Interesting Approval for Air Canada

[Gino Under]

I'd have to agree with Panama Jack on this one.
This looks like nothing more than legaleeze for "code share" with a Star Alliance 'Express' carrier.
Big deal?
Not really.

Out of curiosity, what agreement gave Jazz exclusivity or a monopoly on the 2nd tier flying in this country?

Gino

[Liquid Charlie]

Pretty obvious to me and a lot of others unless I got a bad batch of the wild weed - seems like air canada is maneuvering to strengthen their options when the Jazz contract is up - They have eliminated Jazz as an entity to the public eye by "americanizing" and choosing to call it AC express and now the separate companies just parts of air canada express - there is still enough time left for companies interested in bidding this to position themselves and get infrastructures planned and set to go. As much as I support what people has worked so hard for to get their airline up to a standard where it is a good place to work I fear they have a real fight on their hands to maintain that and not be cut loose because some cut throat low wage airline low balls the bid.

Fee for departure airlines have very few places to cut expenses and unfortunately wages and working condition are on top of the list. Dark times for ahead I fear.

[just curious]

While I suppose Moderators by definition are supposed to be moderate, I sent off a registered letter advising CR that I will no longer be using Air Canada for cross border travel.

I am not worth much more dead than I am alive, but the quality of training, compensation and oversight of Colgan leads me to suspect that traveling with them will put that a bit closer to the test.

That Dash Crash just "over the border" revealed a corporate culture that is toxic. No thanks!
J C

[ScudRunner]

Something to stick in your pipe and smoke for awhile.....................


http://www.competitionbureau.gc.ca/eic/ ... 03387.html

Competition Bureau Seeks to Block Joint Venture between Air Canada and United Continental

Backgrounder

June 27, 2011

The Commissioner of Competition applied today to the Competition Tribunal to prohibit a proposed joint venture between Air Canada and United Continental Holdings Inc. If the joint venture is allowed, it will monopolize ten important Canada/United States routes, and substantially reduce competition on nine additional routes, leading to increased prices and reduced consumer choice on key, high demand transborder routes.

The Bureau became aware of the proposed joint venture after the parties issued a press release in October 2010.

Until they merged on October 1, 2010, United and Continental were separate airlines. United and Continental (along with their operating subsidiaries) continue to operate separately pending receipt of a single operating certificate from the U.S. Federal Aviation Administration. United Continental has publicly stated that it expects to receive the certificate by the end of 2011.

Canadian airlines are unable to formally merge with non-Canadian airlines owing to current foreign ownership restrictions governing regulation of the airline industry. Yet, this joint venture would achieve that very same result for Air Canada and United Continental.
The 19 routes affected by this merger are: Route Post-Merger Marketshare
Calgary/Chicago 87%
Calgary/Houston 100%
Calgary/San Francisco 87%
Montreal/Chicago 70%
Montreal/Houston 100%
Montreal/New York 65%
Montreal/Washington 100%
Ottawa/Washington 100%
Ottawa/New York 100%
Toronto/Chicago 68%
Toronto/Cleveland 100%
Toronto/Denver 100%
Toronto/Houston 100%
Toronto/New York 62%
Toronto/San Francisco 100%
Toronto/Washington 100%
Vancouver/New York 34%
Vancouver/Los Angeles 42%
Vancouver/San Francisco 99%

American studies regarding similar route concentration have demonstrated price increases to consumers of up to 15 per cent; the Bureau anticipates similar price hikes in this case if the Competition Tribunal allows the joint venture to proceed.

In addition to challenging the proposed joint venture under the merger provisions of the Competition Act, the Bureau is seeking to undo three existing "coordination agreements" between the airlines. This is the Bureau's first challenge under section 90.1 of the Act, a new civil provision that came into force on March 12, 2010, allowing the Commissioner to challenge anti-competitive agreements between competitors. Under section 90.1 of the Act, the Commissioner can apply to the Competition Tribunal for an order to alter or block an agreement, as we have done in this case with respect to the three outstanding coordination agreements.

