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AC and WS : How little separates the airlines anymore

AC and WS : How little separates the airlines anymore

Old May 12, 18, 7:35 am
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AC and WS : How little separates the airlines anymore

https://www.msn.com/en-ca/money/tops...cid=spartandhp
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Old May 12, 18, 8:41 am
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Funny, this seems to be the same (or more or less) as

WestJet and Air Canada: How little separates the airlines anymore | CBC News

(Upon checking, MSN actually quotes the cbc piece.)
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Old May 12, 18, 9:04 am
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I would argue that nothing has separated WS and AC for a long time, from the point of view of the occasional economy traveller. AC still has a big edge for people who sit up front or fly often enough to get status. But they barely mention those folks in the article, just a nod to frequent flyer program loyalty.

With the 787, WS will start to catch up for some international business class flights.
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Old May 12, 18, 9:07 am
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Originally Posted by smallmj View Post
AC still has a big edge for people who sit up front or fly often enough to get status..
Which is a small slice of the traveling public, albeit a lucrative one.
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Old May 12, 18, 9:23 am
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Some folks Are Unable to Do Basic Math

The claim is not backed up by actual facts. On the contrary, the comparison data printed in the article highlights significant differences in the operating characteristics of the two distinct airlines. Perhaps they are similar on domestic operations, but when it comes to the key source of profits for AC, its long haul foreign routes, they are very different airlines.

Those in the industry say differences between the two carriers are essentially non-existent.
And this ladies and gentlemen may explain why so many Canadian airlines have failed. The so called experts are unable to grasp the key characteristics. Duh, hey Charlie, let's show some flare and lease us some planes and we can be just like the big Guys. We can call it Jet-Stop, and have FAs in cool lime green outfits that are really tight, yuck, yuck.

i. AC has 73 widebody aircraft vs. West Jet's 4 - On this characteristic alone there is little to compare.
ii. AC has 2.3X the personnel that encompasses multiple jurisdictions and social benefit environments. The workforce is very different from West Jet. Hiring and retaining foreign language personnel is no easy task. Hiring, training and retaining widebodypilots is more expensive and difficult than it is with the B737/AB 319/20/21. (At least that's what the industry journals say.)
iii. AC is a worldwide operation that must comply with regulations that vary from country to country. It is expensive to maintain a presence in multiple foreign locations.
iv. AC is more of a full service airline offering meals , lounges and complex partner connections.

I get it, West Jet says it is changing. Let me know when it does, because it is still West Jet the domestic bus service of the sky until its wide bodies arrive and it actually provides the lie flats, full service and multiple long haul foreign routes. An airline can't just show up in HKG, PVG, PEK, NRT etc. and in its best Gomer Pyle voice say surprise, surprise we are flying here now. These airports have no more slots to award. They are at capacity. Until West Jet is in a strategic alliance, it will be at a disadvantage. The assumption that Delta will welcome West Jet with open arms assumes a lot of things, especially that DL and its Asian partners will want another competitor on their routes and that AC and the Chinese carriers will cede market share. AC has a death grip on some of the best slots to and from Asia and premium class pax look at schedules. I know I do. The profit on these long haul routes is generated from the premium class, especially the paid business class cabin.
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Old May 12, 18, 12:45 pm
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See this:

https://www.flyertalk.com/forum/westjet-westjet-rewards/1903332-more-like-ac-every-day.html
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Old May 13, 18, 8:38 am
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Originally Posted by Transpacificflyer View Post
I get it, West Jet says it is changing. Let me know when it does, because it is still West Jet the domestic bus service of the sky until its wide bodies arrive and it actually provides the lie flats, full service and multiple long haul foreign routes.
If you're sitting in Y, AC is also very much the domestic bus of the skies. Except the AC bus has a much worse OTP.
If you're sitting in Y on a rouge flight, it's an especially uncomfortable bus that's seriously overcrowded. Also with a "last in North America" OTP.
Since most domestic flights in Canada are pretty short, WS represents a valid option that is fully comparable to AC's Y product. If one is a flying bus on domestic routes, so is the other.
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Old May 13, 18, 9:26 am
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Originally Posted by Transpacificflyer View Post
The claim is not backed up by actual facts. On the contrary, the comparison data printed in the article highlights significant differences in the operating characteristics of the two distinct airlines. Perhaps they are similar on domestic operations, but when it comes to the key source of profits for AC, its long haul foreign routes, they are very different airlines.

