Jazz and a new Air Canada regional airline.

[boeingboy]

I have just seen an email of the new Jazz Commercial Agreement with Air Canada.

In a nut shell they (Jazz) will have a minimum fleet of 44 Q400's and 16 CRJ705's, with the Dash 8 classics being run by a new Air Canada regional airline - apparently run similar to Rouge - with it's own workforce and operations. The Dash 8 100's will be phased out of service by 2025, and the 300's will undergo a SLEP (service life extention program) created and offered by Bombardier (Jazz is the launch customer). This adds another 15 years to the airframe life. They will also have fewer spare aircraft.

Their (Jazz) compensation goes from a "cost plus 12.5%" to a "fixed fee". They also get performance incentives but they reduce after 2020.

The pilots apparently signed a new agreement in which they subscribe to a pilot mobility list and Air Canada has said they would offer a minimum 80% of their vacancies to those from that list, that in turn lets Jazz hire younger pilots at "industry competitive rates"


Thoughts?
I don't know - but overall - it sounds like a downhill slide to me.

[Panama Jack]

My thoughts:

1) Air Canada continues to be a marginally profitable company (when it actually does realize a profit);
2) Air Canada's management, like all other airline managements, seeks cost reductions and better value propositions;
3) Jazz was in danger of extinction due to its increasing cost structures (itself becoming a legacy carrier) vis-a-vis new-entry regional airlines who were willing and able to do similar flying for cheaper. (See Comair Airlines/Delta Connection and "airline recycling");
4) The Common Employer issue which many Jazz employees held on to in the 90's and early 2000's is a lost cause. A flow-through promise is a piece of candy which many pilots will accept in lieu of cash.

Yes, it is a downhill slide. However I would not expected anything else. Even Westjet started a regional division with an eye on lowering its increasing costs. Lets look towards what new chapter Ultra-Low Cost Carriers like Canada Jetlines and Jet Naked bring to the table.

[rudder]

The new airline will basically be the same as if GGN was using D8's except it will be a subsidiary of CHR. Likely that it will contract with Jazz for some services (i.e. Dispatch).

In the AC CPA bidding war it would appear that CHR has laid down the gauntlet and it will be interesting to see what opportunities remain for other prospective bidders.

[TrailerParkBoy]

My thoughts:

Yes, it is a downhill slide. However I would not expected anything else. Even Westjet started a regional division with an eye on lowering its increasing costs. Lets look towards what new chapter Ultra-Low Cost Carriers like Canada Jetlines and Jet Naked bring to the table.

Terrible analogy.

Westjet created a regional airline with smaller aircraft and smaller salaries. They didn't create a new airline with their older B737s and cut salaries by 30%.

Jazz will create a new airline with the DH8 Classics and offer bottom of the industry standard salaries for those who get stuck on the DH8 Classic while the others who fly DH8 Q400 (same Type Rating with Differences Training) get 30% more in salary.

IMO, the Classics do the hardest work in the company!

[rudder]

[

IMO, the Classics do the hardest work in the company!

True. But they do not generate the revenue for AC to offset the current Jazz overhead. Other operators will submit bids to AC with entry level crew costs and lower employee benefit expense. And AC will accept the lower bid. Jazz had one of two choices - abandon the classics or make a deal with ALPA for a second operating certificate.

Jazz will stop flying the less than 50 seat segment for the same reason that AC subcontracted the under 77 seat segment away from the mainline staff. It sucks but it is the reality of the marketplace.

Jazz's focus going forward should be increasing its volume of 75 seat flying in the AC Express portfolio.

[loopa]

So am I reading this right?

Jazz as a company will have 86 planes. But they will have 44 Q400's and 16RJ's making up 60 planes. And then 26 x dash 8 classics will make up 86 frames under the Jazz umbrella, but operated on what will now be a c scale ?

Hopefully I read this wrong, cause if that's the case, OUCH.

[av8ts]

That sounds about right. People can go on about "lowering the bar" or "selling out" but under the cpa those Dash 8 classics were going to be operated for less money. Jazz pilots had a choice, do it themselves or let Acme Air or whoever AC contracted do.

[TrailerParkBoy]

[

IMO, the Classics do the hardest work in the company!

