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Customer satisfaction with Air Canada, WestJet below average: Survey

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Canada’s two biggest airlines scored below average for customer satisfaction among major North American carriers, according to a new survey, part of a trend of growing passenger frustration across the industry.

Conducted by J.D. Power, the poll found Air Canada and WestJet fell below the average customer satisfaction figure of 782 on a 1,000-point scale for economy class service. WestJet notched 777 to edge out Air Canada, which scored 765.

Pricier fares, crowded planes and fewer flight options are behind the frustration — but demand remains strong nonetheless — said Michael Taylor, managing director of travel, hospitality and retail at the Michigan-based consumer analytics company.

As a result, carriers yielded higher revenues this year after a prolonged industry slump prompted by the pandemic. Taylor said many are running at “peak efficiency,” though higher labour and fuel costs compared with 2019 have hampered profit margins, and capacity has not yet reached pre-pandemic levels.

A global pilot shortage has fostered problems in North America, partly explaining why fewer planes ply the skies compared with four years ago.

Some airlines have ditched smaller planes, trying to pack in as many passengers as possible per flight as they slim down their schedules.

“They’re more full — they have a higher load factor — and that usually decreases satisfaction,” Taylor said.

Meanwhile, the surge in leisure travel after two years under border restrictions and COVID-19 health concerns has pushed prices north.

“Because of that high demand, ticket prices are significantly higher, and they’ve been going higher for the past two, two-and-a-half years or so. For the vast majority of travellers, that’s the key factor in satisfaction,” he said.

That discontent is quantifiable in ways other than surveys. The complaints backlog at the Canadian Transportation Agency stood at about 45,000 as of late April, more than triple the tally from a year earlier and requiring at least 18 months on average per case. Many cases revolve around compensation claims after flight delays or cancellations.

The drawn-out uproar prompted the federal government to table an overhaul to Canada’s passenger rights charter last month in an effort to tighten compensation loopholes and toughen penalties.

While a spate of upstart airlines has made domestic air travel cheaper than ever overall in Canada — particularly in the busiest corridors — passengers face higher prices and scarcer trip options in many regions and on international routes, according to figures from aviation data firm Cirium.

“You want to fly to, say, Winnipeg, it might be a little more expensive, because it’s not the most popular destination versus, say, getting to Toronto,” Taylor said.

The sparser flight boards at many airports also stem from a de facto division of the country by the two main players: Air Canada and WestJet, which share roughly 80 per cent of the domestic market.

Since last fall, Calgary-based WestJet has cut routes in Ontario, Quebec and Atlantic Canada to refocus on its home turf out west. It has also cut flights on some more heavily travelled corridors, including roughly four out of five trips between Toronto and Montreal compared to 2019 levels, Cirium data shows.

Montreal-based Air Canada has mirrored this move, remaining in Central and Eastern Canada while scaling back in the west. It also scrapped 26 regional routes east of Winnipeg in June 2020, with only two resuming since.

The survey Wednesday ranked airlines in three separate categories: first class and business class, premium economy, and economy and basic economy. In the first two groups, Air Canada placed fifth of six.

For economy — encompassing the vast majority of passengers — WestJet ranked fifth and Air Canada came eighth out of 11. Neither airline immediately responded to a request for comment.

Southwest Airlines, Delta Air Lines and JetBlue Airways snagged the top three spots — despite a meltdown at Southwest that caused of thousands of December flight cancellations in what U.S. Transportation Secretary Pete Buttigieg called a “system failure.” American Airlines, Spirit Airlines and Frontier Airlines took up the rear.

JetBlue and Delta came in first and second respectively for business class, and swapped spots for premium economy. United Airlines finished last for business class, and American Airlines did the same for premium economy.

The survey, carried out between March 2022 and March 2023, is based on responses from 7,774 passengers at scores of airports who flew on large North American airlines.

This report by The Canadian Press was first published May 10, 2023.

This is a corrected story. An earlier version incorrectly stated the ranking of Air Canada and WestJet.

 

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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