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Ailing Air Canada Revising a La Carte Strategy?

Posted by: Justin Bachman on April 02

For those who despise the plethora of fees airlines now charge, an intriguing story showed up today in the (Toronto) Globe and Mail. The newspaper reported that Air Canada’s new CEO, Calin Rovenescu, is pondering a reversal of the airline’s a la carte pricing strategy. The story was attributed to a source “familiar with Mr. Rovinescu’s plans to restore the cash-strapped carrier back to financial health.” (To be sure, the “review” of the fee strategy may include assessing the reception this idea receives after everyone reads about it in a large newspaper.)

I pay attention to Air Canada because 1) it’s a large global network carrier, 2) it’s part of the Star Alliance, the world’s biggest airline group, and 3) U.S. carriers almost certainly monitor their Canadian cousin’s pricing experiments. Air Canada, which adopted a range of pricing structures under former chief executive Montie Brewer, has been a revolutionary among network carriers in the pursuit of ancillary revenues. The management shakeup – with April 2 Rovenescu’s first full day on the job – comes as many observers think Air Canada is headed for a second trip through bankruptcy in the past five years. Industry blogger Holly Hegeman has a critical appraisal here of the company’s management. Air Canada is 75% owned by Montreal-based ACE Aviation Holdings.

Reader Comments

Bill steele

April 14, 2009 11:04 PM

Funny,this is AC
If Air Canada Sold Paint
Written by Power to Change Ministries

First, a reprise of how ordinary hardware stores sell paint…

Customer: “Hi. How much is your paint?”

Clerk: “We have regular quality paint for $18 a gallon and premium paint for $25. How many gallons would you like?”

Customer: “Five gallons of regular paint please.”

Clerk: “Great. That will be $90 plus tax.”

Now, imagine you are buying paint from Air Canada…

First you spend days trying to reach them by phone to ask if they have paint. Nobody answers, so you drive to an Air Canada store.

Customer: “Hi. How much is your paint?”

Clerk: “Well, sir, that all depends on quite a lot of things.”

Customer: “Can you give me a guess? Is there an average price?”

Clerk: “Our lowest price is $12 a gallon, and we have 60 different prices up to $200 a gallon.”

Customer: “What’s the difference in the paint?”

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Clerk: “Oh, there isn’t any difference; it’s all the same paint.”

Customer: “Well, then I’d like some of that $12 paint.”

Clerk: “When do you intend to use the paint?

Customer: “I want to paint tomorrow. It’s my day off.”

Clerk: “Sir, the paint for tomorrow is the $200 paint.”

Customer: “When would I have to paint to get the $12 paint?”

Clerk: “You would have to start very late at night in about three weeks. But you will have to agree to start painting before Friday of that week and continue painting until at least Sunday.”

Customer: “You’ve got to be kidding!”

Clerk: “I’ll check and see if we have any paint available.”

Customer: “You have shelves FULL of paint! I can see it!”

Clerk: “But it doesn’t mean that we have paint available. We sell only a certain number of gallons on any given weekend. Oh, and by the way, the price per gallon just went to $16. We don’t have any more $12 paint.”

Customer: “The price went up as we were talking?”

Clerk: “Yes, sir. We change the prices and rules hundreds of times a day, and since you haven’t actually walked out of the store with your paint yet, we just decided to change. I suggest you purchase your paint as soon as possible. How many gallons do you want?”

Customer: “Well, maybe five gallons. Make that six, so I’ll have enough.”

Clerk: “Oh no, sir, you can’t do that. If you buy paint and don’t use it, there are penalties and possible confiscation of the paint you already have.”

Customer: “WHAT?”

Clerk: “We can sell enough paint to do your kitchen, bathroom, hall and north bedroom, but if you stop painting before you do the bedroom, you will lose your remaining gallons of paint.”

Customer: “What does it matter whether I use all the paint? I already paid you for it!”

Clerk: “We make plans based upon the idea that all our paint is used, every drop. If you don’t, it causes us all sorts of problems.”

Customer: “This is crazy!! I suppose something terrible happens if I don’t keep painting until after Saturday night!”

Clerk: “Oh yes! Every gallon you bought automatically becomes the $200 paint.”

Customer: “But what are all these “Paint on sale from $10 a gallon” signs?”

Clerk: “Well, that’s for our budget paint. It only comes in half gallons. One $5 half gallon will do half a room. The second half gallon to complete the room is $20. None of the cans have labels, some are empty and there are no refunds, even on the empty cans.”

Customer: “Forget it! I’ll buy what I need somewhere else!”

Clerk: “I don’t think so, sir. You may be able to buy paint for your bathroom and bedrooms, and your kitchen and dining room from someone else, but you won’t be able to paint your connecting hall and stairway from anyone but us. And I should point out sir, that if you paint in only one direction, it will be $300 a gallon.”

Customer: “I thought your most expensive paint was $200!”

Clerk: “That’s if you paint around the room to the point at which you started. A hallway is different.”

Customer: “And if I buy $200 paint for the hall, but only paint in one direction, you’ll confiscate the remaining paint.”

Clerk: “No, we’ll charge you an extra-use fee plus the difference on your next gallon of paint. But I believe you’re getting it now, sir.”

Customer: “You’re insane!”

Clerk: “But we’re now Canada’s only paint supplier! And don’t go looking for bargains! Thanks for painting with Air Canada. Next!”


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BusinessWeek editors Dean Foust and Justin Bachman provide road warriors with the latest news, trends in business travel, which as most readers are aware, has all the romance of taking a school bus cross country. Come here to pick up travel news and tips or just commiserate about your latest business trip gone awry.

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