Spy Versus Spy

Written by Paul Dunn for the Purposes of Classroom Discussion

In the airline industry, passenger load capacity is the proportion of seats filled on each flight. The
objective is to have all airplanes at full load capacity on all flights.

In October 2000, Jeffrey Lafond, a former Air Canada employee, joined WestJet Airlines as a
financial analyst. As part of his separation package from Air Canada, Lafond received two airline
tickets per year for five years. These tickets were booked through a private password-protected
Air Canada website reserved for former employees and retirees.

Mark Hill was the vice-president of strategic planning, and a co-founder, of WestJet. Hill used
Lafond’s identification code to access the Air Canada website to obtain information concerning
passenger load capacity, actual loads, and load percentages. This was very useful information
because it could be used by WestJet to adjust its ticket prices in order to attract passengers away
from Air Canada. Between May 15, 2003 and March 19, 2004, Lafond’s code was used 243,630
times to access the private Air Canada website.

On December 19, 2003, Melvin Crothers, a WestJet employee noticed Air Canada’s logo and
load factors on the computer screen of Duncan Bureau, director of sales. Crothers thought that a
‘rogue employee’ at Air Canada was leaking information to WestJet. So, he decided to report
this to Clive Beddoe, the CEO of WestJet. But, Beddoe was on holidays. Later that afternoon,
Crothers phoned a former WestJest executive who was now an Air Canada executive and told
him that a WestJet employee had access to a private Air Canada website. Crothers justified his
informing Air Canada on the basis that “I didn’t like what I found out about the website. It was
wrong, morally and ethically, and I’m a Christian man.”

Five days later, on December 24, Yves Duguay, senior director of corporate security and risk
management for Air Canada, hired IPSA International Inc., a private investigating firm, to look
into Crothers’ allegation. A month later, IPSA discovered that someone in the Victoria area was
repeatedly accessing the private Air Canada employee website. A trace of the IP address led
them to suspect that the hacker was Mark Hill, who lived in Oak Bay, a suburb of Victoria.
However, Air Canada could not prove that Hill was acquiring confidential Air Canada
information.

On March 5, 2004, Hill booked an Air Canada flight from Toronto to Fort Lauderdale. (He was
investigating whether WestJet should expand its operations to include Fort Lauderdale.) Air
Canada hired Robert Stenhouse, a former RCMP staff sergeant, and arranged for Stenhouse to
have the seat next to Hill. The two men introduced themselves. Hill said he was a WestJet
executive. Stenhouse said that he was former Mountie but did not add that he was currently
working for Air Canada. During the flight, Hill had sheets of paper with data that he entered into
his laptop. When Hill when to the washroom, Stenhouse copied the material. It was detailed
information about Air Canada flight numbers, flight times, and passenger loads.

1
Two weeks later, Air Canada hired other private detectives to go through Hill’s trash at his home
in Oak Bay. Afterwards, Air Canada arranged to have the shredded papers digitally reconstructed
by a U.S. firm.

Questions
1. Did WestJet do anything wrong?
2. Did Air Canada do anything wrong?
3. Melvin Crothers received no financial benefit nor any thanks from WestJet nor Air Canada
for what he did. Did Crothers do the right thing?

Source
Adapted from “Spy versus Spy: Corporate Espionage in the Canadian Airline Industry,” in Brooks, L. and
Dunn, P. 2021. Business & Professional Ethics for Directors, Executives & Accountants, ninth
edition. Cengage Learning, pp. 188-189.