The coordination agreements between the parties currently in force are:

Marketing Cooperation Agreement between Air Canada and United Air Lines, Inc.;
Alliance Expansion Agreement between Air Canada and United Air Lines, Inc.; and
Air Canada/Continental Alliance Agreement between Air Canada and Continental Airlines Inc.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

Que Dubya Jay


http://www.theglobeandmail.com/globe-in ... le2140541/

WestJet Airlines Ltd. (WJA-T) is asking for intervenor status in the Competition Bureau’s fight with Air Canada (AC.B-T), saying it is directly affected by its rival airline’s plan to join with a U.S. partner.

Montreal-based Air Canada wants to forge a close alliance with Chicago’s United Continental Holdings Inc. (UAL-N), the world’s largest airline, on 19 cross-border routes between Canada and the U.S. The carriers would share data about sales and fares and co-ordinate schedules with the aim of reducing costs.

Competition Commissioner Melanie Aitken filed charges at the Competition Tribunal in June, saying the partnership is tantamount to a merger because the airlines would dominate the international routes. She said it would reduce choice, deter rivals and jack up prices – something WestJet agreed with in its filing on Wednesday.

WestJet competes directly against Air Canada on three of the routes – Calgary to San Francisco, Vancouver to Los Angeles and Vancouver to San Francisco. It says Air Canada’s plan to share competitive information with a U.S. carrier makes it almost impossible for the smaller Canadian rival to compete.

It also provided a list of Canada-U.S. flights it is interested in pursuing, but has so far avoided because it couldn’t make a strong business case. It continues to be interested in the routes – such as Toronto to Washington and Vancouver to New York – but said the Air Canada partnership would make that all but impossible.

“If the proposed merger is implemented, WestJet’s ability to continue to provide effective competition for the provision of transborder air passenger services ... will be significantly and materially constrained and its ability to provide any competition at all on WestJet considered transborder overlap routes is likely to be virtually foreclosed,” wrote Hugh Dunleavy, the airline’s executive vice-president of strategy and planning.

By intervening, WestJet is requesting that it be allowed to speak at any hearings and explain how Air Canada’s deal is affecting its business. In its request, it positions itself as Air Canada’s only real competition in Canada, estimating its share of the national domestic air travel market at the end of last year at 29 per cent, in total seats per week. It also estimated its share of the market for Canadian travellers flying out of the country at around 10 per cent.

Air Canada has defended the partnership, arguing that the Competition Bureau’s criticisms are “wholly inconsistent” with the federal government’s policy to deregulate air travel. It also said it has tried to deal with the bureau’s concerns, but found Ms. Aitken preferred to pursue charges.

Stopping the deal “would significantly impede Air Canada’s ability to compete [and] would have significant adverse effects on Canadian consumers,” the airline said in its 55-page filing.

WestJet defended its own partnerships in its filing, as it, too, has links to U.S. carriers – American Airlines Inc. (AMR-N) and Delta Air Lines Inc. (DAL-N) But it said that its arrangements only ensure that its passengers can transfer to the U.S. carriers for a second leg of their journey without obtaining new boarding passes. It has also pursued code sharing agreements with the airlines. Its deal with American Airlines allows both airlines to book seats on the same flight. It is seeking a similar deal with Delta.

“This type of arrangement does not permit the airlines to share competitively sensitive information, co-ordinate flight offerings, co-ordinate on pricing, inventory and yield management, co-ordinate on route planning, sales, marketing or scheduling access across networks or to share net revenues or costs on the particular routes that are subject to these agreements,” Mr. Dunleavy said.

WestJet said that while its roots are in domestic leisure travel, it is increasingly trying to compete against Air Canada for business travellers, and for that to work it needs to be on a level playing field with its rival.

“The ability of Air Canada, United and Continental to leverage shared information and to co-ordinate on pricing and other activities to a significant extent ... will continue to serve to strengthen the structural barriers that enhance and entrench [their] market dominance with the effect that competitors and potential competitors such as WestJet will be unable to gain sufficient and timely access to the necessary airport infrastructure and services in order to provide effective competition,” Mr. Dunleavy said.

The case is likely to be heard next year, if a settlement isn’t reached sooner. The Competition Tribunal has the ability either to squash the deal, or allow it to proceed with conditions attached.

