Jazz Air Income Fund is in discussion with Canadian travel tour veteran Robbie Goldberg about potentially partnering with him on his latest venture, Direct Save Holidays, a new competitor in the packaged tour market he intends to launch next winter.
Not only would the move allow Jazz to expand its business outside of its existing partnership with Air Canada, which currently accounts for 99% of its sales, but it could potentially see the regional carrier begin flying a new fleet of five Boeing 737-800s. The aircraft is larger than its current fleet of regional jets and turboprops, and is the same as the newest and largest aircraft operated by its rival WestJet Airlines Ltd., opening up dozens of sun destinations to its network.
Debra Williams, Jazz spokeswoman, said while nothing has been finalized, the airline has been in discussions with Mr. Goldberg about partnering with him on Direct Save Holidays. Mr. Goldberg intends to finance the company himself and launch it in November 2010.
Mr. Goldberg is a veteran in the Canadian travel tour industry, having started up Conquest Vacations in 1972. He ran the company until 2007, at which time he severed all ties with it and sold it. Conquest held about 7% of the domestic packaged tour market before its collapse last April.
Conquest was one of the casualties of an ongoing price war in the Canadian packaged tour industry. The market has been plagued by excess capacity in recent years as players like Transat A.T., Sunwing Vacations, as well as the travel tour arms of WestJet and Air Canada, fight for market share.
In addition to Conquest folding, the fierce competition also led to a merger between Sunwing Vacations and Signature Vacations this year, and has led to speculation that there may be further consolidation in the travel tour market after this winter, with Sunquest Vacations and TMR likely targeted.
However, despite these issues persisting, Mr. Goldberg said in an interview Thursday that he sees an opportunity for “a direct-sale, web-based, low cost, highly reactive operator” like Direct Save Holidays, especially as the economy starts to recover and people begin to travel again.
“By the end of this season, there may or may not be another consolidation. In any case, as they are fighting it out, and the bottom lines of those companies are effected, they’ve all stated they need to start making money,” Mr. Goldberg said. “I think we’ll see a different picture next winter.”
Mr. Goldberg said he intends to offer packaged tours next winter from Toronto, Calgary, Edmonton and Vancouver to popular sun destinations in Mexico, Cuba and the Dominican Republic with Direct Save Holidays.
Instead of establishing a costly distribution network like its competitors, Mr. Goldberg said he intends to cut out the middleman and keep the company lean by having consumer book their vacations directly on the company’s website.
“Things have changed in the Canadian market in the past couple years,” Mr. Goldberg said. “The consumer is more and more booking direct, and a lot of the people that travel are comfortable with a computer.”
Chris Murray, CIBC World Markets analyst, said the launch of Direct Save Holidays will add capacity to an already overcrowded market next winter. But he acknowledged that Mr. Goldberg has extensive experience in the market and could put considerable pressure the current incumbents.
He also said that benefits to Jazz would be considerable, and would be a positive in the company’s ongoing efforts to diversify its business.
Mr. Goldberg said the plan currently does call for Jazz to be a partner, though nothing has been finalized, and he has held talks with other players.
Nevertheless, he said all decisions will be finalized by February 2010.
I can't see how this will happen as it would be a conflict of interest with Air Canada. Besides there is too much capacity in the sun business already.
Also would Jazz expect their crews to fly those machines at their current wages?
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KAG wrote:I can't see how this will happen as it would be a conflict of interest with Air Canada. Besides there is too much capacity in the sun business already.
Also would Jazz expect their crews to fly those machines at their current wages?
Jazz is allowed under the CPA, only thing they can't operate is another regional.
KAG wrote:I can't see how this will happen as it would be a conflict of interest with Air Canada. Besides there is too much capacity in the sun business already.
Also would Jazz expect their crews to fly those machines at their current wages?
Jazz is allowed under the CPA, only thing they can't operate is another regional.
Negative ghostrider.
Operating any aircraft over 71(?) seats using the Air Canada name is a direct violation of the Scope clause.
