Delta and WestJet agree to form joint venture

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W5
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Delta and WestJet agree to form joint venture

#1 Post by W5 » Wed Dec 06, 2017 2:47 pm

http://news.delta.com/delta-and-westjet ... nt-venture

U.S.-Canada joint venture to offer more choices for transborder flying.

Delta Air Lines and WestJet have agreed to deepen their existing partnership by entering into a comprehensive transborder joint venture that will increase travel choices between the U.S. and Canada.

The airlines have entered into a preliminary memorandum of understanding regarding their intention to deepen their existing partnership to form a commercial joint venture arrangement, which will offer customers access to an extensive transborder route network, world-class airline products, enhanced frequent flyer benefits, shared airport facilities and amenities, and a more seamless travel experience.

Highlights of the planned joint venture arrangement, subject to board approvals, execution of definitive agreements and applicable regulatory approvals, in the United States and Canada, include:

Coordinated flight schedules for new nonstop flights to new destinations, expanded codesharing, and seamless and convenient connections on the airlines’ extensive networks in the U.S. and Canada.
Enhanced frequent flyer benefits including reciprocal benefits for top-tier members of both airlines.
“With its strong brand and employee- and customer-centric culture, WestJet is the perfect partner for us in the U.S.-Canada transborder segment and together we will produce great results for our respective employees, customers and investors,” said Steve Sear, Delta’s President – International and Executive Vice President – Global Sales. “We look forward to applying Delta’s experience building successful joint venture partnerships to this important segment of transborder travel, the second-largest international segment for U.S. travel.”

“This agreement will bring heightened competition and an enriched product offering to the transborder segment, both of which will benefit our guests,” said Ed Sims, WestJet Executive Vice-President, Commercial. “This is an important step in WestJet’s mission to become a global airline. We are delighted to be working with the premier U.S. carrier, Delta Air Lines, in this joint venture.”

WestJet Boeing 767 Plus CabinDelta has a 25-year track record of partnering closely with airlines around the globe, beginning with the first successful trans-Atlantic partnership, when Northwest and KLM launched their joint venture in 1993. With this agreement, Delta will have eight partnerships with leading carriers in the world’s biggest aviation segments spanning Europe, Latin America, Asia, Australia and Canada. Through deep relationships and immunized joint ventures, Delta has successfully achieved many benefits of cross-border cooperation for its customers.

WestJet, Canada’s second-largest airline, currently has 45 airline partners providing access to more than 175 destinations in more than 20 countries. WestJet has also entered into a definitive purchase agreement for 10 Boeing 787-9 Dreamliners with the first aircraft expected to be delivered in January 2019. With one of the youngest fleets in the airline industry, WestJet continues its global growth while controlling operating costs and providing an award-winning guest experience.

Further information about Delta Air Lines and WestJet is available at delta.com and westjet.com.
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Re: Delta and WestJet agree to form joint venture

#2 Post by Jimmy2 » Wed Dec 06, 2017 4:45 pm

So is this some kind of **** you to Westjet pilots for unionizing? I can't imagine this will be good for the planned Westjet widebody expansion project.
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Re: Delta and WestJet agree to form joint venture

#3 Post by NewCommercialPilot » Wed Dec 06, 2017 7:40 pm

Jimmy, WJ has been expanding for20 years. In that time, from alliances have been announced, the onboard product has changed, new airline types have been added to the flight, and new airlines have been built from scratch. How is today's announcement any different from any of the preceding codeshares or new destinations? Short answer, it isn't. If your business isn't growing and adapting, it is dying or becoming stagnant and irrelevant.
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Re: Delta and WestJet agree to form joint venture

#4 Post by DropTanks » Wed Dec 06, 2017 7:46 pm

Jimmy2 wrote:
Wed Dec 06, 2017 4:45 pm
So is this some kind of **** you to Westjet pilots for unionizing? I can't imagine this will be good for the planned Westjet widebody expansion project.
Ummmm what? No, not quite a f--- you to the pilots. Contrary to popular belief the pilots are not at the center of the known universe. The sun doesn't rise and set at the behest of the pilot group. People have got to start realizing that it's business as usual right now. These initiatives don't get rolled out overnight just because ALPA is in. This is yet another good news story for all Westjetters, pilots included. It's puts bums in seats and cash in hand for both sides. It's another chess piece on the board set up to fill 10+ Widebodies. I don't see how you can construe it as anything but good news for WJ.

