Porters Real reason for existance

[Localizer]

I'd like to think/hope ACPA is against another CPA partner. All the talk about pilot wages being driven down and industry standard .. This puts the ball in ACPA's court to stand up for the "industry standard". (and I don't mean the US industry standard)

Just as it makes good business for Jazz to diversify so to for AC.

Jazz CPA is way to expensive to compete against Porter with.

Jazz has to diversify in order to grow .. There is no room in the CPA for Jazz to get any bigger, so the only way to do that is go outside the CPA. The CPA cost are high, yes .. but there are a lot of kick backs to AC on profits/clauses etc .. so really how high are the CPA cost?? .. You nor I will ever really know the true numbers.

[Brick Head]

I'd like to think/hope ACPA is against another CPA partner. All the talk about pilot wages being driven down and industry standard .. This puts the ball in ACPA's court to stand up for the "industry standard". (and I don't mean the US industry standard)
.

You know it is not that simple. It is certainly a concern. So to is the price tag associated with the Jazz CPA, how much is flowing to stakeholders other than employees, and the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains. Our pension is at risk, and we haven't had a raise in 9 years. The 20% pay cuts we took are now, after inflation, approaching 35%. All this has an effect on industry standard as well.

What's your suggestion?

[Dark Helmet]

Well, Global Solutions would have been a start. However, you and I both know that is dead in the water. enough said.

I was going to ask you the same thing Brickhead. You are very good a identifying the problems and flaws, but do you have a solution?

Say, what would happen if ACPA shot down this "scope modification clause"

[Brick Head]

Well, Global Solutions would have been a start. However, you and I both know that is dead in the water. enough said.

I was going to ask you the same thing Brickhead. You are very good a identifying the problems and flaws, but do you have a solution?

Say, what would happen if ACPA shot down this "scope modification clause"

Anything short of everyone on the same national list will fail to protect the profession. Every CA has to recognize that list. It has to be universal or else the group within will get whip sawed by anyone on the outside. GS was flawed because it wasn't universal. Can we do it though? Can we agree to national list? Could the College make that happen? Would we find it acceptable that if someone looses a job, they can use that national number elsewhere? Would WJ buy into it? It is however the only thing that will work.

Since that is probably a pipe dream. The next best thing would be every CA stipulating min wages and working conditions that must be met, for their company to do business with another. Not nearly as good but still helps. They can get there cost savings from areas other than pilot wages and working conditions.

JMO

[Localizer]

You know it is not that simple. It is certainly a concern. So to is the price tag associated with the Jazz CPA, how much is flowing to stakeholders other than employees, and the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains. Our pension is at risk, and we haven't had a raise in 9 years. The 20% pay cuts we took are now, after inflation, approaching 35%. All this has an effect on industry standard as well.

What's your suggestion?

I said it before .. Brick Head .. Can you say without a shadow of doubt that the Jazz CPA is too high? Considering you nor I know the true cost in the end? My answer ... It has to be working for AC in one way or another because they divested a long time ago yet they extended the CPA by an additional 5 years. That tells me AC is content with the Jazz product.

I wanna remind you that Jazz pilots did take a hit as well (CCAA) .. it wasn't a one sided deal. But to be clear your statement "the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains." says, you're willing to drive down the industry as long as you are able to capitalize off whatever means are necessary.

This statement bothers me because it seems you're talking out of both sides of your mouth. Jazz is potentially expanding on the Thomas Cook flying outside AC and not affecting AC pilots .. we're told we're driving the industry down. You're telling me ACPA is looking to use the Jazz CPA as a bargaining chip to gain, thus driving the industry down .. but thats ok? ..

Another thing I wanna be clear on ... is your pension at risk? or is the Top Hat at risk? ... I'm by no means a pension expert nor do I claim to know anything about the AC pension, but most pensions are protected to some degree, just not the top hat.

[Kevin Russell]

Hi Loc,

I certainly do not wish to contribute to the reduction of wages among our profession. Maybe I'm wrong but I seem to remember that not that long ago the Jazz pilot group was lobbying to fly the 175/190 for lower wages than is being done by AC pilots. Please correct me if I'm wrong.

[Localizer]

Hi Loc,

I certainly do not wish to contribute to the reduction of wages among our profession. Maybe I'm wrong but I seem to remember that not that long ago the Jazz pilot group was lobbying to fly the 175/190 for lower wages than is being done by AC pilots. Please correct me if I'm wrong.

Hey Kevin ..