The Company shall ensure that the Company and its Affiliates do not create or
otherwise form any Specialty Company without the express written consent of the
Association.
Step back a minute here people. Can any of you actually say that allowing ANY operator to use 737s on the pay scale of Jazz is good for the industry? The WJ people should be equally pissed that now a group of pilots is willing to operate the same equipment at wholesale prices.
Thank you for the continued degradation of WAWCON.
I have a hard time seeing this will happen. I actually heard a rumour that this idea is already canned.
yycflyguy,
I don't think so. Jazz wouldn't be operating under the AC name. Jazz Air LP is owned by Jazz Air Income Fund. Air Canada Jazz is just our operating name when we do your flying for you. Jazz is not a affiliate company of AC anymore we're just a charter operator for you. This has nothing to do with ACPA or your scope clause.
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Last edited by Bede on Tue Dec 01, 2009 3:47 pm, edited 1 time in total.
KAG wrote:I can't see how this will happen as it would be a conflict of interest with Air Canada. Besides there is too much capacity in the sun business already.
Also would Jazz expect their crews to fly those machines at their current wages?
Jazz is allowed under the CPA, only thing they can't operate is another regional.
Negative ghostrider.
Operating any aircraft over 71(?) seats using the Air Canada name is a direct violation of the Scope clause.
The Company shall ensure that the Company and its Affiliates do not create or
otherwise form any Specialty Company without the express written consent of the
Association.
Step back a minute here people. Can any of you actually say that allowing ANY operator to use 737s on the pay scale of Jazz is good for the industry? The WJ people should be equally pissed that now a group of pilots is willing to operate the same equipment at wholesale prices.
Thank you for the continued degradation of WAWCON.
Where does it say that they will be operated using the Air Canada name? I read the story and it states that Jazz would be operating B738s for Direct Save Holidays. Not sure how this translates into Jazz buying B737 and operating them under Air Canada's name?
My money will be on Enerjet. Already have 737 and are from Western Canada. Logical choice. But I guess Flair could always be an option, but I think Enerjet would work out well.
KAG wrote:I can't see how this will happen as it would be a conflict of interest with Air Canada. Besides there is too much capacity in the sun business already.
Also would Jazz expect their crews to fly those machines at their current wages?
Jazz is allowed under the CPA, only thing they can't operate is another regional.
Negative ghostrider.
Operating any aircraft over 71(?) seats using the Air Canada name is a direct violation of the Scope clause.
The Company shall ensure that the Company and its Affiliates do not create or
otherwise form any Specialty Company without the express written consent of the
Association.
Step back a minute here people. Can any of you actually say that allowing ANY operator to use 737s on the pay scale of Jazz is good for the industry? The WJ people should be equally pissed that now a group of pilots is willing to operate the same equipment at wholesale prices.
Thank you for the continued degradation of WAWCON.
Hey flyguy...
Why don't you just take a step back yourself? There is NO group of pilots over at Jazz Air that has agreed to operate anything, let alone at 'wholesale' prices. I can assure you that the membership at said company would not be voting to operate anything the size of an -800 at 'current rates'.
As my friend Bede pointed out, the 'Air Canada' name has SFA to do with this. IF there was ANY conflict, (and I don't see any) it would involve only the CPA with Air Canada. Your 'scope clause' holds no water here.
As for WAWCON, there is always room for improvement... but I think 85-100K to fly a 37/50 seat airplane is reasonable. Compared to Air Canada, Jazz Air's working conditions & CA are equal to or better in many respects.
Just my opinion (with a little bit of fact thrown in).
Don't say it can't happen ..... Westjet was once in the can't happen bracket. Jazz is working hard to get business outside AC, so i'm my eyes its very much possible. The interesting point here is the articles in the paper ... they really never made it to this level during the Transat deal.
oh god, those ACPA boys must be going CRAZY over this! Would love to be a fly on that wall. I'd be surprised if they weren't trying to co-ordinate a hostile takeover of Jazz just to make sure those boys and girls never step foot in anything other than Dash's and RJ's.