AC has tons of Widebodies flying all over the world and in order to do that they have a vast network of JV's, codeshares, CPA's, you name it. WJ is simply laying the groundwork for its own bright future.
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Re: Delta and WestJet agree to form joint venture

#5 Post by goingnowherefast » Wed Dec 06, 2017 7:50 pm

Possibly, connect international passengers through Delta hubs to overseas. However, Delta pilots are paid quite well. They're even ALPA too.

I believe this one is genuine, nothing to so with unions. Allow WJ to offer more service into the US. Compete against AC's US expansion. Also allows Delta more access to Canada and push back against AC pushing into their territory.
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Re: Delta and WestJet agree to form joint venture

#6 Post by Transonic » Wed Dec 06, 2017 8:12 pm

Jimmy2 wrote:
Wed Dec 06, 2017 4:45 pm
So is this some kind of **** you to Westjet pilots for unionizing? I can't imagine this will be good for the planned Westjet widebody expansion project.
Not at all. The opposite.

Who do you think has the lower cost structure? WS or DL?

DL is using JVs to divert connecting traffic to lower cost operators. This is the biggest gripe amongst DL pilots as no scope clause can contain this strategy.

WS now has the best US airline to tap into and pull passengers out of a market 10x the size of ours.

For DL, this is also a competitive answer to AC's 6th freedom expansion into the US.

This is great for WS and DL.
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Re: Delta and WestJet agree to form joint venture

#7 Post by brooks » Thu Dec 07, 2017 12:21 pm

I agree.
Short of owning 49% of WJ this is a great deal for both. SP up a whole $1 this morning.
Now if WJ Encore can order up some C Series 100's the war between WJ and AC might get a whole lot more interesting. Good for the consumer.
How's that JetLines thing going?
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Re: Delta and WestJet agree to form joint venture

#8 Post by TheStig » Thu Dec 07, 2017 5:15 pm

brooks wrote:
Thu Dec 07, 2017 12:21 pm
Now if WJ Encore can order up some C Series 100's the war between WJ and AC might get a whole lot more interesting. Good for the consumer.
How's that JetLines thing going?
Great idea! Encore can operate the C Series and Westjet can park all their equivalent sized 737-600's and -700's, brilliant! Make sure to share your idea at the next town hall meeting. Better yet! Swoop can operate all the -800's and Westjet can operate just the 10 787's, the share price would go crazy!
How's that union thing going?
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Re: Delta and WestJet agree to form joint venture

#9 Post by flyinhigh » Fri Dec 08, 2017 6:23 am

I love how folks come on here and lambast Encore for "Doing it cheaper". There is not one Encore pilot that will operate a comparable aircraft to what Westjet has for a penny less than what the WAWCON would be if it were operated by big brother. Its just like SWOOP, I haven't met a person willing to operate it for less than what it should be.

We have one department list and nobody has any interest in blowing it up just to "fly something nicer".
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Re: Delta and WestJet agree to form joint venture

#10 Post by atphat » Fri Dec 08, 2017 6:38 am

flyinhigh wrote:
Fri Dec 08, 2017 6:23 am
I love how folks come on here and lambast Encore for "Doing it cheaper". There is not one Encore pilot that will operate a comparable aircraft to what Westjet has for a penny less than what the WAWCON would be if it were operated by big brother. Its just like SWOOP, I haven't met a person willing to operate it for less than what it should be.

We have one department list and nobody has any interest in blowing it up just to "fly something nicer".
Rrriiiggghhhtttttt
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Re: Delta and WestJet agree to form joint venture

#11 Post by NewCommercialPilot » Fri Dec 08, 2017 8:10 am

flyinhigh wrote:
Fri Dec 08, 2017 6:23 am
...just like SWOOP, I haven't met a person willing to operate it for less than what it should be.

We have one department list and nobody has any interest in blowing it up just to "fly something nicer".
Two points:

1) In a market economy, what an employment position pays is largely based on what the labour market decides it should be. While current WJ and WJE pilots may (not a given) turn down the opportunity to fly at SWOOP, there may be those around the globe who are willing to do the job at those rates. If SWOOP can offer a product to the public that meets the safety standards expected of them, and they can fill the two front seats, then the rates they pay pilots is entirely up to their management team.

2) Where you are on a seniority list colours what you see as fair, and what you think a union should do. If I had 300 pilots above me, and blowing up an existing policy would move me up 300 pilots, legally, I'd probably take a shot at it. Fortunately, I'm not in that position. But some may be.
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Re: Delta and WestJet agree to form joint venture

#12 Post by groundpilot » Fri Dec 08, 2017 9:01 am

NewCommercialPilot wrote:
Fri Dec 08, 2017 8:10 am
flyinhigh wrote:
Fri Dec 08, 2017 6:23 am
...just like SWOOP, I haven't met a person willing to operate it for less than what it should be.

