Dirty Deal. WJ little tricks...

[Blastor]

Air Canada cancels increase in summer service to P.E.I.

Last Updated Tue, 26 Apr 2005 14:00:20 EDT

CBC News

CHARLOTTETOWN - Air Canada has pulled its plans to add extra summer capacity between Toronto and Charlottetown and said it's reviewing its service to P.E.I. in the wake of the provincial government's offer of revenue guarantees to two competitors.

In a letter to Premier Pat Binns last week, Air Canada senior director of corporate affairs Lyse Charette said the government's actions led the carrier to drop its plans to add extra seating and cargo capacity during the peak summer season.

The provincial government recently signed revenue guarantee deals with WestJet and Northwest Airlink.

The WestJet guarantee could cost P.E.I. taxpayers up to $300,000 if the airline fails to meet projected revenues on a service it is starting on June 28.

It is similar to the $200,000 agreement the Binns government signed in January to attract Northwest Airlink to provide a summer flight between the Island and Detroit.

Air Canada called the provincial government's revenue guarantees a subsidy.

"Your government's subsidies of close to one-half million dollars significantly distort the marketplace, and now force Air Canada to review the continuance of our services, including the Toronto-Charlottetown service, beyond the 2005 summer peak season," Charette

[Blastor]

Air Canada letter

http://www.cbc.ca/pei/features/news/aircanadaletter.pdf

[Schlem]

The provincial government recently signed revenue guarantee deals with WestJet and Northwest Airlink.

Hey Blastor...

Are you also bombarding NW Airlink pilot forums with this crap too?

What about defending the laid off AC employees and creditors AC screwed over by paying pennies on the dollar only to come out of protection and place orders for hundreds of millions of dollars in brand new aircraft?

[Rebel]

Schlem

Do you really believe the dribble that you write because to the rest of us it’s pretty misinformed and plain ignorant..

[Donald]

When I read it on the news before surfing over to Avcanada, I got a different impression. Premier Binns tried to force AC into using larger aircraft after AC announced the majority of flying into YYG would be done by Jazz (and with the demise of JetsGo). Without a favourable response, he then shopped some cash to WJ and Northwest to get larger aircraft.

Some questions I'm left with are....

1. Why should a premier try to force airlines into providing a certain level of service within an de-regulated industry? If the bums are available, the seats will be there.

2. Was the same offer made to AC before WJ?

3. Does AC "owe" anything to small(er) markets?

[Rebel]

Donald

Very interesting and intelligent questions and I wish I could provide the answers to them. Sometimes investigating reporters serve a very useful purpose, where are they when we need them..

The EU rapped Ryanair for similar practices I sure hope this doesn't start a new trend on this side of the pond.

[Schlem]

Schlem

Do you really believe the dribble that you write because to the rest of us it’s pretty misinformed and plain ignorant..

So Rebel... what's wrong about what I posted above? Don't worry about the NW skylink question because I know Blastor won't answer it anyway.

Did AC not pay pennies on the dollar to it's creditors when it came out of protection? Do you have any thoughts about the laid off AC employees and how they might feel seeing Milton and co ordering all these new jets?

[EI-EIO]

Perhaps the cargo capacity of an RJ compared to a 32x was more a concern than the number of seats on offer.

What aircraft are NW-Airlink offering to use on the route?

[Blastor]

A Goverment spending taxpayers money, to subsidise a private
commercial company future losses, to do business in its province
when the service already exist and cost nothing to the taxpayer.......

Smell like ADS-SCAM to me. Maybe they should hold a referendum on it.

[337]

[quote="Blastor"]A Goverment spending taxpayers money, to subsidise a private commercial company future losses,


Who's money do you think has been backing Air Canada since day one?

[Schlem]

Who's money do you think has been backing Air Canada since day one?

Blastor conveniently forgets about those facts.

[Rebel]

Air Canada has sought subsidies in past, P.E.I. premier alleges
WestJet deal not a first

Nicholas Van Praet
Financial Post

April 28, 2005

MONTREAL - Prince Edward Island Premier Pat Binns, under fire for his government's decision to woo WestJet Airlines Ltd. with nearly half a million dollars in incentives in exchange for summer service, says Air Canada has asked for similar support in the past and has not been averse to receiving subsidies.

Air Canada said it would cancel its extra service to P.E.I. this summer and is threatening to pull out of the province altogether over the WestJet deal. It says the subsidy creates an unlevel playing field.

Some airline industry players in Quebec said yesterday they found Air Canada's clamouring for a level playing field ironic because a special deal the carrier struck with the government of Quebec props up its near-monopoly in that province.

"There's no level playing field in Quebec," said John McKenna, president of a trade group representing Quebec carriers. "This carrier is getting millions to provide a service into a region and the others get nothing."

For his part, Mr. Binns told the P.E.I. legislature that he found Air Canada's outrage surprising. The premier said Air Canada accepted a revenue guarantee of $250,000 several years ago when it began offering direct flights between Charlottetown and Montreal. He said his government made the offer to WestJet because existing summer service to the province was insufficient.

