Could AC Buy Transat? 16May19 Update: AC enters into agreement to buy Transat
May 18, 2019, 6:09 pm
#137
Join Date: Nov 2017
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One other question to consider with the acquisition is what happens to the existing service levels at TS. Having never flown the airline due to previous IRROPs issues - is there anything worth keeping from the existing TS service. How does TS fare to Rogue? Are there things they do better that perhaps Rogue could learn from to provide a better experience than what they currently offer? Touching on the question I raised earlier: will TS operate business as usual after AC acquires them or will Rogue and TS merge operationally? Perhaps Rogue gets dropped in favour of the TS model (i.e. no frequent flyer miles or perks similar to BA's Level or LH Group's Edelweiss). In which case, the cost for AC to maintain the TS presence wouldn't be that huge since all the infrastructure is already laid out there.
That's news to me! I was under the impression that they just suspended operations there and recall T1 and T2 coexisting whilst T1 expanded. IIRC wasn't the IFT actually once part of T2? Times, they are a changing I suppose! Here's an old clip I dug up from T2 in its weaning hours:
https://www.youtube.com/watch?v=VBvrtvXWalo
-James
That's news to me! I was under the impression that they just suspended operations there and recall T1 and T2 coexisting whilst T1 expanded. IIRC wasn't the IFT actually once part of T2? Times, they are a changing I suppose! Here's an old clip I dug up from T2 in its weaning hours:
https://www.youtube.com/watch?v=VBvrtvXWalo
-James
May 18, 2019, 6:25 pm
#138
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That's news to me! I was under the impression that they just suspended operations there and recall T1 and T2 coexisting whilst T1 expanded. IIRC wasn't the IFT actually once part of T2? Times, they are a changing I suppose! Here's an old clip I dug up from T2 in its weaning hours:
https://www.youtube.com/watch?v=VBvrtvXWalo
-James
https://www.youtube.com/watch?v=VBvrtvXWalo
-James
The IFT is completely separate from any other terminal (current or past), and was built to provide extra capacity during the construction of the 'new' T1. It re-opened last summer to provide extra gates for T3 during peak times. They could easily use it to serve T1 instead. It is just a matter of sending the buses to the other terminal. That's assuming that the customs hall and baggage infrastructure could handle the additional traffic.
May 18, 2019, 7:12 pm
#139
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May 18, 2019, 10:44 pm
#140
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For instance, AC could move Rogue/TS flights into T3 and keep mainline at T1. The concern here would be that the facilities at T3 aren't nearly as good as T1. Would AC bother building a MLL there for their Elites and those travelling in Premium Rogue? What about Priority check-in? This says nothing about how transfers would work going from mainline/regional over to Rogue. Perhaps AC would have shuttle buses to ferry passengers between T3 and T1 much like what UA does at EWR. Even then, things get tricky given how messed up the departure lounge situation is at YYZ (i.e. International and Domestic flights being segregated).
There's a lot of talk here of how TS would continue to exist if AC bought them. I mean, they certainly would on Day 1, but in my opinion, AC's intention would not be for TS to survive as an entity. Aside from some of the vacation operator stuff which could be beneficial for ACV, and aside from eliminating a competitor in the market, I think what AC is really interested in is the TS fleet. The A310s, 737s and 738s would be dumped, but some of the 332s and 333s, although not brand new, would be good augmentation or even replacement of some of the 767s at Rouge (depending on the current lease terms). The 4 A321ceos that TS has are just under 10 years old and would be useful at either mainline or Rouge.
But what AC is probably really interested in are the A321neo and A321neoLRs which are starting to be delivered to TS from now through 2020. Even before the MAX grounding, it seemed less likely AC would ever take delivery of the MAX 9s, (and with the MAX issues, it would not surprise me if AC is doing some re-evaluation of its fleet strategy which could mean not even taking the entirety of its MAX 8 order. One factor AC used when deciding between the neo and the MAX was delivery slot availability and freshly delivered neo's landing on its doorstep right now looks very attractive).
May 18, 2019, 11:08 pm
#141
Join Date: Nov 2017
Posts: 3,359
I think what AC is really interested in is the TS fleet. The A310s, 737s and 738s would be dumped, but some of the 332s and 333s, although not brand new, would be good augmentation or even replacement of some of the 767s at Rouge (depending on the current lease terms). The 4 A321ceos that TS has are just under 10 years old and would be useful at either mainline or Rouge.
But what AC is probably really interested in are the A321neo and A321neoLRs which are starting to be delivered to TS from now through 2020. Even before the MAX grounding, it seemed less likely AC would ever take delivery of the MAX 9s, (and with the MAX issues, it would not surprise me if AC is doing some re-evaluation of its fleet strategy which could mean not even taking the entirety of its MAX 8 order. One factor AC used when deciding between the neo and the MAX was delivery slot availability and freshly delivered neo's landing on its doorstep right now looks very attractive).
