WestJet's "Other ATC" charge is a Sham (and Why They Need to Drop it)

I’ve argued that Air Canada’s updated Aeroplan program will be swiftly devalued as travel returns to the new normal.  Regardless, the low fees that Aeroplan has promised (and delivered for now) means that WestJet needs to react in order to keep market share. WestJet’s sham ATC fee is clearly an obfuscation and a money grab. It’s in WestJet’s best competitive interest to remove their ATC fee and properly include the charge in their base fare. 

What are these “Other ATC” charges?

Fuel surcharges were implemented in the early 2000’s as a result of rising oil prices. Added on top of base fares, this was another lever that an airline’s revenue management team could pull on to ensure that costs were covered while oil prices were rising. What (mostly) hasn’t happened is that airlines, who were quick to introduce the surcharge, didn’t pull back the surcharge when oil prices were lower.  Although the argument was made by the media, airlines were sued, IATA said they would fall, airlines just renamed the “Fuel Surcharge” to “Carrier Imposed Surcharges” in response to the DOT cracking down on the use of the Fuel Surcharge moniker. This lead to wild profitability in the industry (British Airways made over US$3B in 2018, no doubt that their astronomical carrier surcharge helped with that)

For those of us who use Miles&Points, these surcharges are another way airlines are able to get away with milking $’s out of their frequent flyers because typically these fees are added onto point redemptions. Air Canada used to include surcharges that were hefty, but they recently removed them from award tickets after updating the Aeroplan program. 

The old Air Canada surcharges were steep

The number one offender in this category is Britain’s very own British Airways. While there is the British APD that you’re required to pay, flights booked on British Airways Executive Club are hit with massive fees. For example, on the Toronto to London route on British Airways in Business class, I was charged $517.00 as a surcharge.

While some of that is the APD, it’s obviously a grotesque cash grab. They don’t even break this charge down on Google ITA or on their website.

Why do airlines charge Carrier Surcharges?

Surcharges are included for a few reasons as a result of revenue management. As surcharges are relatively static, the airline can guarantee the minimum price on the ticket. For example, the base fare can go to almost zero, but they can still guarantee money on their passenger surcharge. 

A $15 fare isn’t really 15 bucks…

In addition, if there is a discount code, it only discounts the base fare, not the carrier surcharge, which leads to practice like this. (or even worse) Finally, the carrier surcharge is non commissionable by travel Agents, which means there is more money for carriers. 

WestJet Carrier Surcharge and “Other ATC”

Now that Air Canada has removed surcharges from award tickets, the ball is in WestJets court. Right now, WestJet charges ~ $170 each way, for each ticket to Europe.

The problem is, for those people who collect WestJet Dollars, they can’t use WestJet dollars for this ATC charge (nor do paying customers earn points on this charge). Even worse, when using the companion fare, the fee isn’t covered. In fact, they just don’t apply these companion vouchers in this situation.

Your WestJet dollars cover only $164 of the $1336 fare for two, or about 15 percent.

Overall, the value proposition isn’t there if the main competition doesn’t charge additional fees. For a program that advertises themselves as easy to use, they’ve been outmanoeuvred by Air Canada.

The Point

Ultimately, as the return of travel comes into the realm of the possible heading into mid-2021, WestJet is going to have to look at its competitive position and remove these sham “Other ATC” fees that put their program significantly behind Air Canada’s fee-free new Aeroplan.  I hope that the ensuing competition for passengers and loyalty as travel starts to return to near-normal levels will be good for passengers and their wallets.