Unlikely Partnership

[TAWS]

http://www.theglobeandmail.com/report-o ... le1694660/

Brent Jang Transportation Reporter
From Friday's Globe and Mail
Published on Thursday, Sep. 02, 2010 11:55PM EDT
Last updated on Thursday, Sep. 02, 2010 11:56PM EDT
They once waged fierce battles for Canada’s skies, but now they’re teaming up to take on Japan.

WestJet Airlines Ltd. co-founder Mark Hill and a former arch-rival, retired Air Canada executive Robert Peterson, believe they have a formula that can help lure Japanese tourists back to Canada after years of declining visits.

The two former airline executives have homes within one kilometre of each other on Vancouver Island, but didn’t know they were neighbours until former Bay Street analyst Jacques Kavafian quietly approached them in May to launch a new tour operator, Canadian Pacific Travel Inc., aimed at the Japanese market.

Mr. Hill and Mr. Peterson say they don’t hold any grudges stemming from a corporate spying scandal, which ended in WestJet apologizing to Air Canada four years ago to resolve an espionage lawsuit.

The bitter feud seems like a distant memory, insist the aviation veterans, who have now turned their attention to nurturing CP Travel. “Business is business,” said Mr. Peterson, who retired in 2006 and moved from Montreal to Victoria.

Mr. Peterson, 59, jumped at the chance to work on the Japanese venture and Mr. Hill, 48, also eagerly climbed aboard. “What’s funny is once we realized we had places close by, we started to run into each other at local establishments,” Mr. Hill said.

CP Travel will bundle Canadian vacation packages for tourists flying from Osaka, Nagoya and Tokyo. Service is slated to begin next June from those three Japanese cities, and Sapporo and Fukuoka could be added in 2013.

Mr. Peterson, who served as Air Canada’s chief financial officer from 1993 to 2005, is CP Travel’s CFO, and Mr. Hill assumes the role of chief operating officer. Mr. Kavafian, 50, is CP Travel’s president and chief executive officer. The long-time analyst resigned last October after more than five years at Research Capital Corp.

Mr. Kavafian said he believes that with cheaper tour packages and the introduction of non-stop service from places such as Osaka and Nagoya, the slumping market for Japanese tourists will be ripe for a rebound. Longer term, he hopes to attract visitors from South Korea and China, which granted “approved destination status” to Canada in late 2009, clearing the way for more Chinese tourists.

Japanese visitors on CP Travel’s itinerary will arrive in Vancouver and Calgary, while connecting flights will be arranged for other parts of Canada, depending on the tour package for planes, hotels and sightseeing, Mr. Kavafian said.

“We will be collaborating with other tourism players,” said Mr. Kavafian, who has made 15 trips to Japan to conduct market research. Privately owned CP Travel has reached deals to acquire Vancouver-based Maple Fun Tours and Tokyo-based Ryoko Club, which have both been operating for more than 25 years in the tourism sector.

As Japan’s economy weakened and its residents diverted their holiday spending to other destinations such as China, inbound tourism from Japan to Canada gradually declined from a peak of more than 729,000 travellers in 1996 to fewer than 206,000 people last year, including overnight and day trips, according to Statistics Canada.

“The recession has left in its wake a new breed of Japanese consumer, one that is more cautious about spending money,” the Canadian Tourism Commission said a recent report on Japan.

CP Travel sees opportunities to help reverse the downward tourism trend and take advantage of a strengthening yen, which makes holiday packages to Canada cheaper for Japanese consumers. In the first half of this year, there were 96,475 overnight visitors from Japan to Canada, up 29 per cent from the same period last year, Statscan said.

CP Travel hopes to carry 35,000 customers during seasonal service next year, and has an ambitious goal to transport 155,000 people in 2013. Popular sights are expected to include Vancouver, Banff, Niagara Falls and Montreal.

“There will be a lot of skeptics, but there were skeptics with WestJet, too,” Mr. Hill said. Calgary-based WestJet began in 1996 with three planes and has grown into the country’s second-largest carrier, boasting a fleet of 90 aircraft.

Mr. Hill – who co-founded WestJet with Clive Beddoe, Tim Morgan and Donald Bell – resigned as the airline’s vice-president of strategic planning in 2004, after Air Canada filed an espionage lawsuit against WestJet.

Montreal-based Air Canada, which accused Mr. Hill of staging an electronic spying campaign, resolved the dispute in 2006. WestJet agreed to pay a $15.5-million out-of-court settlement and apologized for spying on Air Canada's password-protected employee website for booking flights.

One of CP Travel’s priorities will be securing seats on aircraft, a practice known as “lift” in industry jargon. Possible providers range from small outfits such as Calgary-based Enerjet, headed by Mr. Morgan, to scheduled carriers like Air Canada, which will start serving Tokyo’s Haneda Airport in January, complementing its flights at Narita International Airport.

No decision has been made yet on airline partners, but the aircraft type being eyed is a 230-seat Boeing 767. Access to two planes will be needed for the 2011 launch, with plans to expand to eight jets in 2013.

[Machiavelli]

I also saw this article and was intrigued despite the typical Jang reporting.

I think you're thread title should be something like "Who's Gonna Get The Widebodies?" or " 767's for Jazz?".

The time could also be right for WestJet. Dip the toes into the widebody realm like the old Transat deal that became WestJet Vacations then DIY.

Speaking of Transat, maybe they'd like to do it with 330's as a commentator said. There's a new tentative pilot contract...

Interesting that Enerjet was named as well and that's where my money would be. Longshot but it's been too quiet over there. In reality, I'll have to check.

I'm going to eliminate Air Canada as a contender right now because it's a low-cost operation and a former Air Canada CFO would know better.