August 24, 2011 / 9:36 PM / in 6 years

WestJet backs regulator against Air Canada, United

TORONTO (Reuters) - WestJet Airlines is lining up behind Canada’s Competition Bureau in opposing a proposed joint venture and existing agreements between Air Canada and United Continental Holdings.

<p>An Air Canada Boeing 777 taxis at Sydney airport after being given the all clear to resume its journey to Vancouver July 28, 2011. REUTERS/Tim Wimborne</p>

In documents made public on Wednesday, Air Canada’s main domestic competitor asked for intervenor status in a case before the country’s Competition Tribunal.

In June, the Competition Bureau asked to have a planned joint venture between Air Canada and United scrapped on antitrust grounds, and challenged co-operation between the airlines it said would lead to inflated fares.

“Under the joint venture scenario, WestJet would be competing with the combined strength of Air Canada and United Continental,” Hugh Dunleavy, executive vice-president for strategy and planning at WestJet said in an interview.

United Continental, formed when UAL Corp acquired Continental Airlines last year, has had so-called alliance agreements with Air Canada since 1997. The companies co-ordinate seat sales, fare structures, discounts and marketing campaigns on transborder routes.

Their proposed joint venture would go further, pooling resources and sharing revenue so each company “would be indifferent as to which airline collects fares or operates a particular route,” according to Air Canada’s submission.

While WestJet has an agreement with American Airlines that allows the two companies to sell space on each other’s flights, Dunleavy said they are not allowed to discuss capacity, scheduling or pricing.

Special approval from U.S. regulators has allowed Air Canada and United to co-ordinate more under their alliance agreements, Dunleavy said.

WestJet’s submissions to the tribunal said the other airlines’ co-ordination has already kept it from competing on transborder routes.

Last week Air Canada and United made their own submissions. Air Canada said the regulator’s opposition was “fundamentally misconceived” and would hurt passengers by reducing efficiency.

Canada’s largest airline said the measures are “a crucial aspect of Air Canada’s ability to compete with other airlines and to remain viable in the long term.”

Reporting by Allison Martell; editing by Frank McGurty and Rob Wilson

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