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Last edited by squawk 7600 on Tue Dec 01, 2009 7:33 pm, edited 1 time in total.
Whole sale prices, I don't think so. However I would really be in favour of maintaining the status pay scales that we currently have but averaging the salaries and giving a pay raise across the board to all the pilots. Status pay is the way to go IMHO. It's BS and everybody knows it that the bigger the airplane is the more money you should make. Bigger usually means less and easier work. We get paid to be pilots and fly the type the suits us best, that's the way to go and I hope it stays that way. I said in a previous post that I hope Jazz becomes the worste paying 737 and best paying Dash operator there is.
not really sure why this is a bad thing?...I doubt you would see a classic doing it though...going to be ng's if there is any truth to it....which is unlikely given the saturation already as stated earlier...unless enerjets plan on going into smaller cities is playing out???...heck maybe WJ may start losing guys!!
KAG wrote: Besides there is too much capacity in the sun business already.
But when WJ started there wasn't enough?
Well that was only a few years ago that WJ vacations really started, and then the economy was going great. Today we have mergers, foreclosures, a teetering economy, and the threat of oil bouncing back. It’s a very different landscape today, one that IMHO doesn’t need another player.
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First let me start by saying that I would not want us to get this contract if it meant we had to operate these planes at our current payscale. Im pretty sure most Jazz pilots would agree with this. We complain enough that our pay is too low to be flying light props and jets, so why should be an acceptable payscale for a midsize pax jet?
Now a lot of people like to remind us that we are a completely separate company from AC. So, if we are completely separate, then why should it be such a big deal for our managers to be trying to diversify the operations and going after other contracts, assuming it is acceptable under our current CPA?
There is absolutely no chance that the folks at Jazz would try to secure a contract flying only 5 737s if it meant that it would in any way hinder our relationship with AC. The CPA we have with them is our bread and butter. It accounts for 98% of our revenues, so it doesnt make any sense that they would go after 5 bigger planes if it would risk us losing our 125 with AC. You can be sure that Jazz managers would be in talks with AC managers about it. Jazz would never go through with this if the AC managers were stone cold against it. Not to mention we just renewed the CPA with AC through 2020, so this shows that our managers have a desire to stay in a good relationship with AC, and vice versa.
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Well said. The only thing I don't agree with Topper is that you say it is AC management that would be against it. Not true. Calin R would be rubbing his hands together in evil pleasure at the thought of operating Airbus comparable size aircraft at anything less than the current wages being paid at AC. Whipsawing V.09.
Westjetters should be paying attention too. You just re-negotiated an agreement that improved the industry standard and now another operator wants to fly the same equipment... you think for similar conditions? If I was your management I would be pointing to what Jazz is paying before the next round of negots.
Jazz is not a affiliate company of AC anymore we're just a charter operator for you. This has nothing to do with ACPA or your scope clause.
This has EVERYTHING to do with ACPA and our CPA. If you are "just a charter operator" for us how come AC still gets the fuel, infrastructure and reservation bills to pay? While we are at it, if you are "just a charter operator" how come you get to use C2 passes on Mainline travel?
yycflyguy wrote:This has EVERYTHING to do with ACPA and our CPA. If you are "just a charter operator" for us how come AC still gets the fuel, infrastructure and reservation bills to pay? While we are at it, if you are "just a charter operator" how come you get to use C2 passes on Mainline travel?
errr...because that is the agreement ACJ has with AC?
end the whipsawing? that's funny. ACPA walked away from that opportunity years ago. you wanna end the whipsawing? come back to the table.
and the hypocrisy of some of the westjetters on avcanada is hilarious
this venture will either survive or fail on it's own merits and most of the discussion on here so far is very premature IMHO
it shouldn't be news to anyone that the airline industry in canada isn't regulated anymore. competition is good for the consumer and the only way your competitor makes money is if they can make more money than you can by providing a product or service at a higher yield. they do so by operating at a lower cost. WAWCON is only part of this scenario.
