CloudsBelow

So,
When an airline wants to send seats to Canada but are not allowed, Its protectionist govt.
BUT
When an airline has no capacity restrictions and decides to downgauge, Its because their resources are scarce

Spounce

Many airlines operate under what might be considered subsidies. BA had its debt written off when it was taken private, and it was long able to keep competition out of Heathrow. US carriers got huge bailouts after 911, got away with protection in CH11 for long periods (some of them more than once), and were able to dump their pension obligations in the laps of US taxpayers. Gulf carriers benefit from being able to treat their staff in ways that would be illegal in democratic countries. Do they even pay for fuel?

AC competes with far more carriers on TATL routes than the 2 JVs you mention. The AF/KL merger and the BA/AA tie ups were anyway not of AC's doing, so they hardly point to an effort by AC to create a monopoly for itself.

yulred

Yes. Its not rocket science.

Some airlines have higher operating costs than others which, when combined with local operating costs, make a market less attractive than it might be for an airline with lower operating costs. Ie BA operating costs > TK operating costs = BA margin in YYZ< TK margin in YYZ. BA could make a higher margin on another route (say DEL), so it will move to that route, whereas TK... they seem to want to fly to everywhere these days. BA is still in rationalization mode, whereas TK/EK etc are in expansion mode (just look at the way they're buying additional capacity, as opposed to replacements for older aircraft)

What part of it needs to be spelt out?

yulred

LHR is probably one of the most competitive markets in the world these days. Comparing AC now to BA 20 years ago.... I don't understand the rationale.

In any event, the basis of the lower cost base is more or less irrelevant. I don't see why AC should be more equal than other Canadian companies when AC blankets themselves are sourced from China, where companies "treat their staff in ways that would be illegal in democratic countries", as you so succinctly put it. Either we go all out and ban the practice completely (in which case AC and our economy will tank faster than you can say "jack robinson"), or we can accept that this is the reality for most Canadians and shouldn't be any different from AC. I don't see you sitting and complaining about AC importing blankets from China. Why, then, should anyone care about where travel capacity is imported from? The general rule seems to be that liberalized trade is good, not bad (otherwise god lone knows what we're doing chasing free trade agreements around the world).

Its not that AC isn't special - it clearly is treated as such. Its that AC should not be special. Its just another company, and it shouldn't be treated as anything more than that. Propping it up on the shoulders of Canadians (even through indirect subsidies like protectionism) is not good for taxpayers who are, by default, consumers. There is a cost associated with these inflated airfares.

As for the BA/AF etc issue, how much capacity is there in Canada from other EU TATL carriers? 5%? 10%? Its kind of like saying Mobilicity provides competition to the big 3 telecoms. Yes, it does, but in a very limited context, which sums up the 'other' TATL competition - some seasonal airlines, some charters, and that's about it. Its not AC's fault that they don't fly to Canada more - not at all.

However, even you have to admit that the Transport Canada volte-face on TK's frequencies so soon after it tied up with AC is no coincidence. I mean, they got two additional slots in their first 4 years, and as soon as an agreement is signed with AC, they nearly double their frequency. It suggests that AC has far too much influence in Transport Canada. And that is problematic.

Spounce

You needn't go back anywhere near as far as 20 years to find BA enjoying a huge competitive advantage at Heathrow courtesy of the denial of slots there to other carriers. Heathrow is severely slot-constrained today, and BA would face more competition on its home turf were this not the case.

If the basis of the lower cost base was irrelevant to me in every circumstance I guess it wouldn't bother me to shop in establishments that I knew sourced from sweatshops such as the one in Bangladesh that collapsed recently. As for where AC buys its blankets, my sense is that labour costs represent a much larger chunk of operating expenses than the purchase of blankets does.

I agree. If you consider the taxes and fees imposed on Canadian airlines and on their customers, you quickly reach the conclusion that AC is treated as a cash cow.

Jagboi

No they couldn't, their fleet is stretched to the maximum right now and they are having trouble maintaining the current schedule. If a plane goes tech any place other than LHR the flight is cancelled until the plane gets fixed. If at LHR they steal a plane from a later scheduled flight and hope they can fix it before it is scheduled to go out.

CloudsBelow

LAN (YYZ), Air India, KLM in YYC, BA in YYZ and YYC, Virgin America, Virgin Atlantic, US (DCA), UA (DEN), DL (ATL, MSP), LX in YUL off the top of my head.

All just to say airlines are not clamoring to come here

I agree with this. To a point. I'd like to see the EK and the others get single daily access to YYZ.

CloudsBelow

Gee, You mean they don't have a bunch of 777s sitting around LHR??

