They were going to lock everyone out and shut the doors?

[altiplano]

Poor job trying to reframe the argument, realitycheck.

"Either with us or against us or it's time to move on"

That's not the dispute I see here. I see the group that is the most highly committed to the success of the enterprise protecting themselves and their profession.

[Bede]

Hi RealityChex,

I usually like your informative posts. I think your last one lacks some insight though.

I personally don't think that swoop was started to "screw the pilots", but that doesn't mean that "screwing the pilots" won't be an incidental effect. For years we have been told by a certain VP, on an annual basis, that the best thing to do is run an airline for 20 years, then burn it to the ground and start over with year 1 wages. Now here we are 20 years in and we're starting a new airline, with rock bottom pilot wages (40% less), transferring aircraft and routes.

And you wonder why we might be concerned?

[Rezy]

I don’t think Swoop was designed to “screw pilots” and I’ve never said that. But it is designed to replace WestJet flying because that’s exactly what it is doing.

[av8r374]

The kind of flying that Swoop is targeting is to compete with buses and trains, people that normally don't fly and of course the likes of Flair, Jetlines and others. This customer base is not going to fly on WestJet or at the very least fly as much. So therefore, if not WestJet, the business goes to the competitors, which gradually make inroads and erode the business base

I’ll stop you there, because this is not true. This is what management has said they are going to do, but the facts suggest otherwise, and even the investors are pissed - listen to the last call from May 8.
Swoop is starting with 6 routes. Out of those 6 routs, 50% completely cannabilize WestJet flying. As in, you can NO longer purchase a ticket from WJ to fly YEG-YXX, YEG- YHM, YHM-YHZ.
That’s definitely not attracting new business or going after new air travellers or competing with people that take buses. That’s cannibalizing your own flying on routes where people fly point to point. They are forcing Swoop to be successful because you won’t even be able to purchase a ticket on WestJet anymore. This is going to be a big airline - and if they can’t even find 6 routes to be successful, without cannibalizing WestJet flying, then it’s clearly not a good business model, as you described. It’s a replacement airline for domestic WJ flying.

Rezy, let me start by saying I do not agree with a lot of things happening at WJA.

However, I feel compelled to throw out a different perspective on this "cannibalization". It is entirely possible that WJA only ever operated these routes to occupy gates and slots that could otherwise be utilized by ULCCs trying to break in to the market. It is possible that they make little (in anything at all) on these routes but utilize them to stave off the competition.

Now if they start a company that can sit there and occupy these gates/slots, also compete with fares, utilize leased aircraft that would otherwise go to competing ULCC startups, capture a new market and lose less money (possibly even turn a profit) all in one, why not? Especially if it protects majority of their profit-generating flying which relies on the hub and spoke system as well as targeting premium travellers. The very flying, that will be able to sustain the higher costs of better WAWCON that the industry desires.

[Diadem]

Swoop is doing exactly what Swoop is designed to do. Isolate the canibalization of core traffic to the YXX-YEG-YWG-YHM corridor, (and on key transborder leisure routes in the winter), and then tactically, and ruthlessly go after new entrants where ever they pop up.

Dealing with them in a highly aggressive manner is the best way to protect the larger strategy, which is long term growth and lots of new iron in the years to come, starting with the 20 787's.

Why couldn't WestJet do that with WestJet aircraft and just cut the prices of tickets way down, like they did when NewLeaf was about to go to Phoenix-Mesa? WestJet started servicing the same route, even though they already flew to PHX, just to undermine NewLeaf, who ended up abandoning the route. It would lose them a bit of revenue in the short term, but if the strategic goal is to destroy new entrants then it's a small price to pay in the long run when they won't have the competition on those routes. Drop prices aggressively for a few months, drive the new entrants out of the market, and return prices to where they were. Besides, with connecting passengers, they may lose money on a single leg, but still be profitable over the entire trip, and that's an area where a new entrant can't compete.

[tbaylx]

Swoop is doing exactly what Swoop is designed to do. Isolate the canibalization of core traffic to the YXX-YEG-YWG-YHM corridor, (and on key transborder leisure routes in the winter), and then tactically, and ruthlessly go after new entrants where ever they pop up.

Dealing with them in a highly aggressive manner is the best way to protect the larger strategy, which is long term growth and lots of new iron in the years to come, starting with the 20 787's.

Why couldn't WestJet do that with WestJet aircraft and just cut the prices of tickets way down, like they did when NewLeaf was about to go to Phoenix-Mesa? WestJet started servicing the same route, even though they already flew to PHX, just to undermine NewLeaf, who ended up abandoning the route. It would lose them a bit of revenue in the short term, but if the strategic goal is to destroy new entrants then it's a small price to pay in the long run when they won't have the competition on those routes. Drop prices aggressively for a few months, drive the new entrants out of the market, and return prices to where they were. Besides, with connecting passengers, they may lose money on a single leg, but still be profitable over the entire trip, and that's an area where a new entrant can't compete.