We have one department list and nobody has any interest in blowing it up just to "fly something nicer".
Two points:

1) In a market economy, what an employment position pays is largely based on what the labour market decides it should be. While current WJ and WJE pilots may (not a given) turn down the opportunity to fly at SWOOP, there may be those around the globe who are willing to do the job at those rates. If SWOOP can offer a product to the public that meets the safety standards expected of them, and they can fill the two front seats, then the rates they pay pilots is entirely up to their management team.

2) Where you are on a seniority list colours what you see as fair, and what you think a union should do. If I had 300 pilots above me, and blowing up an existing policy would move me up 300 pilots, legally, I'd probably take a shot at it. Fortunately, I'm not in that position. But some may be.
Thank you for the lesson on market economies.

Anyhow, this has to be a new low. Now you’re saying you could have WJ flying done by foreign pilots.

Two points:

1) No pilot union will allow this complete lack of scope.

2) You don’t think this would have a huge impact on moral? Talk about WestJuice becoming vinegar
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Re: Delta and WestJet agree to form joint venture

#13 Post by NewCommercialPilot » Fri Dec 08, 2017 9:25 am

groundpilot wrote:
Fri Dec 08, 2017 9:01 am

Thank you for the lesson on market economies.

Anyhow, this has to be a new low. Now you’re saying you could have WJ flying done by foreign pilots.

Two points:

1) No pilot union will allow this complete lack of scope.

2) You don’t think this would have a huge impact on moral? Talk about WestJuice becoming vinegar
It isn't WJ flying, it's SWOOP flying. WestJet isn't going to be the operator of the aircraft, nor are those routes currently being flown by WJ aircraft.

Regarding scope, well, oh well. As long as WJ management does not break any labour laws, I think it's up for negotiation what is contained in the first CBA between ALPA and WJ.

As far as morale, the labour market has never been better for pilots, so I think if someone isn't happy, there are remedies. That said, SWOOP isn't going to be lowering the amount of flying done by WJ flights and with the aircraft on order, there should be lots of movement to keep most pilots happy. SWOOP is a tempest in a teapot. It's a market response to a product that we have not been able to effectively combat with our elevated mainline cost structure.

Cheers.
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Re: Delta and WestJet agree to form joint venture

#14 Post by W5 » Fri Dec 08, 2017 1:01 pm

WestJet has a radical — and risky — plan to get you on its planes

http://business.financialpost.com/trans ... its-planes

The Canadian carrier is starting a war with low-cost, no frills upstarts while also wooing the wealthy

Out in western Canada, the airline world is about to watch a unique business experiment. If it goes as planned, in a few years there will be a new favourite carrier battling for your airfare dollars, regardless of whether you’re a penny pincher or a rich banker.

WestJet Airlines Ltd., which flies Boeing Co. 737s in Canada much the same way Southwest Airlines Co. does in the U.S., is embarking on a radical shift to become a global-network airline, replete with fancy foods, plush beds up front and nine new, spiffier airport lounges and many more top-dollar business customers. Simultaneously, it’s launching an ultra-low-cost airline called Swoop to pursue those with the smallest budgets.

This “high-end, low-end” strategy comes as airlines the world over struggle to combat the grand ambitions of lower-cost rivals. The response has largely been defensive, with new fare classes or new airlines that have lower cost structures.

WestJet had a different idea. Next June, the carrier will debut no-frills Swoop, which is modeled on ultra-low-cost carrier Ryanair Holdings Plc. Swoop is squeezing 189 seats onto its 10 Boeing 737-800s, which is 21 more seats than WestJet flies on the same airplane. It’s simultaneously preparing for the first of 10 new Boeing 787-9 Dreamliners, which arrive in January 2019, to fly to Europe and Asia, with options for 10 more of the large planes.

WestJet’s attempt to strengthen its position comes amid a collective bargaining push by employees. In May, its pilots voted to unionize, as did pilots at its regional carrier, Encore, five months later. Multiple unions are looking to organize other groups at WestJet, including flight attendants and mechanics. These efforts are likely to mean higher labour costs. With that threat hanging over its bottom line, not to mention the cost of long-haul flights, the planned expansion with Swoop and long-haul jets could endanger what is currently a profitable franchise.
WestJet executives, who are quick to boast of 50 consecutive quarters of profit, said they’re not worried.