True. But they do not generate the revenue for AC to offset the current Jazz overhead. Other operators will submit bids to AC with entry level crew costs and lower employee benefit expense. And AC will accept the lower bid.o.

There will be hundreds of senior captains who will no leave Jazz nor their DH8s while keeping their so called "overhead salaries"!

They should have created the Jazz rouge and tell the current group, you are too expensive to fly the Classic! So if you want to stay at JAZZ then you will have to fly the RJ on the A Scale.

Im sure there are hundreds of junior FOs that would love to fly the Classic at the new salary.

I think the Classic Airline wasn't properly implemented!

[loopa]

That sounds about right. People can go on about "lowering the bar" or "selling out" but under the cpa those Dash 8 classics were going to be operated for less money. Jazz pilots had a choice, do it themselves or let Acme Air or whoever AC contracted do.

Fair enough. More like didn't have a choice though...

[boeingboy]

The way I read it though - the new airline running the classics was owned and operated by Air Canada - not Jazz.

Which really makes me wonder why they are getting back into the regional market???

[rudder]

The way I read it though - the new airline running the classics was owned and operated by Air Canada - not Jazz.

Which really makes me wonder why they are getting back into the regional market???

Wrong.

The older D8's will be operated on a new AOC for a new airline that will be owned by CHR. These aircraft will be covered by a second CPA between CHR and AC.

[Panama Jack]

Terrible analogy.

Westjet created a regional airline with smaller aircraft and smaller salaries. They didn't create a new airline with their older B737s and cut salaries by 30%.

Is it?

I don't usually take a stab at Westjet because there is little that I find to criticise- profitable company, good corporate culture, etc. If I were executive management at the airline I probably would have done the same thing- it is prudent and helps the company grow at a lower cost structure.

When Westjet got smaller aircraft, the choice to integrate it into their main operation as an additional type, or create a separate division. In the past, airlines have simply added fleets when a new type came along rather than set up an entirely new operation. Also, you can't say it was a dissimilar operation; it wasn't like Westjet, a CAR 705 Operation, was starting up a 704 or 703 operation or going into the helicopter business.

Westjet did set up a separate operation because it made economic sense. They could start a separate, lower-cost 705 silo to do some of the company's flying. No shortage in finding pilots on the market who would be happy to fly for this operation, and the existing main core of pilots didn't feel bothered by this move- so that is a real triumph for management. Realistically, though, flying a Dash 8 is no less difficult than flying a Boeing 737. The lower-cost silo is beneficial to management because it allows costs to be contained in that silo while flying opportunities can be transfered across the network.

And I doubt that once Westjet gets really serious about widebodies and longhaul they will intentionally set up a separate operation (Westjet Long-haul) with bigger planes and bigger salaries, in the same way that they did with the Dash's. Also, I Westjet management isn't ready for and obviously doesn't want a labour confrontation with employees, however, that doesn't rule out the possibility of it happening in the future when growth slows and legacy costs creep up, especially if the market were to become more competitive with cheaper, new-entry Ultra-LCC's.

[whipline]

The irony. Sky regional and Georgian drool over themselves to get better equipment from AC all while screwing jazz. Pilots go there, some from Jazz to get a left seat and gain experience at rock bottom wages and working conditions.

Now, anyone at Jazz has an 80% flow through to AC with their wages topped up for years. The new pay scale at Jazz I'll bet matches the shit pay scales at ggn and sky.

So for those who jumped at gaining experience for rock bottom pay and working conditions, hoping for something better and wanting to jump the cue..enjoy!! You just got owened by the Jazz MEC.

[Heisenberg666]

Actually, nobody from Jazz came to Georgian. For good reason.

[Johnny#5]

Who's Owen?

[teacher]

Actually, nobody from Jazz came to Georgian. For good reason.

Several went to Sky.

[BingBong]

Actually, nobody from Jazz came to Georgian. For good reason.

Guess again...some went to sky then moonlighted at GGN to do training and Indoc.

Those scumbags deserve everything coming to them AND have a front row seat reserved for them in the warm place...and I'm not talking about Dominican

[Mig29]

Is that true???! Wow

[BingBong]

Ex 57' f/os. Will remain nameless

[FL7377]

Any one have insight when "Jazz Rouge" will start up?