Every airline deploys a/c where they expect best returns. My point was nothing is stopping BA from starting YOW if yulred feels the $1,300 airfare he referred to is that lucrative

yulred

1. I don't think there's any dearth of airlines or competition at LHR. Its a very well served, if slot constrained, airport. It faces a lot more competition than most airlines - unlike LH, for example, there are no constraints on airlines operating to anywhere in the UK.

2. AC is sourcing blankets (I know this because they come with tags that say Air Canada on one side, and Made in China on the other) to save money. It is sourcing these blankets from outside Canada, despite the fact that we have perfectly good blanket makers here, for savings. I don't object to this at all. I just don't see why it has such an issue with Canadians seeking advantages from outside operators for savings.

3. The taxes apply to all airlines. BA bears the largest burden of the APD. They aren't granted special status in the UK because of it. AC isn't the only airline treated like a cash cow. All airlines are. And as I've said before, I don't disagree with the way AC is going about things. In fact, I've blamed Transport Canada for creating conditions conducive to AC's behaviour on several threads.

yulred

Nothing is stopping them. But something is stopping others who do want to fly here. Not to YOW necessarily, but to Canada in general. Nothing is stopping AF either. Something is stopping TK, however. I mean, BA can fly anytime anywhere. TK can fly 9 weekly frequencies to two cities. Spot the difference?

yulred

1. So a couple of airlines drop a couple of routes and that's evidence that airlines "are not clamoring to come here". EK, EY, QR, TK, ET will all disagree, as will SQ. But to the point:

- LAN dropped the YYZ tag on of a SCL-NYC flight. It never made sense in the first place. Not that the SCL-YYZ market is representative of the Canadian market as a whole anyway.

- The Indian government has told AI to sell 5 777s. Guess which aircraft AI flew to YYZ? 777s. Don't think they had much of a choice there, and pretty damn certain it had everything to do with AI mismanagement and not a whole lot to do with market conditions.

- VS is back. That said, it too is a fleet in transition with the phase out of the 747s and 346s and the induction of 330s. The only way it can serve Canada is by pulling an aircraft off the SFO route - short way of saying the fleet is pretty stretched, but they're still doing their damndest to get in.

- BA is going through a fleet transition and, crucially, has publicly admitted that it is replacing its 747s with 787s systemwide. When they pull a 747 out of YYZ and put a 787 in its place, it has less to do with YYZ as a market and more to do with the fact that it is retiring 747s and replacing them with 787s on a 1-to-1 basis.

- Virgin America .... we all saw the predatory pricing farce that played out when they were here. They decided they could use their small fleet of aircraft better elsewhere. And they are. They're turning in profits these days. Given the way prices went from $350 to $700 overnight with their exit, one can only wonder how much of it was down to anti-competitive practices.

- UA and AC have a joint venture and, if I m not mistaken, are metal neutral. UA cutting DEN means jack all - AC and UA have probably agreed to cut capacity on that route. If UA kept operating, AC might have dropped the route. Either which way, it wouldn't matter. For all practical purposes UA and AC are one entity on transborder (minus a handful of routes).

- LX flies to YUL.

- These US and DLs and whatnots.. given the hub and spoke system used by US carriers, how significant are individual routes? If DL drops ATL-YYZ and increases LGA-YUL, the net affect is zero. You're going to have to do better with the Transborder market than just rattle off random routes.

2. What is "to a point"? Either you believe the consumer should pick the winners, or you believe the government should pick the winners? Suggesting that consumers should pick winners "To a point", after which the Government should pick winners doesn't make any sense at all. You can choose whichever one you want, but it still remains an either/or equation. This notion of partially allowing the market to work hasn't achieved much good with telecoms. At least that's the message emanating from Ottawa these days.

Spounce

Nor is there at YUL, or YYZ, or YVR. Not even if EK can't fly to Canada as often as it wants to.

Perhaps AC's blanket manufacturer follows decent employment practices. AC certainly does, and it provides good jobs for thousands of people. The Gulf carriers on the other hand save money by treating their staff in ways that would be illegal in countries where, for example, women aren't thrown in jail for the crime of being raped. But because of where AC buys its blankets, EK should have unlimited traffic rights to Canada? I don't follow the logic.

True, but your acknowledgement that AC is treated like a cash cow refutes your own position that it's a burden on the Canadian taxpayer.

Sebring

1. With the code-shares with Etihad and Turkish now in place, and likely to grow, I imagine that the time isn't far away when there will be a loosening of access for EK.

