Sunseeker Airlines Inc

Essay

Sunseeker Airlines Inc. offered weekly charter flights to several destinations in Florida. Its aircraft on the Miami route had a 250-seat capacity. From past experience Sunseeker knew that approximately 10% of passengers who booked seats would not show up, which meant it could reserve 275 passengers for the Miami flight.
In late December it appeared that sales were not progressing well for the late January flights. The sales managers decided to have a seat sale in order to fill up the flights. Accordingly, advertisements were prepared and appeared in three major national newspapers on the first weekend in January offering the seat sale for the January 20^th departure. The sale price offered was $149 rather than the regular fare of $219. Beatrice saw the seat-sale advertisement in the Sunday newspaper. Not realizing that the airline was open for booking on Sunday, she did not call until Monday morning. At that time, she was told by the booking agent that the January 20^th flight was fully booked. Beatrice was offered a flight on the following Saturday departure, January 27, at $219. At the time of running the seat-sale advertisement Sunseeker had 3 actual seats available or 27 open reservations available considering the over sale factor. The newspaper advertisement cost over $12,000.
Discuss the issues raised by these facts. What are the rights and obligations of the airline in undertaking marketing activities?
C.P.R. (3d), 392, this case looks at the practice of "bait-and-switch" selling. On these facts, the airline did not have sufficient seats remaining on the flight in order to meet demand at the reduced price. When customers called shortly after reading the advertisement, they were informed that the sale was "full" and offered a seat at a higher price. This practice is an offence under the Competition Act unless certain defences can be met. There is no evidence that the airline undertook to ensure that adequate seats would be available to meet reasonably anticipated demand for the seat-sale price. To the contrary, it is apparent that the airline knew it had insufficient seats since the revenue which could be generated by filling the empty seats at sale prices was only $4,023 and the advertising costs were over $12,000. A reasonable explanation for such action is that Sunseeker hoped to make a large number of sales at the higher, regular fare once it induced potential customers to call.
The airline may be prosecuted for violations of the Competition Act for its bait-and-switch selling practices and will be subject to fines and/or an order to cease such activity if convicted. The investigation process may be triggered by consumer complaints that the practice is occurring. The facts lend little support for any defences to the alleged violation. Sunseeker took no steps to ensure adequate supply, no events beyond its control prevented it from doing so and it could not help but anticipate demand when advertising in three national newspapers. Moreover, Sunseeker did not attempt to provide customers with seats on later flights at the sale price but tried to sell seats at the higher fare.