said Cran, the association's president.
The Greater Toronto Airports Authority, which runs the country's biggest airport, defended itself by saying it just charges an airport improvement fee.
“That's the only fee that goes directly to the passengers,'' said authority spokeswoman Trish Krale. The fee for departing passengers is $25 and $8 for connecting passengers, she said.
Krale said the authority has announced that its landing fees for airlines will go down 10 per cent on Jan. 1.
Jazz, the regional airline spun off from Air Canada, (TSX:AC.A), reported Thursday that its third-quarter net income fell to $25.3 million or 21 cents per diluted unit, down from $31.7 million or 26 cents per unit for the same quarter last year.
Operating revenue fell 13 per cent to $379.7 million from $437.4 million last year.
Randall said maintenance and engineering employees have ratified their collective agreement and the airports group is having a ratification vote its tentative agreement.
Negotiations are continuing with the remaining groups, including crew schedulers, flight attendants, pilots and dispatchers, he added.
Randall said that Jazz is open to acquisitions and taking equity positions in other airlines to diversity its business.
“We have to actively pursue those opportunities to be open to them and, ultimately what we're looking to do, is to diversify our business and to provide a stronger company for all stakeholders going forward. I won't rule anything out.'' Units in Jazz Air Income Fund were trading at $4.26, up two cents, in afternoon trading Friday on the Toronto Stock Exchange.