I can't honestly tell you if that's correct or not? .. I'd like to think not, but i'm not privy to what happens behind closed doors. I can't see Jazz operating them for anything less then the present rates which aren't too far off the present AC rates. I don't think anyone at Jazz was disillusioned to think the 175/90's would show up on the property, which is why they have gone out to find more work. Room for expansion in the CPA is minimal and AC's recent statements regarding new routes/expansion prove that.

Regardless, this is going to affect all of us .. its another group being mixed in the fray and another partner in the whipsaw process. (hope i'm wrong)

[Brick Head]

I said it before .. Brick Head .. Can you say without a shadow of doubt that the Jazz CPA is too high? Considering you nor I know the true cost in the end? My answer ... It has to be working for AC in one way or another because they divested a long time ago yet they extended the CPA by an additional 5 years. That tells me AC is content with the Jazz product.

Localizer,

Fact. The CASM AC pays for the lift in the Jazz CPA is way out of line with industry standard. Yes it is convoluted. True the only ones that would really know is AC an Jazz.

Fact. If AC was happy with the cost of the Jazz CPA they would not be requesting contractual changes on scope, due cost, as they are doing right now.

Fact. The CPA was extended to 2020 in exchange for a margin reduction.

Fact. The CPA was extended to 2020 however the MADUG could very well end Dec 31, 2015.

In addition to establishing the annual minimum number of Block Hours on which the MADUG is based, the CPA Amending Agreement provides Air Canada with the right to revise the MADUG effective in January 2016 in the event Air Canada’s domestic market share for the twelve month period from October 1, 2014 to September 30, 2015 has decreased by a fixed percentage compared to its domestic market share for the twelve month period from August 1, 2008 to July 31, 2009. In the event of such a decrease, the CPA Amending Agreement requires that Air Canada and Jazz agree upon a revised MADUG by November 17, 2015, failing which Air Canada shall have the right to unilaterally set a revised MADUG by sending Jazz notice by November 20, 2015. The CPA Amending Agreement provides Jazz with the right to send Air Canada notice by December 18, 2015 of Jazz’s intention to either accept the revised MADUG or exercise its right to terminate the CPA as of December 31, 2016.

I'd like to know what the fixed percentage is. This statement by passes an arbitrated resolution.

failing which Air Canada shall have the right to unilaterally set a revised MADUG

It would appear the actual extension achieved was 1 year. Anything beyond Jan 2016? Who knows. AC's actions do not reflect a company happy with the cost of the Jazz CPA. They reflect a company doing there best to limit exposure to the Jazz CPA. The 5 aircraft out of the Island for example. Are they the 5 fins that can be removed from the Jazz CPA as a result of Jazz entering into a commercial agreement with TC for 5 aircraft?

But to be clear your statement "the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains." says, you're willing to drive down the industry as long as you are able to capitalize off whatever means are necessary.

Absolutely not. Defending the Jazz CPA is not defending the profession. It is defending the cash flow of those who capitalized on the divestiture of Jazz, at the expense of the profession. And more than that it is a temporary haven. It will not last. Is that good for the profession?

There are other ways to defend the profession from a US style race to the bottom, without defending the Jazz CPA. That is all I am saying.

Another thing I wanna be clear on ... is your pension at risk? or is the Top Hat at risk?

The pension deficit is not being payed at the moment. In the summer of 2009 all AC unions signed a moratorium on the deficit payments. It was approved by the OSFI. That moratorium ends in the spring of 2011. First payment in summer 2011. Unless we see a rebound in the deficit on its own (stock or bond rates) between now and then, the back service payments (deficit), not even including going concern contributions, amount to about 1/2 a billion/year all pensions combined. AC very much has their sights set on our pension. CR made that pretty clear recently in fact.

[Brick Head]

As I stated to Rudder earlier in the thread. This is not done.

AC does not have an agreement with ACPA on this issue. It is generating much debate and I am sure much more will take place.

There is however no mistaking what the company wants.

[teacher]

Yes your right it is very clear, pay less, make more. Make no mistake that your salaries, your pension and your working conditions are in their sights too. If you thought our negotiations were tough, I'm afraid to see what yours are like. Don't get me wrong, I wish you guys the best BUT if mainline wants less from us, they'll want less from you too. The CPA over payment (as some would claim) is but a minor dent in ACs cash flow but as it's seen time and time again, it's an easy target for pilots to complain about.