But what AC is probably really interested in are the A321neo and A321neoLRs which are starting to be delivered to TS from now through 2020. Even before the MAX grounding, it seemed less likely AC would ever take delivery of the MAX 9s, (and with the MAX issues, it would not surprise me if AC is doing some re-evaluation of its fleet strategy which could mean not even taking the entirety of its MAX 8 order. One factor AC used when deciding between the neo and the MAX was delivery slot availability and freshly delivered neo's landing on its doorstep right now looks very attractive).
One thing to consider is the extent to which AC would continue to support the existing routes TS flies. I could imagine a situation where pax have booked tickets months in advance only to find out that AC no longer flies there and would suspect that it would be quite costly to re-accomodate them.
Safe Travels,
James
May 18, 2019, 11:22 pm
#142
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That would never happen. Rouge is not intended to operate as a separate airline. It is a cost management tool for Air Canada, chiefly to manage labour costs. Rouge already adds overhead costs and operational complexities for AC, but savings in other areas outweigh those costs. If AC could achieve the labour cost efficiencies that Rouge enables within the mainline company and with an integrated fleet, Rouge would cease to exist. (OT for this thread, but the Domestic and International passenger segregation is what enables more seamless connections, including transit-without-a-visa schemes. There's a reason why YUL recently re-introduced segregated areas).
There's a lot of talk here of how TS would continue to exist if AC bought them. I mean, they certainly would on Day 1, but in my opinion, AC's intention would not be for TS to survive as an entity. Aside from some of the vacation operator stuff which could be beneficial for ACV, and aside from eliminating a competitor in the market, I think what AC is really interested in is the TS fleet. The A310s, 737s and 738s would be dumped, but some of the 332s and 333s, although not brand new, would be good augmentation or even replacement of some of the 767s at Rouge (depending on the current lease terms). The 4 A321ceos that TS has are just under 10 years old and would be useful at either mainline or Rouge.
But what AC is probably really interested in are the A321neo and A321neoLRs which are starting to be delivered to TS from now through 2020. Even before the MAX grounding, it seemed less likely AC would ever take delivery of the MAX 9s, (and with the MAX issues, it would not surprise me if AC is doing some re-evaluation of its fleet strategy which could mean not even taking the entirety of its MAX 8 order. One factor AC used when deciding between the neo and the MAX was delivery slot availability and freshly delivered neo's landing on its doorstep right now looks very attractive).
There's a lot of talk here of how TS would continue to exist if AC bought them. I mean, they certainly would on Day 1, but in my opinion, AC's intention would not be for TS to survive as an entity. Aside from some of the vacation operator stuff which could be beneficial for ACV, and aside from eliminating a competitor in the market, I think what AC is really interested in is the TS fleet. The A310s, 737s and 738s would be dumped, but some of the 332s and 333s, although not brand new, would be good augmentation or even replacement of some of the 767s at Rouge (depending on the current lease terms). The 4 A321ceos that TS has are just under 10 years old and would be useful at either mainline or Rouge.
But what AC is probably really interested in are the A321neo and A321neoLRs which are starting to be delivered to TS from now through 2020. Even before the MAX grounding, it seemed less likely AC would ever take delivery of the MAX 9s, (and with the MAX issues, it would not surprise me if AC is doing some re-evaluation of its fleet strategy which could mean not even taking the entirety of its MAX 8 order. One factor AC used when deciding between the neo and the MAX was delivery slot availability and freshly delivered neo's landing on its doorstep right now looks very attractive).
I would be surprised if Transat is flying empty aircraft. There are people buying those seats. Perhaps some destinations can be moved to larger aircraft. Would AC need Transat flying a Vancouver to London in addition to its own flights or just put a larger aircraft on the route.
What AC is buying is the book of business. All these customers that normally fly Transat. Transat is also this vertically integrated entity with tour companies, travel agencies, and hotels. If I were AC I would hand on to those non-airlines business just long-enough to get them in bed with the new AC loyalty program then try to find new owners for them.
I think AirTransat has shown quite a bit of discipline in how they have built out their route network. They are not flying to Hawaii or Las Vegas as an example. They do move a lot of people between Paris and Montreal.
May 19, 2019, 6:09 am
#143
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May 19, 2019, 9:32 am
#144
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Transat doesn't own any hotels or hotel management companies as while they held a minority stake in H10 Hotels have sold that off since their offer to buy the remainder was rejected. They did create a hotel division last year with plans to launch a resort chain of its own but am not sure where those plans have lead to date.
May 19, 2019, 10:17 am
#145
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Transat A.T. was in the midst of starting their first hotel construction in Puerto Morelos. There was something in one of the releases on the AC acquisition that Transat A.T. had agreed to slow-roll (or some such term) expenditures on the construction during AC's exclusivity period (sorry can't find the specific release at the moment).
