Airline was quiet when raising fuel charges recently

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MONTREAL - Air Canada (TSX:AC.B) failed the test of transparency by not being up front enough in informing the public about new fuel surcharges, industry observers said yesterday.

Unlike rival WestJet (TSX:WJA), Canada's largest airline has made little mention of the reintroduction of a substantial increased cost of flying. The primary reference is buried in link on its website once consumers establish the final cost of their travel.

Calgary-based WestJet, by contrast, has informed consumers about the surcharges in a news release, newspaper advertising and on the main page of its website.

Airline industry observer Joseph D'Cruz of the University of Toronto's Rotman School of Business says Air Canada has hurt its public image by not adopting sufficient transparency in adopting fuel surcharges. "It's just a poorly handled public relations activity," D'Cruz said in an interview.

Air Canada has altered its fuel surcharge policy three times in recent days. Last week, it first matched U.S. carriers by introducing a three-tier fare for transborder travel between Canada and the United States. It then extended the surcharge structure to domestic travel.

Once WestJet followed up with lower levels on medium and longer distance flights, for competitive reasons Air Canada matched those amounts and adopted a single $40 charge for one-way transborder flights.

The two airlines now have identical surcharges for domestic flights: $20, $30 and $45 depending on the distance travelled.

While the surcharges may have little short-term impact on consumer behaviour, the extra costs and vast difference between advertised fares and final costs could have a long-term impact on air travel, D'Cruz added.

Air Canada spokeswoman Isabelle Arthur said the airline hasn't hidden the fuel surcharge. "It's at the forefront of everyday life for everyone ... and our fuel surcharges are indicated at the time when you buy your airfare."

While the airline has noted on its website policy changes regarding unaccompanied minors and additional baggage charges, it has failed to mention the surcharge.