“We just got to the point where the single brand can no longer fulfill all of the missions,” Chief Executive Officer Gregg Saretsky said Wednesday, during an investor presentation. He acknowledged the skeptical feedback his airline has received over Swoop: “Many people are scratching their heads and wondering if that will work.”

“We’ve heard concerns about execution and our ability to successfully move upmarket and downmarket at the same time,” he said.

Calgary-based WestJet knows the dismal history of U.S. airlines that battled low-cost upstarts by establishing new carriers such as Swoop. In the early 2000s, Delta Air Lines Inc. formed Song to battle JetBlue Airways Corp., while United Airlines established a low-cost airline called Ted. Neither brand had operating costs that were sufficiently below its parent, and both were dissolved within five years.

WestJet executives, however, point to a different model: the experience of Melbourne-based Jetstar Airways, which Qantas Airways Ltd. launched 13 years ago to combat low-cost rival Virgin Blue (now called Virgin Australia Pty). Jetstar is a completely separate operation that flies in Australia and New Zealand and has helped Qantas cater to the thriftier end of the travel market.

Jetstar is “the one major exception in the world to the rule about low-cost airlines-within-an-airline never working,” said Seth Kaplan, managing partner of trade journal Airline Weekly. He also noted that Australia and Canada share some critical similarities in terms of population, the size of economies, major industries focused on natural resources and currencies that are heavily influenced by commodity markets.

WestJet said Swoop will fly primarily domestically, with a cost base that’s 40 percent below the mainline carrier — and only 0.1 cent above the average 5.9 cent cost per seat mile of the three U.S. ultra-low-cost airlines.

“Our view is that the network that Swoop builds will be incremental to the WestJet network, rather than cannibalizing it,” Ed Sims, executive vice president of commercial at the airline, said Wednesday in an interview.

In America, the Big Three legacy carriers have tried this “high-low strategy” without creating new carriers. They shoehorn every demographic into the same aircraft, from the price-sensitive Basic Economy traveler to the corporate big spenders in first class. Some airlines now segment customers into five distinct fare families, with multiple cabins on their aircraft.

The goal is to cede as little traffic as possible to no-frills rivals such as Spirit Airlines Inc. and Frontier, a shift from past years when the big airlines largely considered their customer bases to be radically different.

In Europe, the global behemoths have begun new, lower-cost offshoots: Last week, Air France-KLM Group made a play for younger customers with an airline called Joon; IAG SA, British Airways’ parent, is starting a cheaper brand, Level, for trips across the Atlantic, starting in June; and Deutsche Lufthansa AG is busy expanding Eurowings with new, longer flights, mainly into the U.S. This trio is chasing budget-minded travellers with new subsidiaries, rather than trying to integrate them into their flagship brands.

Despite these attempts, many industry analysts see ample risk in chasing all segments, the proverbial “all things to all people” strategy that has a checkered track record. After all, many airlines that stick to their patch have done well.

Spirit and Ryanair, for the most part, don’t lure business traffic away from Delta or Lufthansa. And premium carriers such as Singapore Airlines Ltd. and Qatar Airways Ltd. rarely expend effort to chase cash-strapped travelers. Investors have criticized United Continental Holdings Inc., for example, for aggressive fare skirmishing with ultra-low-cost rivals, a battle that’s dented its revenue performance.

Of course, WestJet’s big changes weren’t born in an aviation vacuum. The airline is responding to a variety of threats, from new ultra-low-cost Canadian rivals plotting new service to its bigger rival Air Canada, which has made international growth from the Great White North an article of faith. Air Canada also operates a budget unit called Rouge, which battles for price-sensitive customers, as do Canadian leisure airlines Air Transat and Sunwing Airlines Inc. Air Canada estimated that a Rouge aircraft costs up to 30 per cent less to operate than similar jets in its mainline fleet — the result of additional seats and lower-cost labour agreements.

Analysts have been cautiously optimistic about WestJet’s plans, noting that Swoop is likely to be profitable from the start, but said there will have to be significant follow-through. The “rewards associated with success are two to three years away,” BMO Capital Markets analyst Fadi Chamoun wrote in a client note this week. Given WestJet’s scale, low debt and ample cash flow, Raymond James analyst Ben Cherniavsky wrote in a report, “we believe these are risks worth assuming.”