Last year, Transat bought land in Puerto Morelos, Mexico, to build its first hotel complex, but has agreed to halt spending on the project while takeover talks are on. Analysts said this is a sign Air Canada has little interest in becoming a hotelier and intends to focus on Transat’s core airline business.
Between them, the airlines would command about 60 per cent of transatlantic tickets and 46 per cent of winter holiday seats to Mexico, the Caribbean and other sun spots. Analysts say the competition watchdog would look closely at the takeover and is likely to demand concessions from Air Canada that would reduce the market share of the combined airlines.“We expect this to be a large hurdle,” said Corey Hammill, of Paradigm Capital.
May 19, 2019, 5:24 pm
#146
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Transat A.T. was in the midst of starting their first hotel construction in Puerto Morelos. There was something in one of the releases on the AC acquisition that Transat A.T. had agreed to slow-roll (or some such term) expenditures on the construction during AC's exclusivity period (sorry can't find the specific release at the moment).
May 19, 2019, 8:01 pm
#147
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Here is my speculation: Air Canada will apply the Rouge business model to Transat (the airline), transition the crews and aircraft to Transat, drop the Rouge name and adopt a slight variation of Transat’s visual identity for both the airline and Air Canada Vacations. Let’s be serious... this was an ACV acquisition anyway.
“Transat, by Air Canada”.
“Transat, by Air Canada”.
May 20, 2019, 3:04 pm
#148
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https://www.theglobeandmail.com/busi...ompetition-on/
Air Transat’s own figures suggest that this merger would increase Air Canada’s market share to 63 per cent from 43 per cent on European routes and to nearly 50 per cent on routes to Florida and the Caribbean. Many of these are holiday routes flown by price-sensitive leisure travellers who currently benefit from the choice of carriers. Indeed, Air Canada has recently increased its service offerings on such routes, almost certainly driven by Air Transat’s success with this business model. A merger would not only curtail the options of travellers and likely lead to sharply higher airfares but would also eliminate Air Canada’s own competitive drive to offer new service.
Air Transat’s own figures suggest that this merger would increase Air Canada’s market share to 63 per cent from 43 per cent on European routes and to nearly 50 per cent on routes to Florida and the Caribbean. Many of these are holiday routes flown by price-sensitive leisure travellers who currently benefit from the choice of carriers. Indeed, Air Canada has recently increased its service offerings on such routes, almost certainly driven by Air Transat’s success with this business model. A merger would not only curtail the options of travellers and likely lead to sharply higher airfares but would also eliminate Air Canada’s own competitive drive to offer new service.
May 20, 2019, 3:30 pm
#149
Join Date: Nov 2017
Posts: 3,359
https://www.theglobeandmail.com/busi...ompetition-on/
Air Transat’s own figures suggest that this merger would increase Air Canada’s market share to 63 per cent from 43 per cent on European routes and to nearly 50 per cent on routes to Florida and the Caribbean. Many of these are holiday routes flown by price-sensitive leisure travellers who currently benefit from the choice of carriers. Indeed, Air Canada has recently increased its service offerings on such routes, almost certainly driven by Air Transat’s success with this business model. A merger would not only curtail the options of travellers and likely lead to sharply higher airfares but would also eliminate Air Canada’s own competitive drive to offer new service.
Air Transat’s own figures suggest that this merger would increase Air Canada’s market share to 63 per cent from 43 per cent on European routes and to nearly 50 per cent on routes to Florida and the Caribbean. Many of these are holiday routes flown by price-sensitive leisure travellers who currently benefit from the choice of carriers. Indeed, Air Canada has recently increased its service offerings on such routes, almost certainly driven by Air Transat’s success with this business model. A merger would not only curtail the options of travellers and likely lead to sharply higher airfares but would also eliminate Air Canada’s own competitive drive to offer new service.
I would also be curious to see what the Competition Bureau recommends AC do for the acquisition. Perhaps hand over some slots or routes to rival WS or PD?
May 20, 2019, 5:54 pm
#150
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I could see AC keeping transat seperate purely as a leisure operator and rebranding as ACV, or some combination. Move the ACV traffic off A/C partly, and then use rouge to focus solely on routes mainline can't sell at Premium J pricing.
There's demand for the inbetween / package pricing the leisure operators can offer.... sunwing has still stuck around with transat as their main competitor. ACV isn't top of mind choice (same with WJV) unless people don't care about price.
I'm fine with the merger if pricing doesn't increase much on the packages. LOL
There's demand for the inbetween / package pricing the leisure operators can offer.... sunwing has still stuck around with transat as their main competitor. ACV isn't top of mind choice (same with WJV) unless people don't care about price.
I'm fine with the merger if pricing doesn't increase much on the packages. LOL