WestJet accepts blame, settles with Air Canada in espionage case


A resolution has been reached in a high-profile “corporate espionage” case with WestJet airlines admitting culpability today, apologizing to Air Canada, and agreeing to pay settlement costs totalling $15.5 million.

The amount includes a $10 million donation that WestJet will make in the name of Air Canada to children’s charities across the country, and payment of Air Canada’s litigation costs of $5.5 million. “The conduct was both unethical and unacceptable, and WestJet accepts full responsibility for such misconduct.”WestJet press releaseText

This settlement concludes a lawsuit Air Canada filed in 2004 with the Ontario Superior Court of Justice accusing its rival airline of illegally accessing confidential data via a Web site that enabled WestJet to drive Air Canada out of certain markets.

Today, WestJet – in a press release jointly issued with Air Canada – has accepted “full responsibility” for those actions, which it admits were “both unethical and unacceptable.”

In today’s release, WestJet admits certain members of its management had “engaged in an extensive practice of covertly accessing a password-protected proprietary employee Web site maintained by Air Canada to download detailed and commercially sensitive information without authorization or consent from Air Canada.”

This practice, it concedes, was undertaken with the knowledge and direction of the highest management levels at WestJet and was not halted until discovered by Air Canada.

As part of the settlement, Air Canada has accepted WestJet’s apology and withdrawn its claims (which were substantially higher than what WestJet will now be forking out).

In the original lawsuit filed against WestJet in 2004, Air Canada had sought $220 million. The filing alleged that by gaining access to confidential Air Canada data, WestJet was able to:

• Adopt pricing programs geared at forcing Air Canada out of certain markets – by identifying Air Canada’s most profitable routes and adjusting schedule and pricing information accordingly

• Planning expansion to new routes

“By knowingly misappropriating Air Canada’s confidential information, WestJet has gained a valuable springboard in starting new routes and terminating other routes both within Canada and the United States [and] avoiding costly and time-consuming mistakes,” Air Canada’s court filing had said.

According to the filing, WestJet accessed all this confidential data through one of its employees – a former Canadian Airlines staffer who, as part of a severance package, was able to book two free tickets a year until 2005 through a Web site. Access to that site was through a personal identification number.

The lawsuit alleged this employee, who was a financial analyst, was encouraged to use that I.D. by a senior WestJet executive, to view top-secret data, including passenger traffic and load factors for all of Air Canada’s routes.