AirCanada is forced to raise at least $ 800 million in the current yearto enable it to close the gap that exist in pension funding. Further,it has been forced to review its salaries and other benefitsregarding the employees to bring them in line with those of WestJet.Again, WestJet has a share purchase plan that can be used to reducethe cash that it pays out and such a method is not available in AirCanada that is experiencing high costs. Also, the labor contracts inAir Canada are contained in large documents whereas those of WestJetare as short as 30 pages. Similarly, the continued declining ofrevenues will make Air Canada break the credit card agreements withthe responsible firms.
Themain issue is that the rival company, WestJet has adopted a veryaggressive strategy that will ensure that it dominates the flightmarket thereby complicating the operations of Air Canada. WestJet hascome up with new rules and regulations that govern the cancellationof flights after customers have made the booking where they will notbe charged any fee. This is not the case with Air Canada where suchaxing attracts a penalty.
Thereare similar causes to this issue. For instance WestJet has come upwith new services that emphasize on value and also modifying theexisting ones to inflict damage to Air Canada. They have attractedsome customers who have shifted from Air Canada to WestJet so thatthey can be part of the beneficiaries. Also, WestJet involves itsemployees as part of the customer service, and this encourages themto work extra hard to gain maximally. Further, some airlines, likeAir Canada, stress on surviving the downturn whereas WestJet employstechniques that enable it to thrive and keep expanding.