Because they can do it with swoop and a 7c CASM and make money.

WestJet CASM is becoming closer to a legacy carrier with lounges, loyalty programs, business class etc. What if your competition who has lower costs than you doesn’t just go away after a few months? Swoop is necessary to protect the bottom end or Indigo partners or some other well capitalized group is going to come eat Westjets lunch and they won’t go away after a few months of WestJet price matching.

Swoop wasn’t brought in to screw anyone or steal main line flying, it’s their to protect mainline and the full service model that it’s become. Without Swoop mainline growth would be in trouble longer term.

[altiplano]

Doesn't change the fact that they could densifying the airplanes, paint a new logo, build a new website, and still give the flying to their pilots.

The business model is what defends the market in your example, it doesn't matter who's driving.

So the fact that they are able to create division and distract the pilot group is a bonus for management in this plan... Swoop wasn't created to screw the pilots, but the purpose of substandard wages and crewing it from outside was to screw the pilots.

[WeedPro2000]

Doesn't change the fact that they could densifying the airplanes, paint a new logo, build a new website, and still give the flying to their pilots.

The business model is what defends the market in your example, it doesn't matter who's driving.

So the fact that they are able to create division and distract the pilot group is a bonus for management in this plan... Swoop wasn't created to screw the pilots, but the purpose of substandard wages and crewing it from outside was to screw the pilots.

Yes distraction is a important component of any safe flight operation department.

[Rezy]

Double post

[Rezy]

The kind of flying that Swoop is targeting is to compete with buses and trains, people that normally don't fly and of course the likes of Flair, Jetlines and others. This customer base is not going to fly on WestJet or at the very least fly as much. So therefore, if not WestJet, the business goes to the competitors, which gradually make inroads and erode the business base

I’ll stop you there, because this is not true. This is what management has said they are going to do, but the facts suggest otherwise, and even the investors are pissed - listen to the last call from May 8.
Swoop is starting with 6 routes. Out of those 6 routs, 50% completely cannabilize WestJet flying. As in, you can NO longer purchase a ticket from WJ to fly YEG-YXX, YEG- YHM, YHM-YHZ.
That’s definitely not attracting new business or going after new air travellers or competing with people that take buses. That’s cannibalizing your own flying on routes where people fly point to point. They are forcing Swoop to be successful because you won’t even be able to purchase a ticket on WestJet anymore. This is going to be a big airline - and if they can’t even find 6 routes to be successful, without cannibalizing WestJet flying, then it’s clearly not a good business model, as you described. It’s a replacement airline for domestic WJ flying.

Rezy, let me start by saying I do not agree with a lot of things happening at WJA.

However, I feel compelled to throw out a different perspective on this "cannibalization". It is entirely possible that WJA only ever operated these routes to occupy gates and slots that could otherwise be utilized by ULCCs trying to break in to the market. It is possible that they make little (in anything at all) on these routes but utilize them to stave off the competition.

Now if they start a company that can sit there and occupy these gates/slots, also compete with fares, utilize leased aircraft that would otherwise go to competing ULCC startups, capture a new market and lose less money (possibly even turn a profit) all in one, why not? Especially if it protects majority of their profit-generating flying which relies on the hub and spoke system as well as targeting premium travellers. The very flying, that will be able to sustain the higher costs of better WAWCON that the industry desires.

Gates and slots full? At YXX, YEG, YHM, YHZ. Not possible. All of these airport have tons of gate availability and their respective airport authorities are in a position where they have so much availability that they are handing out sweetheart deals to airlines to attract more flights! (Reduced landing fees, reduced gate fees, etc).
But you’re right the flying will be more sustainable - why? Because Swoop will have a lower CASM.

[altiplano]

Doesn't change the fact that they could densifying the airplanes, paint a new logo, build a new website, and still give the flying to their pilots.

The business model is what defends the market in your example, it doesn't matter who's driving.

So the fact that they are able to create division and distract the pilot group is a bonus for management in this plan... Swoop wasn't created to screw the pilots, but the purpose of substandard wages and crewing it from outside was to screw the pilots.

Yes distraction is a important component of any safe flight operation department.

Do you deny that all the focus placed on fixing the swoop problem has distracted your group from maximizing gains in other areas? So much effort put into securing a win just in defending your scope...

[av8r374]

I’ll stop you there, because this is not true. This is what management has said they are going to do, but the facts suggest otherwise, and even the investors are pissed - listen to the last call from May 8.
Swoop is starting with 6 routes. Out of those 6 routs, 50% completely cannabilize WestJet flying. As in, you can NO longer purchase a ticket from WJ to fly YEG-YXX, YEG- YHM, YHM-YHZ.
That’s definitely not attracting new business or going after new air travellers or competing with people that take buses. That’s cannibalizing your own flying on routes where people fly point to point. They are forcing Swoop to be successful because you won’t even be able to purchase a ticket on WestJet anymore. This is going to be a big airline - and if they can’t even find 6 routes to be successful, without cannibalizing WestJet flying, then it’s clearly not a good business model, as you described. It’s a replacement airline for domestic WJ flying.

