Strangely, the company refused to elaborate on its original press release, letting the talking heads speculate endlessly about how it's going to get impossibly expensive to get anywhere, if you can get a flight at all -- and all because of the new bane of our existences, super expensive oil.
But none of these so-called journalists referenced a story that has been getting a lot of coverage in Europe, Asia and Australia, but oddly enough is barely on the radar here -- a story that might offer a far different explanation for what's happening in the airline industry.
Since 2006, there's been a major investigation into price fixing among many of the world's airlines, specifically in the realm of air cargo. So far, four carriers have pled guilty to manipulating such things as fuel surcharges, including Quantas, Air Korea, British Airways and Japan Airlines. Quantas paid a fine of $61 Million and its boss went to prison. JAL just handed over $110 Million for its involvement and British Airways may have to fork out 10% of its annual sales or $850 Million.
That's because in addition to BA's $300 Million fine, each of the convicted airlines are facing class action suits to the tune of hundreds of millions of dollars. That'll buy a lot of those little bags of peanuts -- or maybe pay the salaries of a few thousand Air Canada employees.
You see, back on Christmas Eve, Air Canada was put on notice by investigators in the EU that they were under investigation and in April announced they were setting aside $125 Million to deal with the problem. They haven't been convicted yet, but so far the guys going after the airlines are batting a thousand.
You can read their full scorecard here.
Interestingly, that money was set aside just a few days before Air Canada announced their most recent fuel surcharge and an additional fee for those traveling with a second suitcase. Perhaps coincidentally, there was also a further devaluing of Aeroplan points. Now those two lonely seats available on the Toronto-Windsor red-eye next November will take even longer to save up for.
So, the question that's been bugging me all day is -- are 2000 people losing their jobs because the price of oil is too high or because the guys who run the company might be crooks?
We've been through an incredible series of corporate financial disasters from Enron and Worldcom to the current sub-prime mortgage fiasco in the US. And you've got to wonder if this white collar crime spree has more to do with the overall downturn in the economy than how much a barrel of oil costs.
It just seems to me that you can't make billions of dollars of people's savings go away and not have a profound effect on everyday life.
I've heard theories that because nobody trusts corporate accounting anymore, most of the market players have shifted from trading stocks to speculating in commodities, thus driving up the price of oil, corn and gold beyond what they're really worth.
I don't know enough about economics to know if that's true, but I sure know how much the shenanigans that have gone on in the Canadian TV and film industries have done to devalue our situation, so it sorta makes sense. And if there's a conviction in the Livent trial, I fear the small pools of private money still available to the arts will dry up even further.
I used to like Air Canada and flew them as often as I could. But several years ago, they started to change. The staff felt surly and glum and little by little the nice things about traveling with them disappeared. I honestly can't remember the last time I was on one of their planes, let alone the last time I even considered checking what they had to offer when I'm booking a flight.
And it's hard to come to grips with the fact that an airline that's considered the national carrier and paints the name of your country on their side may have been involved in criminal activity and screwing you more than by showing "Big Mama's House -- 1 & 2" as their transcontinental double feature.
I know it's probably hard to run an airline and I'm sure paying for jet fuel is a bitch. But I also wonder how many of those 2000 soon to be unemployed people you could keep if you didn't have to set aside $125 Million to cover a fine.
Or maybe you could keep them all and simply get rid of the handful of guys at the top who fixed prices in the first place.