Bloomberg.com
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Re: Delta and WestJet agree to form joint venture

#15 Post by flyinhigh » Fri Dec 08, 2017 2:00 pm

NewCommercialPilot wrote:
Fri Dec 08, 2017 8:10 am

Two points:

1) In a market economy, what an employment position pays is largely based on what the labour market decides it should be. While current WJ and WJE pilots may (not a given) turn down the opportunity to fly at SWOOP, there may be those around the globe who are willing to do the job at those rates. If SWOOP can offer a product to the public that meets the safety standards expected of them, and they can fill the two front seats, then the rates they pay pilots is entirely up to their management team.

2) Where you are on a seniority list colours what you see as fair, and what you think a union should do. If I had 300 pilots above me, and blowing up an existing policy would move me up 300 pilots, legally, I'd probably take a shot at it. Fortunately, I'm not in that position. But some may be.
1) Your right, but those said pilots will not be on the Westjet pilot list than. You want to undercut just to fly a big plane, have atter, but know that the west jet group won't have you on their list.

2) So you'd sell you're soul and drive down moral to move up 300 numbers. Based off this comment and previous comments, you must be a peach. I for one am quite happy to ensure myself and others I work with are driving to a common goal and the same WAWCON to keep the industry moving forward.
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Re: Delta and WestJet agree to form joint venture

#16 Post by NewCommercialPilot » Fri Dec 08, 2017 5:13 pm

flyinhigh wrote:
Fri Dec 08, 2017 2:00 pm


1) Your right, but those said pilots will not be on the Westjet pilot list than. You want to undercut just to fly a big plane, have atter, but know that the west jet group won't have you on their list.

2) So you'd sell you're soul and drive down moral to move up 300 numbers. Based off this comment and previous comments, you must be a peach. I for one am quite happy to ensure myself and others I work with are driving to a common goal and the same WAWCON to keep the industry moving forward.
Before I answer your hypothetical question, can you list some occasions in your life when you've turned down the opportunity to potentially 1) add hundreds of thousands of dollars to your income, 2) accelerate by years your promotion to the left seat and/or your ability to hold the base of your choice, and 3) decrease the odds of your layoff?

Should I hold my breath?

I've personally not had to make the above choice. I have however, sat on a super-secret tactic that for six years enabled me to pick up jammy overtime pairings (on our online shift trade system) ahead of my colleagues and didn't feel guilty doing so. Now that I'm jumping lots and designing a wingsuit airspeed sensor system, I've had a change of heart and actually shared the tactic with two Captains and one FO. While this increases the odds that more will find out, and decrease my ability to pick up OT if I so desire, it was time to pass the torch on to a new generation. They are quite happy. I've improved their morale and for that, this "peach" has a smile on his face.
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Re: Delta and WestJet agree to form joint venture

#17 Post by brooks » Fri Dec 08, 2017 11:13 pm

TheStig wrote:
Thu Dec 07, 2017 5:15 pm
brooks wrote:
Thu Dec 07, 2017 12:21 pm
Now if WJ Encore can order up some C Series 100's the war between WJ and AC might get a whole lot more interesting. Good for the consumer.
How's that JetLines thing going?
Great idea! Encore can operate the C Series and Westjet can park all their equivalent sized 737-600's and -700's, brilliant! Make sure to share your idea at the next town hall meeting. Better yet! Swoop can operate all the -800's and Westjet can operate just the 10 787's, the share price would go crazy!
How's that union thing going?
So thanks for coming out "TheStig". The C-Series 100... Doesn't quite complete with the 700 let alone the MAX-7.
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Re: Delta and WestJet agree to form joint venture

#18 Post by flyinhigh » Sat Dec 09, 2017 6:34 am

NewCommercialPilot wrote:
Fri Dec 08, 2017 5:13 pm


Before I answer your hypothetical question, can you list some occasions in your life when you've turned down the opportunity to potentially 1) add hundreds of thousands of dollars to your income, 2) accelerate by years your promotion to the left seat and/or your ability to hold the base of your choice, and 3) decrease the odds of your layoff?

Should I hold my breath?

I've personally not had to make the above choice. I have however, sat on a super-secret tactic that for six years enabled me to pick up jammy overtime pairings (on our online shift trade system) ahead of my colleagues and didn't feel guilty doing so. Now that I'm jumping lots and designing a wingsuit airspeed sensor system, I've had a change of heart and actually shared the tactic with two Captains and one FO. While this increases the odds that more will find out, and decrease my ability to pick up OT if I so desire, it was time to pass the torch on to a new generation. They are quite happy. I've improved their morale and for that, this "peach" has a smile on his face.
Don't hold to long. 5 years ago I made such a decision that to this day would total up to around 120K in lost salaries. When you realize that there is more to life than money, you will live a much happier life/lifestyle.
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