Air Canada joins WestJet in severing ties over claim of 'secret fares'

Air Canada said Friday it will join rival WestJet in severing its ties with Hopper Inc. after the mobile travel app's suggestion it has sole access to "secret fares" caused confusion in the travel industry.

Hopper landed in hot water with other travel groups that sell air fares, such as travel agents and aggregator sites, when the company suggested earlier this week that they were the only ones to have special fares — at up to a 35 per cent discount — and marketing them as "Secret Fares."

"For someone to say that we have a secret fare and that it applies to all of our network is totally incorrect, it doesn't happen," Duncan Bureau, Air Canada's vice-president of global sales, said in an interview Friday.

The country's largest airline had agreed to a trial of Hopper's program by giving it access to a low fare on one route between the United States and Asia, he said.

Like other airlines around the world, Air Canada uses all kinds of distribution channels to drive sales, especially in markets where it isn't the dominant player. They offer various types of fares, including private ones available to partners depending on the route, competitive dynamics and season.

"We don't disadvantage one distribution partner from another. What we do is we leverage distribution partners that have a strength in a particular market or particular niche," he said.

Bureau said Air Canada isn't interested in selling the lowest possible fare or unloading seats at below cost.

"We don't have secret fares. We have negotiated fares with all of our different partners and different partners bring different types of customers."

Hopper was wrong to imply that Air Canada created an advantage for the app over its other partners, he said.

"For us, it's about integrity. We have a lot of distribution partners and what I cannot have is someone going to the marketplace insinuating that they have access to inventory or fares that no one else has fares to on a system-wide basis."

The airlines say they were caught off guard when their names were used in a news release and were the subject of news reports.

WestJet spokesperson Lauren Stewart said late Thursday that the company was severing ties with Hopper "due to the confusion this has created in the marketplace."

WestJet said Hopper will still be able to sell the company's published fares, comparable to those available on its website, but that it will no longer provide the private, discounted fares it offers to travel agents and other partners.

Apology issued

Having perhaps attracted more attention than it bargained for, Hopper apologized Friday.

"We value our relationships with both Air Canada and WestJet, and sincerely apologize for any confusion caused by the way we marketed this initiative," Hopper spokesperson Brianna Schneider wrote in an email.

In its release Wednesday, Hopper said other "secret fare" airline partners include LATAM, Turkish, Copa and Air China, adding they will be joined by other carriers in the coming weeks.

But the company clarified that "Secret Fares" was the name of a program.

"Secret Fares is a Hopper-specific marketing strategy and not a unique class of airfare," she said.

So-called opaque fares can be a good way to distribute hard-to-sell seats at a lower price, without triggering an immediate fare war, but likely raised concerns from vendors and key travel agency partners, said Robert Kokonis, president of airline consulting firm AirTrav Inc.

"I think calling it 'Secret Fares' was not a wise marketing approach for Hopper," he said.

John Kirk, editor of travel industry publication TravelPulse Canada, added that Hopper's initial approach likely didn't sit well within the travel distribution network.

"I don't know if this was something Hopper thought would bring them some media attention and grab some sales or not but I guess it didn't work for them," he said in an interview.

Still, Jacques Nantel, marketing professor emeritus at the University of Montreal's HEC business school, expects that the airlines will eventually mend fences with Hopper.

"You just let them simmer awhile until they come back with a plan which is little more aligned with what Air Canada would like discounters to offer and they'll probably start talking again."