"Given the fact that they were the first carrier to ask [us] to be supported, it's surprising that they would take exception to support being given to someone else," Mr. Binns said Tuesday. The premier was not available yesterday.

In a terse letter sent to Mr. Binns on April 21 and reported in the Financial Post yesterday, Air Canada's director of corporate affairs said the nearly $500,000 worth of guaranteed ticket sales and free advertising P.E.I. is offering WestJet amounts to a government subsidy of a competing airline. The letter said Air Canada is now considering a "review" of its regular service to the island. Air Canada is the only airline that offers year-round service to P.E.I.

Air Canada spokeswoman Isabelle Arthur said yesterday the airline has been approached in the past and has struck deals with small communities across Canada in cases where the airline couldn't justify service under normal conditions and where its exit would have left the town with limited or no air service. "This can in no way be compared with the Charlottetown situation," she said.

© National Post 2005

[Rebel]

"337 wrote:

Who's money do you think has been backing Air Canada since day one? "

Get your facts straight, that's nonsense and you know it..Some of you folks really should have finished school.

[Blastor]

Yes, those wannabee’s conveniently forget that Air Canada
Is a PRIVATE COMPANY not a crown corporation.

BTW Not a single taxpayer dime went into the restructuration of Air Canada. Just asked the employees.

I’m sure our little westjety friends won’t allow reality to burst their
little bubble.

Enjoy your $0.00 profit share checks .

[Schlem]

BTW Not a single taxpayer dime went into the restructuration of Air Canada. Just asked the employees.

I’m sure our little westjety friends won’t allow reality to burst their
little bubble.

"restructuration"?

What would the employees know about that? Anyone with any kind of sense knows that the gov't played a large role in helping get AC back on it's feet. If you don't believe that then you don't understand large corporate business in Canada.

The sponsorship scandal that is killing the Liberal's should have opened your eyes as to how the incumbent gov't has done business.

BTW... I don't work for Westjet.

[complexintentions]

Uhh...Air Canada has been a private company for more than 15 years...and for every "perk" they've supposedly gotten, they've also been hamstrung by the Air Canada Act which mandates all kinds of spectacularly expensive things WJ doesn't have to even think about..like being told where their head office will be, told where they must continue to provide service, told which languages they must provide service in...on and on..none of this is news to most...perhaps you actually put some hard facts to your statement about how the government helped AC restructure?!

Now if WestJet started service to somewhere like, oh, Brandon, and then stopped, because they were losing their shirts, and then the government stepped in and said "no, you can't stop flying there"....then THAT would be more like Air Canada...oh wait...didn't that exact scenario already happen, minus the government interference part?!

One other thing. One must be careful with lofty statements like "...then you don't understand large corporate business in Canada."

WHO doesn't understand how corporations work? Aren't you moaning (several times) about how Air Canada's restructuring has allowed it to clear the balance sheets and order new a/c? Suck it up, sister...THAT'S how large corporate business operates...

All well and good to have a hard-on for WJ but please, don't ignore the facts, even if they're distasteful.

[Schlem]

Now if WestJet started service to somewhere like, oh, Brandon, and then stopped, because they were losing their shirts, and then the government stepped in and said "no, you can't stop flying there"....then THAT would be more like Air Canada...oh wait...didn't that exact scenario already happen, minus the government interference part?!

Opinions are like assholes... good thing we all have one.

The government will not force a company to fly a money losing route without subsidising them... "government"... "subsidise"... "Air Canada"... we've all heard that tune before.

Cheers

[Jaques Strappe]

The government will not force a company to fly a money losing route without subsidising them... "government"... "subsidise"... "Air Canada"... we've all heard that tune before.

Actually Schlem, I have to say they can and have done. Do you not remember how AC was shackled by the government being told what they could and could not charge for a ticket, being told where and where not to fly all in an effort to give Westjet an opportunity to grow after the AC/CDN merger. ( which was also orchestrated by the gov't )

WestJet was allowed to "Cherry Pick" profitable routes while AC was mandated to service money losing routes. Gander is a great example. Westjet tried it, lost money then took their ball and went home. AC is not allowed to do that. In an effort to subsidize the money losers, AC had to charge more where they could. All the while Westjet was allowed to erode the money makers. This is why I get such a kick out of Beddoe complaing about how Jetsgos pricing was bad for business or the industry in general.

So instead of losing money and not being able to cover the loss from another route, having Jazz service the low volume routes makes total sense and yet here we go, PEI gets pissed off because AC limits service to Jazz, so they subsidize Westjet. In the past, any small town that AC has tried to get out of, winds up with a discussion in parliament and AC being sent back. How there can be an Act of parliment controlling a private company is beyond me. Do you get your pay stub in both official languages????

As far as these blanket statements of AC being bailed out, subsidized or whatever else, I would suggest that instead of making blanket statements and then repeating eachother like a bunch of parrots, you dig up the facts. All you achieve in the meantime is an obvious image of not really knowing the industry within which, you work.

[EyeDeeOt]

SO HOW DO YOU LIKE THEM APPLES ???