Those in the industry say differences between the two carriers are essentially non-existent.
And this ladies and gentlemen may explain why so many Canadian airlines have failed. The so called experts are unable to grasp the key characteristics. Duh, hey Charlie, let's show some flare and lease us some planes and we can be just like the big Guys. We can call it Jet-Stop, and have FAs in cool lime green outfits that are really tight, yuck, yuck.

i. AC has 73 widebody aircraft vs. West Jet's 4 - On this characteristic alone there is little to compare.
ii. AC has 2.3X the personnel that encompasses multiple jurisdictions and social benefit environments. The workforce is very different from West Jet. Hiring and retaining foreign language personnel is no easy task. Hiring, training and retaining widebodypilots is more expensive and difficult than it is with the B737/AB 319/20/21. (At least that's what the industry journals say.)
iii. AC is a worldwide operation that must comply with regulations that vary from country to country. It is expensive to maintain a presence in multiple foreign locations.
iv. AC is more of a full service airline offering meals , lounges and complex partner connections.

I get it, West Jet says it is changing. Let me know when it does, because it is still West Jet the domestic bus service of the sky until its wide bodies arrive and it actually provides the lie flats, full service and multiple long haul foreign routes. An airline can't just show up in HKG, PVG, PEK, NRT etc. and in its best Gomer Pyle voice say surprise, surprise we are flying here now. These airports have no more slots to award. They are at capacity. Until West Jet is in a strategic alliance, it will be at a disadvantage. The assumption that Delta will welcome West Jet with open arms assumes a lot of things, especially that DL and its Asian partners will want another competitor on their routes and that AC and the Chinese carriers will cede market share. AC has a death grip on some of the best slots to and from Asia and premium class pax look at schedules. I know I do. The profit on these long haul routes is generated from the premium class, especially the paid business class cabin.
I have bolded some of the points above I wish to address:
  • WestJet understands its opportunities for growth within North America are limited and they can't sustain the rate of growth they have enjoyed for the past years without flying further afield. This is why it has started to move into the arena previously and perhaps smugly considered the realm of Air Canada: long haul premium between Canada and the world.
  • Yes WS has 4 widebody aircraft, but will soon have 14. Recall they started with 3 737s, and look at them now. While many commenters are focused on the here & now snapshot, the company is looking further ahead. If WS can compete with AC on one thing, it's their status as a loyal and exclusive Boeing customer, likely with as much or more pull with the manufacturer than the good folks in YUL. Ten Dreamliners can turn into many more.
  • I get the sense some believe WS will have difficulties hiring foreign language personnel and widebody pilots. More so than AC? Hardly.
  • The executives in Calgary must have no idea how complex and expensive it is to comply with regulations in multiple foreign countries. They only fly to 20, after all.
  • AC is indeed (today) more of a "full service airline". And now they have a challenge from another aspirant seeking to be the same.
  • WS executives likely have a better understanding on their ability to secure landing rights and slots at premium airports than by glancing at a wikipedia page. They'll never touch down and pull up to a gate at NRT...until they do.
  • There exists also the assumption that WestJet is seeking Skyteam membership. Assumption is the mother of all (better stop here).
  • Of course AC and Chinese carriers won't "cede market share". No such thing as a free lunch and all that. Imagine if businesses never launched a product or a service because they were afraid existing competitors might not grant them willing access into the market.
  • On your final bolded point, I agree. And look at who's coming to town, eager for a slice of that pie.
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Old May 13, 18, 10:31 am
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There's a pretty big difference, and it's where it matters most in a commodity business. The cost side of the equation.

Last quarter, net of fuel, it cost WS 10.81 cents to move a seat a mile on an average 897 mile sector. It cost AC 12.99 cents to move a seat a mile, except their average sector was 1,665 miles.

