FlyerTalk Forums - View Single Post - Transport Minister Lapierre to move fast to allow U.S. airlines to fly within Canada
Old Feb 10, 05, 7:47 am
FlyerTalk Evangelist
Join Date: Sep 1999
Location: Toronto, Ontario, Canada
Programs: OWEmerald; STARGold; SPGPlat; PCPlat/Amb; HiltonDiamond; CarlsonGold; A|ClubPat; AirMilesGold
Posts: 38,106
I agree with Notam's points. This dog won't hunt, and every minister brings it up to appear to be hip and understanding, while really reflecting an abject lack of understanding likely foisted on him by a bureaucracy bereft of any ideas of how to oversee a consumer-focussed policy. [If they really had the consumer in mind, taxes and fees we pay at the user level would be halved, and the airport authorities would be reformed and reigned in.]

But yes, AC would certainly benefit more than any US carrier were this to happen, which is why the Americans will not let it happen. Look at the reality: Canada now has competition on every domestic route worthy of sustaining competition. WestJet has frequency to match AC on most major city pairs, CanJet and JetsGo supplement this and keep pricing pressure on AC and WJ.

There are only a half-dozen city pairs within Canada that make economic sense and might sustain another flight or two without plunging all carriers below the profit edge once more. How many times do we have to go through airline bankruptcies not to realize the stasis in economical and viable operatons?

To compete UA or AA or NW or DL or CO would have to reassign aircraft and crews to these few routes, and offer a frequency that will attract fare-paying customers at a level that will make the service(s) profitable. They would have to sustain losses for several months or even years before profits could be generated, something none can afford today. As for SouthWest, why would it want to fly in a market that is plagued by bad weather for half the year? Same goes for JetBlue. As it stands both these carriers are free to fly transborder routes and hub into their major US networks, but neither have opted for this option because the Canadian market is not viable for them.

Yes, AC would come out the winner. There are dozens of intra-US city pairs onwhich it could likely offer frequency to challenge current carriers. Which is exactly why the Americans would never permit this to happen. Particularly as its major legacy carriers are almost all in bankruptcy, or teetering on the edge.

All I could see the UA permitting is transcons by hubbing in each other's country: i.e. NW selling YYZ-YVR via MSP or DTW, AA selling the same route via ORD, etc. But such flights would only be viable competitively if these carriers ate the US$50 or so that goes to customs/immigration/ag and other fees for crossing the border. Thus these would be top-up, low margin services.

Any US ragional services will be seasonal as we have seen of late with new ones being introduced to places like Charlottetown. However, when virtually all these carriers, like their legacy "parents", are economic basketcases, they are not likely to sustain route expansion to cover off margin Canadian domestic routes. Not only that, but operating costs in Canada are higher than in the US, for both fuel and general ops. And even with low fares, there is a drag on entering new markets because the lower the fare, the higher is the percentage of those fees/taxes. When consumers buy at $100 return flight, a real bargain, and find another $100 tacked on in fees/taxes, it destroys the marketing advantage.

We have a Canadian solution in place and plenty of domestic competition, so why start "fixing" something that isn't broken?

Last edited by Shareholder; Feb 10, 05 at 7:54 am
Shareholder is offline