Rezy, let me start by saying I do not agree with a lot of things happening at WJA.

However, I feel compelled to throw out a different perspective on this "cannibalization". It is entirely possible that WJA only ever operated these routes to occupy gates and slots that could otherwise be utilized by ULCCs trying to break in to the market. It is possible that they make little (in anything at all) on these routes but utilize them to stave off the competition.

Now if they start a company that can sit there and occupy these gates/slots, also compete with fares, utilize leased aircraft that would otherwise go to competing ULCC startups, capture a new market and lose less money (possibly even turn a profit) all in one, why not? Especially if it protects majority of their profit-generating flying which relies on the hub and spoke system as well as targeting premium travellers. The very flying, that will be able to sustain the higher costs of better WAWCON that the industry desires.

Gates and slots full? At YXX, YEG, YHM, YHZ. Not possible. All of these airport have tons of gate availability and their respective airport authorities are in a position where they have so much availability that they are handing out sweetheart deals to airlines to attract more flights! (Reduced landing fees, reduced gate fees, etc).
But you’re right the flying will be more sustainable - why? Because Swoop will have a lower CASM.

Yes I agree it is not possible to keep them full all day long. However, if you occupy gates and slots strategically at certain times of the day/week where a bulk of the passenger traffic wants to fly, that's one less gate/slot available for the competition at that time. Larger companies are also better able to leverage themselves over the competition by saying "hey, we can operate x number of flights, bring y passenger volume and z millions of dollars of revenue to your airport (offer certain things as an incentive) if you limit Alias operators slots to x number per day at xxxx time of the day. The only way that is feasible is of course with a lower CASM. The system is a lot more complex- just my 2c.

[cloak]

Question: has the name and intent of Swoop made life easier or more difficult for Jetlines, Flair, Norwegean, etc.?

[onspeed]

Swoop is clearly meant to reduce the cost of running your airline. Which means front and back ends, mostly everything else is a fixed cost. Plainly its an attack on you and your colleagues careers, because really its the only place to save. Unionizing and voting to strike will probably be one of the best moves for Canadian Aviation in the past 20 years, you saved your own careers and hopefully will stop downward pressure in our industry.

My view, there is no chance of a real ultra low cost starting up and threatening WJ, the regulatory requirements, capital required, cost of operating in this country all combine to make the barrier to high. If someone was going to do it they would have done it already. Your management is using low cost as the bogeyman to get concessions.

[av8r374]

Swoop is clearly meant to reduce the cost of running your airline. Which means front and back ends, mostly everything else is a fixed cost. Plainly its an attack on you and your colleagues careers, because really its the only place to save. Unionizing and voting to strike will probably be one of the best moves for Canadian Aviation in the past 20 years, you saved your own careers and hopefully will stop downward pressure in our industry.

My view, there is no chance of a real ultra low cost starting up and threatening WJ, the regulatory requirements, capital required, cost of operating in this country all combine to make the barrier to high. If someone was going to do it they would have done it already. Your management is using low cost as the bogeyman to get concessions.

Remember what happened the last time somebody said the words "no chance of a startup threatening a big airline"? (Hint: think back to 1996)

[WeedPro2000]

Swoop is clearly meant to reduce the CASM of an airline in order to get first mover status in the ULCC space in Canada. It is an attack against other investor groups looking to gain a foothold in that space. It will do this without sacrificing the branding of WJ, which as anyone with a brain can see is moving in a direction opposite to a no frills carrier.

[J Roc]

.

[J Roc]

Swoop is clearly meant to reduce the CASM of an airline in order to get first mover status in the ULCC space in Canada. It is an attack against other investor groups looking to gain a foothold in that space. It will do this without sacrificing the branding of WJ, which as anyone with a brain can see is moving in a direction opposite to a no frills carrier.

CASM??! What are you talking about??? Everyone knows that we measure cost at WJ by using inflated, arbitrary and inaccurate percentages relative to profit over a 5 year period.

Sheesh! You need some re-education, John. Time to brush up on your Cam-o-grams.

[sanjet]

Swoop is clearly meant to reduce the CASM of an airline in order to get first mover status in the ULCC space in Canada. It is an attack against other investor groups looking to gain a foothold in that space. It will do this without sacrificing the branding of WJ, which as anyone with a brain can see is moving in a direction opposite to a no frills carrier.

I got no skin in this game but part of the brand is the people that work there, not just a shiny airplane with new paint colour. When you destroy that morale, your brand will take the hit in terms of customer service and revenue. I get it, you need to control CASM and there are ways to do it, defintiely not this way.

I can guarantee this case will be studied for years to come in business schools on how a high morale company got destoryed by management within 18 months and the fallout that came with it.

[J Roc]

Didn't Fred Cleveland once say to our pilot group - "pilot cost represent only a fraction of CASM"?

Yah, he didn't last.