[Brick Head]

The CPA over payment (as some would claim) is but a minor dent in ACs cash flow but as it's seen time and time again, it's an easy target for pilots to complain about.

Don't confuse the margin on the CPA, as being the only place AC eyes savings. Yes the margin isn't all that high anymore after the 25% reduction. The margin is paid above and beyond Jazz's cost to produce the product. They add the two together to get a rate. This is a normal practice for CPA's.

So very very simply put, Jazz's CASM + Margin = rate. Margin is not the only place to find savings.

To illustrate it another way.

Take the total amount of ASM's Jazz operates for AC.

Remove two of the zero's at the end.

The resulting number represents the cost, or savings to AC, for every one cent change in CASM for regional feed, they can wring out.

Put another way, every penny/ASM change, represents 10million dollars/1 billion ASM's.

How many billions of regional feed ASM's does AC contract out every year?

5 billion roughly to Jazz alone? That represents 50million/annum for every penny of CASM Jazz is above, what a CPA competitor could, or would, provide to AC.

Still think it is peanuts? Still think AC doesn't have massive motivation?

[Localizer]

Still think it is peanuts? Still think AC doesn't have massive motivation?

AC created the CPA ... They should have created a CPA that worked for them in the beginning, when they knew they'd divest the stock. But instead, greed and manipulation took the lead and now the employee groups are left holding the bag .. again. Fool us once, shame on you .. fool us twice shame on us.

[countryhick]

In addition to establishing the annual minimum number of Block Hours on which the MADUG is based, the CPA Amending Agreement provides Air Canada with the right to revise the MADUG effective in January 2016 in the event Air Canada’s domestic market share for the twelve month period from October 1, 2014 to September 30, 2015 has decreased by a fixed percentage compared to its domestic market share for the twelve month period from August 1, 2008 to July 31, 2009

I would suggest that if this in fact occurs, Air Canada will have much bigger worries than revising the CPA with Jazz.

[mattedfred]

I was just wondering if any ACPA members think that our industry would be better served if ACPA agreed to renegotiate their scope language to allow someone other than AC or JALP to provide lift out of CYTZ?

I was also wondering if any ACPA members could explain why they feel that the Small Jets Agreement was worth fighting for if they are now considering renegotiating their scope language to allow someone other than AC or JALP to provide lift out of CYTZ?

Is this an anyone but JALP type of thing?

Do you really think that you would be better off if WestJet, Transat, Sunwing or CanJet was awarded the TC contract?

Do you really think that you would be better off if someone other than JALP provided your lift out if CYTZ?

[Brick Head]

And do you think this industry would be better served when, not if, when Jazz holds AC hostage for every drop of blood they can siphon off during CPA renewal time because there are the only game in town?

This isn't that easy is it?

[Brick Head]

I would suggest that if this in fact occurs, Air Canada will have much bigger worries than revising the CPA with Jazz.

Countryhick,

Westjet still has a lot of aircraft on order. There are a lot of areas WJ really hasn't made its presence felt, as of yet east of YYZ, even 10 years after the merger of AC and Canadian. Royal, C3, Canjet, Jetsgo all made that jump harder. Since this article Mr. Saretsky has stated it is going to be addressed. I think he even used the word it is an embarrassment.


Westjet Closing the Gap

TRANSPORTATION REPORTER

Sean Durfy believes WestJet Airlines Ltd. is on pace to challenge Air Canada for the lead in domestic market share four years from now, likening the Calgary-based carrier to a long-distance speed skater who gradually closes in on the favoured rival.

"We're narrowing the gap. It's more of a 5,000-metre event rather than a 500-metre event," said Mr. Durfy, WestJet's chief executive officer.

By the time the next Winter Olympic Games roll around in 2014, WestJet could be nipping at the heels of Air Canada, he predicted.

At the end of December, WestJet had a domestic market share of 38 per cent, compared with 36 per cent at the end of 2008, Mr. Durfy said in an interview yesterday, basing his figures on revenue passenger miles, a key measure of airline traffic.

While he declined to estimate his rival's share, industry experts say Air Canada's piece of the domestic market stood at 55 per cent at the end of 2009, down from 57 per cent a year earlier.

"We're targeting gaining a point or two every year, so to get to 39 or 40 per cent in late 2010 would be fantastic for us," Mr. Durfy said.

If all goes well for WestJet, the carrier will have roughly 45 per cent of the Canadian scheduled airline market in 2014. Toronto-based Porter Airlines Inc. plans to continue its expansion, solidifying its spot in third place, albeit a long way back from Canada's two largest carriers.

