Limited competition costs consumers – Winnipeg Free Press

Opinion

The game of “Canadian Monopoly” gained a new player last week, one with a game piece shaped like a bloated airplane.

WestJet’s acquisition of budget carrier Sunwing and planned consolidation of Swoop has raised concerns about the future of cheap flights and auxiliary destinations nationally. In a land of corporate monopolies, those concerns are warranted.

Canadians are already intimately aware of the effects little marketplace competition can have on their pocketbooks.

Take telecommunications for example. Canadians continue to pay the highest or among the highest wireless rates in the world thanks to a trio of household names. Rogers, Telus and Bell — often referred to as “The Big Three” — control the lion’s share of cellphone coverage in the country and, as a result, control the cost of data and calling for most of the population.

An annual independent analysis of mobile rates across the world has regularly ranked Canada as the one of the most expensive places on the planet to use a cellphone — costing roughly $144 per month for a 100 GB smartphone plan, a price point 14 times higher than for users in France.

In a 2019 report, Rewheel blamed weak competition as the main driver of prices and described the Canadian market as “a stack of provincial mobile network duopolies and monopolies stitched together by extensive and possibly co-ordinated roaming and network-sharing agreements.”

Yes, there are budget wireless providers, but just as WestJet owns Swoop, most of those brands are owned and operated by The Big Three.

When pressed on price, the telecoms have blamed the country’s landscape and low population density as the reason for high operating costs. Yet, in markets with even a single additional competitor, cell plans are generally found to be cheaper across the board.

Grocery stores suffer from the same monopolistic problems. Despite seemingly ample choice, most stores fall under the umbrella of one of five national supermarket chains, which garner 80 per cent of all grocery sales in Canada. The lines are even blurred between brands. Just last week, Canada Bread was fined $50 million by the Competition Bureau for colluding with Weston Foods to hike bread prices.

For WestJet’s part, it has described the impending merger as an attempt to offer customers more choice thanks to its larger fleet — a confounding message for an airline that’s in the process of grounding two competing brands.

While WestJet’s chief executive officer Alexis von Hoensbroech has said the company remains committed to offering “very competitive fares,” Transport Canada’s approval of the airline’s acquisition of Sunwing includes no stipulations about airfare. This could mean the end of low-priced vacation packages for Manitobans travelling to warmer climes. Similarly, the consolidation of Swoop, which WestJet launched in 2017, could decrease service to smaller hubs, such as Hamilton and Abbotsford.

Air Canada and WestJet are far and away the biggest players nationally, with a handful of regional and charter carriers filling local service gaps. Edmonton-based Flair Airlines continues to offer base airfare (carry-ons and legroom not included) for as little as $9 between some cities. It’s hard to imagine “The Big Two” will descend to that level of economy travel.

Businesses will always aim to make a buck. It’s up to federal agencies, such as Transport Canada and the Competition Bureau, to ensure consumers aren’t unfairly burdened by corporate takeovers.

Businesses will always aim to make a buck. It’s up to federal agencies, such as Transport Canada and the Competition Bureau, to ensure consumers aren’t unfairly burdened by corporate takeovers. It’s understandable that companies want to cover their costs and make a profit, but they shouldn’t be able to buy their way into windfalls.

Let’s hope these entities keep the continual consolidation of the aviation industry high on their radar.