2. The government protects AC as it does others for a purpose, and now that AC is on firmer financial footing (for which it can thank the government for giving it the time to get its house in order), I imagine the government will move in the direction of more access for carriers from the UAE.

3. Now that Boeing is finally moving past the 787 startup issues, and Air Canada's first deliveries are only months away, that, too will give the government more reason to listen more sympathetically to appeals for more market access. Once AC has enough planes to consider new long-haul services, it can either overfly the Gulf, or make productive use of existing or new fifth freedoms.

4. Whatever latitude the government is inclined to give, it is likely to be slow and incremental, building on the current "show me there is a market" strategy of Blue Skies. I don't expect a significant acceleration because the government isn't likely to ease up on its aviation tax grabs that particularly disadvantage Canadian carriers.

5. I hope that whatever flexibility the government is willing to show, it refuses to grant any more access to Qatar Airways. We should have as little to do with that bigoted country until it cleans up its slave labor practises which are killing hundreds of foreign, mainly Nepalese, workers. The UAE is a worker's paradise next to Qatar.

http://www.theguardian.com/global-de...t-workers-dead

Stranger

Issue stock after they played accounting games making things look good. Let the suckers lose when reality sinks in.

All within the rules of course. That's what good accountants are for.

yulred

1. On good days in YUL, YYZ, and YVR, there is lots of competition. On other days, there isn't. There is more competition on days that QR flies to YVR than when it doesn't (the majority of any given week). And with YYZ on days when TK overlaps with either EY or EK, as opposed to when it doesn't. There's competition. Just not all the time. It would be nice if they had it all the time. Oh and EK getting more capacity would put a dent in that 86% Load factor and make it fight to keep customers, instead of taking them for granted. Many here feel like they're being taken for granted. I wonder what emboldened AC to do that.

2. The employment practices are of no concern to me, you or even AC unless they become public. AC is interested solely on one thing: savings. As for jobs, I fail to see why an AC employees job is more important than that of a Canadian working at a Canadian textile firm who loses his job to enable AC to save some money on blankets. Its a bit nonsensical really. When did the AC employee (or the thousand of them) become more important than the textile worker? After all, that is what you are implicitly stating - that its okay for AC to shaft Canadian textile workers because they're keeping jobs for AC employees like you.

Also, you can try to turn this into a "they treat humans badly" issue, but AC certainly has no qualms about flying Canadians to countries like Cuba, acting as perhaps the main conduit for Canadian dollars to flow into and sustainone of the world's most repressive regimes. If you're going to talk the talk, walk the walk. Otherwise these diatribes amount to little more than self-serving hypocrisy. AC - and you - can wax lyrical about human rights all you want, but your first and foremost concern is about whats in your interest as an AC employee. This concern for human rights is opportunistic at best. If it comes down to stop sourcing from Chinese sweatshops and cutting your job, or sourcing from China sweatshops and saving your job...well, that's a question or you to ask yourself.

And no, I did not write that EK should be allowed to fly to Canada because AC buys blankets. I simply wrote that this pretext of human rights is nonsense - and will remain nonsense till AC stops sourcing stuff from countries with lax labour laws (at direct cost to Canadian workers) and stops flying to countries run by repressive regimes. AC is going to do neither of those two things because it saves/makes money off them. Fine. In that case, what's wrong with Canadians looking to outside suppliers and casting a blind eye on the human rights records of the nations those airlines happen to come from?

Its not a nuanced, subtle or sophisticated questions. Its really quite elementary. If AC can go looking for savings with nary a concern for others (including Canadian workers), then why shouldn't Canadian consumers be allowed to do the same thing with absolutely no government constraints?

3. Again, I wrote that AC alone is not treated as a cash cow. All airlines operating to/in/from Canada are. And all of those costs are passed onto the passenger. After all, despite being milked, as it were, AC still manages to boast an 86% load factor. How? Long answer: undersupply. Short answer: undersupply. Deliberate undersupply, orchestrated by Transport Canada.

That doesn't make AC any less of a burden on Canadian taxpayers. Why do I say this? Protectionism is an indirect subsidy. By protecting an airline from competition (not token competition a la ET being allowed to pop up in YYZ twice a week, but real competition that can tip the balance), the government is allowing it to command higher airfares than it otherwise might in an open market. Otherwise what does AC have to fear from unlimited competition? The biggest fear is, after all, the downward pressure on prices, which AC is apparently very concerned about. And so we keep paying a premium - that is to say, a price that is higher than the price the market would dictate if demand and supply were allowed to do their merry dance - so that AC can make money. Every dollar a Canadian pays above the product of that merry dance between demand and supply alone, is an indirect subsidy to AC and a cost to the taxpayer who's paying it.