A decade ago, after acquiring Canadian Airlines International Ltd., Montreal-based Air Canada commanded 77 per cent of the domestic market while WestJet held just 7 per cent.

Founded in 1996, WestJet didn't fly east of Manitoba until 2000.

WestJet has grown steadily from Vancouver Island to Newfoundland in recent years, as Air Canada shifted its attention to U.S. and overseas flights because, historically, long-haul routes carry the highest profit margins.

WestJet announced yesterday that its 2009 profit fell 45 per cent to $98.2-million. Its fourth-quarter profit declined 52 per cent to $20.2-million, but given last year's recession and glitches with a new computer reservations system, the carrier's executives said they were proud to have posted the 19th consecutive quarter of profit.

Versant Partners Inc. analyst Cameron Doerksen said it's realistic for WestJet to set its sights on Air Canada's No. 1 position domestically.

WestJet will benefit from international partnerships, attracting connecting passengers, though some pacts will take longer than expected to come to fruition. An alliance with Dallas-based Southwest Airlines Co., originally slated to take effect in 2009 or 2010, has been rescheduled for launch in 2011.

Mr. Doerksen said WestJet will be limited in Canada at some point with its fleet of Boeing 737 jets, unless it orders aircraft better suited to serving smaller Canadian cities such as Regina. Air Canada has an advantage because it offers flights through its Jazz affiliate, which operates regional jets and turboprops.

"If WestJet does want to tap into the traffic coming from some of these smaller cities, they will have to get smaller aircraft into their fleet or get a partnership going," Mr. Doerksen said.

[teacher]

And do you think this industry would be better served when, not if, when Jazz holds AC hostage for every drop of blood they can siphon off during CPA renewal time because there are the only game in town?

This isn't that easy is it?

I do not support this however your arguement can be easily countered by asking you if mainline would be better served by transfering the EMB and perhaps the entire domestic or short haul market to a lower cost partner company like say, Jazz? That's the problem with this situation, where does it stop? I've said it a million times and I'll say it again, AC would not be in this deal if it were not making them a profit.

Jazz wasn't the only game in town until AC created it (I know it's more complicated than that).

[Dark Helmet]

And do you think this industry would be better served when, not if, when Jazz holds AC hostage for every drop of blood they can siphon off during CPA renewal time because there are the only game in town?

This isn't that easy is it?

I kind of works both ways. AC can hold Jazz hostage as well because right now AC is a large customer of Jazz and it has been bacuse of this good deal CPA.

Should this CPA become even more sour, Jazz will continue to grow outside of the CPA and thus compete against AC even more.

Questions is, Would AC rather work with Jazz or against Jazz, and vice versa.

[countryhick]

Westjet still has a lot of aircraft on order. There are a lot of areas WJ really hasn't made its presence felt, as of yet east of YYZ, even 10 years after the merger of AC and Canadian. Royal, C3, Canjet, Jetsgo all made that jump harder. Since this article Mr. Saretsky has stated it is going to be addressed. I think he even used the word it is an embarrassment.

This is exactly my point. If market share gets to the trigger point for this clause, AC has far bigger problems than renegotiating a small decrease in the margins it pays its CPA provider.

[Brick Head]

Questions is, Would AC rather work with Jazz or against Jazz, and vice versa.

Jazz will expand outside of the CPA regardless of its relationship with AC.

This is exactly my point. If market share gets to the trigger point for this clause, AC has far bigger problems than renegotiating a small decrease in the margins it pays its CPA provider.

countryhick,

Go back and read the top post in this page. By changing CPA providers, AC is not targeting margins. They are targeting the CASM of the CPA providers that provide feed for savings. Your right, the savings from squeezing margins is chicken scratch in comparison.

I think we should just let this die here. I was only trying to point out two things. Motive on the part of AC, and consequences for and against. That is it.

I don't have the answer. Only concerns.

At the moment everyone has taken a step back. Nothing is decided or done. Definitely some careful thought needs to be put into what we agree too.

That is happening.

[mattedfred]

And do you think this industry would be better served when, not if, when Jazz holds AC hostage for every drop of blood they can siphon off during CPA renewal time because there are the only game in town?

This isn't that easy is it?

i'm surprised that you feel that a subcontractor could hold so much power when 98% of their revenue comes from a single source

[Localizer]

i'm surprised that you feel that a subcontractor could hold so much power when 98% of their revenue comes from a single source

Maybe Brick Head is working?? ..