Good post JS.

[CanadaEH]

WestJet was allowed to "Cherry Pick" profitable routes while AC was mandated to service money losing routes. Gander is a great example. Westjet tried it, lost money then took their ball and went home. AC is not allowed to do that. In an effort to subsidize the money losers, AC had to charge more where they could. All the while Westjet was allowed to erode the money makers. This is why I get such a kick out of Beddoe complaing about how Jetsgos pricing was bad for business or the industry in general.

If you disagree with Clive or anybody else for that matter saying that Jetsgo was bad for this industry you need to give your head a shake. During Westjet's initial (take your pick: 1, 2, 5, 8 years) years of operation it provided financial results to prove that it was operating at a profit, not a loss. Did you see Jetsgo doing the same? Sure it's a private company, but that arguement goes out the window in hindsight because Jetsgo is now bankrupt for reasons we ALL know.

The point I am trying to make is that Westjet may have "cherry picked" profitable routes but so what? Westjet made money doing it, Jetsgo obviously did not. Air Canada is no longer mandated to serve routes that are not profitable which is why you've seen the reaction (threat, I should say) to pull winter service into PEI.

So instead of losing money and not being able to cover the loss from another route, having Jazz service the low volume routes makes total sense and yet here we go, PEI gets pissed off because AC limits service to Jazz, so they subsidize Westjet. In the past, any small town that AC has tried to get out of, winds up with a discussion in parliament and AC being sent back. How there can be an Act of parliment controlling a private company is beyond me. Do you get your pay stub in both official languages????

Let's say you're the Premier of PEI. You want to bring tourism to your province and you want to maximize the revenue from doing so. If the only airline servicing your island domestically is not meeting the capacity you feel that your island deserves, what would you do? If talks with the airline go nowhere, what would you do? You go to the next airline that doesn't serve your province and ask them to do it. PEI obviously feels that it deserves more capacity than it is getting from Air Canada, so in participation with Tourism PEI (or whatever its called) the premier promotes the new service to its province by providing money to do so. How is that any different than Tourism Canada providing money to Air Canada for service to/from/within Canada?

[CClub]

So what's the big deal about not getting mainline service from AC? Jazz does just fine, and with all them purty new RJ's coming who's to complain. In YXE and YQR we are losing mainline service this summer to Jazz. Which is good, cause now neither city has to connect through the other to get to Toronto. Direct serivce to Toronto for both cities in RJ's. Saves pissing an hour in Regina or Saskatoon to pick a few more pax or drop some off. Makes sense to me.

[CanadaEH]

So what's the big deal about not getting mainline service from AC? Jazz does just fine, and with all them purty new RJ's coming who's to complain. In YXE and YQR we are losing mainline service this summer to Jazz. Which is good, cause now neither city has to connect through the other to get to Toronto. Direct serivce to Toronto for both cities in RJ's. Saves pissing an hour in Regina or Saskatoon to pick a few more pax or drop some off. Makes sense to me.

I'd expect that with only Jazz service, PEI felt that it didn't have the capacity for any growth in tourism. Last summer Jetsgo offered seasonal service (which I've been told did quite well) and with no other airlines offering service to/from YYZ a Jazz CRJ just won't cut it. Also, with only one carrier I wonder how the tickets were priced at? I wonder what they're priced at now that there is another carrier flying there?

[Jaques Strappe]

CanadaEh

Great posts. I appreciate reading intelligent, lucid debates. I don't think that Jetsgo was good for the industry at all. I was just drawing a similarity between pricing into the market. Westjet did it to Air Canada, Jetsgo did it to Westjet.

Sort of like scope clauses. Mainline guys were always getting upset about flying being sent to Jazz. Then the Jazz guys got a taste when their flying went to Geogian or CMA.

It is a slippery slope, a race to the bottom!

[Go Guns]

I was just drawing a similarity between pricing into the market. Westjet did it to Air Canada, Jetsgo did it to Westjet.

I think the difference there is that Westjet made money where it set the prices.

[RVSM]

Yes, those wannabee’s conveniently forget that Air Canada
Is a PRIVATE COMPANY not a crown corporation.

BTW Not a single taxpayer dime went into the restructuration of Air Canada. Just asked the employees.

I’m sure our little westjety friends won’t allow reality to burst their
little bubble.

Enjoy your $0.00 profit share checks .

You are joking, are you not?

Air Canada burned every major and most smaller airports in this country. Are you telling me that AC paid every penny of AIF, landing fees, terminal fees, etc. that it owed?

Those facilities were owned by the taxpayer through Local Airport Authorities. In the end, it's the taxpayer who ends up funding a portion of these multi-million dollar rip-offs, through higher fees at the airport, and higher property taxes if the municipality has to bail out the LAA if they have been boned by airlines.

BTW, I will enjoy my $0.00 profit share check, probably at a party with my co-workers, just like Im did when those checks were in the tens of thousands of dollars. WestJet has paid out $63 million in profit share over the last 9 years. It occurs to me that Milty could make millions off of his stock options, after cutting everyones pay.

What a system.