So what did it cost AC to move a seat a mile on an 897 mile sector? Not 12.99 cents. Probably more like 15 cents net of fuel. Conversely, what did it cost WS to operate a 1,665 mile sector, basically Calgary to Toronto? If it was 10.81 cents to move a seat 897 miles, it was likely closer to 8.5 cents to operate 1,665 miles.

That cost differential is key, because, as everyone knows, pricing power in a commodity business is fleeting. And with AC focused on the back of the bus where yields are poor, (YUL-YYJ anyone?), WJ is bringing on 20 787's over the next 5 years, going after where the yields are great, with a lie flat seat that that is going to appeal to a lot of people who want to be rested when they arrive in key European, Asian and South Pacific destinations, but prefer to be rested at about half the cost of what is currently be offered.

The $10,000 J class fares to various European destinations, which underwrite the bottom of the market chasing operation are going to slowly, but most definitely drift away. All of a sudden, that CASM differential, which, admittedly will narrow a bit, but no where near enough, will become the metric that matters. Cheap fuel has been a god send over the last 4 years or so. That era may have ended.

Then the question becomes which capacity disappears first? The capacity we've been told is "low cost" because the airplanes are "free" and are being operated by lower cost pilots and f/a's, or the much higher cost flights with expensive iron and more senior and therefore, more expensive mainline crews? Surely smart management would get rid of the "high cost" operation first and keep the "low cost" operation? Or is the "low cost" operation really as "low cost" as we've been led to believe?

And lest anyone forget, in a quarter that WJ has acknowledged that, operationally, it'd like to forget, (and where the weather issues apparently only impacted operations on aircraft painted teal and blue), WJ produced a margin 5% points higher than it's loss making major competitor and needed to fill significantly lower % of seats per departure to do so.

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Old May 13, 18, 12:48 pm
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The critical question is: are AC costs higher because they are big and legacy and union and stupid and unfixable?

Can WS jump up to a " full service " international airline and maintain its 20% lean edge?

The strike next week is going to cut into that 20%. Cost sinks that are lounges and concierges are going to cut into that 20%.

Can and how quickly will AC change in the face of competition? How much are they planning on saving with the fleet renewal?
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Old May 14, 18, 7:47 pm
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There were storms in YYZ recently that caused a lot of delays.

AC flight from my city to LHR went ahead, albeit 4 hours late. WS flight to LGW was cancelled.I cannot say for sure, but I suspect AC has just a little more slack in the system to deal with contingencies like the YYZ storms.

AC flights if cancelled offer faster, more convenient alternatives for me than if WS flights are cancelled.
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Old May 14, 18, 10:47 pm
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Originally Posted by simpleflyer View Post
There were storms in YYZ recently that caused a lot of delays.

AC flight from my city to LHR went ahead, albeit 4 hours late. WS flight to LGW was cancelled.I cannot say for sure, but I suspect AC has just a little more slack in the system to deal with contingencies like the YYZ storms.

AC flights if cancelled offer faster, more convenient alternatives for me than if WS flights are cancelled.
These are valid concerns at present, but become less so as WestJet adds to its longhaul fleet and builds capacity to address IROPs.
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Old May 15, 18, 6:42 am
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Sounds like Canadians need to support other airlines to create more competition. Air Transat, Sunwing etc.
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Old May 15, 18, 7:15 am
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Originally Posted by southpac View Post
Sounds like Canadians need to support other airlines to create more competition. Air Transat, Sunwing etc.
Iíll support any airline that provides a decent product for an acceptable price.
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Old May 15, 18, 7:19 am
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Originally Posted by simpleflyer View Post
There were storms in YYZ recently that caused a lot of delays.

AC flight from my city to LHR went ahead, albeit 4 hours late. WS flight to LGW was cancelled.I cannot say for sure, but I suspect AC has just a little more slack in the system to deal with contingencies like the YYZ storms.

AC flights if cancelled offer faster, more convenient alternatives for me than if WS flights are cancelled.
Uh huh. And a few weeks ago when some crappy weather rolled through YQM as I was on my way home, AC cancelled every single one of its flights - all of them. Good thing I was booked on WS, which was delayed, but at least it did depart. The AC flights cancelled that day at YQM did not, in fact, offer faster, more convenient alternatives for anyone. That's just no longer true.
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