[Panama Jack]

How is this all that much different from code share? This is just another step beyond in the increasingly globalized airline business.

It's not...

Look at this thread

viewtopic.php?f=31&t=75105

Sorry vref,

I clicked on the link and pawed through the two pages of threads, but I don't have the time or attention span this morning to try to research the point you are trying to make.

I appreciate why Jazz and AC employees are unhappy about this, however, I come back to my original point. "How is this all that different from Code Sharing?" If you want to fly non-stop from Vancouver to Frankfurt and book on Air Canada you will find yourself on Lufthansa metal (or carbon fibre).

Since Air Canada is trying to compete on the transborder market with lower-cost US carriers it only makes business sense that they are seeking the same economics as the competition.

As for the scare tactics, I am unconvinced that it will convince many travellers to switch airlines. Many travellers already chose to fly on US carriers because of schedule or price and they don't think twice about it. Following the recent regional airline accidents the regulators in the US is cleaning up the show; pulling out photos of the Colgan accident is a bit like pulling up photos of the Dryden F-28 accident. It is not like they are pacting with an air carrier from the Democratic Republic of the Congo.

I am not taking an advocate position on either side of this arguement, just trying to highlight the rational business logic which Air Canada is facing in an increasingly globalized and competitive industry. Speaking of which, do you only buy "Made in Canada" whenever that option is available, or do you ever buy foreign-made stuff because of it being cheaper or you perceive it to be of better quality? I know I do.

[vref]

Panama Jack,

Sorry. I should have been more clear. I agree with you. It's a codeshare. The reason I included the link was because last year when that announcement was made, everyone thought that Expressjet would be doing a cross-border operation on behalf of AC and at the end of the day,it was just a codeshare. I was simply trying to illustrate that people form opinions very quickly without knowing the facts.

Vref

[Panama Jack]

No sweat Vref.

I think that international deals and the international franchising of airlines will become increasingly common in the future. I know this scares some people but I recall that analogy of the Chinese symbol for risk being the same as the one for opportunity.

The manner in which airlines have been run in the last few decades is unsustainable and poor business and a reason for our gripes about the fickle, cyclical nature of the business and the impact it has on our careers and lives. Unfortunately for legacy carrier employees, governments seem resistant to renationalize airlines or reregulate the industry (unless, of course, you happen to work for Aerolíneas Argentinas).

On the positive side, the outlook for the airline industry and for aviation employees is bright (especially if you don't mind moving) but it will likely mean the reshuffling of the decks of cards.

[Gino Under]

We all know that Regional airlines in the U.S. are in a state of bankruptcy, takeover, buyout, restructuring or Chapter 11 protection.
In one form or another, most are hooked into or up with legacy carriers.
Colgan was a Continental Airlines (who is also a Star Alliance member) regional service but is now a United regional.
The Continental - United marriage resulted in one major cluster f**k involving most U.S. regional airlines. In fact, Colgan ops will be taken over by a former Northwest regional, Mesaba, which became a Delta regional, which was purchased by Pinnacle and the Colgan name will now disappear...as prop services are handed over to Mesaba who are now Pinnacle.
It's all gets so darned confusing. Imagine the flying public?

I'd say Air Canada is simply dotting "i"s and crossing "t"s related to their Star Alliance agreements. Once they get them sorted out as the dust settles south of the border.
I've had lots of United flights from DC on Jazz. Hell, I've even flown Air Canada on a Continental Jungle jet. Scope clause? Harummph!

Nothing shocking in that.

Gino Under

[Nark]

Scope is a major cluster-@#$! here in the US as a result of the CAL/UAL merger. Colgan introduced a first class once they merged in order to bring down the number of seats aboard the aircraft; which is flying under UAL.

Delta is posturing to take back a bit of what they've given up in previous negotiations, in terms of scope.
Southwest is selling all their 717s to DAL, and rumor has it, Delta has agreed to CRJ700 pay rates.

RAH has agreed to purchase several C-series aircraft, which violates all their FFD CPA's. My guess is they did this to make money of selling them as options to other airlines.

What will happen in the next few years is anyones guess.