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Transport Minister Lapierre to move fast to allow U.S. airlines to fly within Canada

Transport Minister Lapierre to move fast to allow U.S. airlines to fly within Canada

Old Feb 10, 05, 12:33 pm
  #31  
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Originally Posted by ACArbeiter
what would help and could be easily arranged is if you could transit Canada without clearning customs. Eg:
A) YYZ-FRA-CAI
B) MEX-YYZ- FRA

A) the pax will not clear German customs, bags go though to ATH
B) Welcome to Canada! Pls fill out your Cdn immigration cards, pick up your bags, then take the skylink back to the Infield terminal you just left. And you will be doing this on the return flight as well.

If other countries let foreign nationals transit without going though customs, why don't we?

But this is at the heart of AC's current strategy of hubbing in Canada for fliers going to/from South/Latin America to either Asia or Europe. YYZ, YUL and YVR are all going to have sterile transit in a year or two to make transfers much simpler, and not requiring Canadian Immigration/Customs clearance.

Already, AC is offering Americans a modified clearance procedure on some major routes. Last month I rode the infield shuttle with a fellow from the NYC area. He had flown into YYZ earlier in the day, done business in Toronto, and was back out for his flight to TLV. He was not required to pick up his checked luggage at Customs. It was now held in sterile transfer and boarded onto the TLV flight without inspection. On the way back, US bound passengers are taken directly to T2 where they are joined with the bags [like everyone else] to preclear US INS/Customs. [They'd have to do this at one end of their journey, and they do get fast-tracked to beat the crowds at T2.]

As for US regionals expanding their transborder ops, and feeding Canadians onward, they've been able to do that since Open Skies was introduced a couple of decades ago, so there is nothing stopping them flying into smaller Canadian cities, as I noted, several have. I believe NWX is flying into Charlottetown in the summer months, and AS/Horizon is flying into Kamloops during the winter ski season.

As for the large number of US cities that have regional service, it should also be noted that many of these communities provide a subsidy to these airlines to fly that service. But there is also a major difference in the structure of middle tier business between Canada and the US. The is a much larger mid corporate sector down there, and this accounts for a lot more travel to mid and small cities for numerous reasons.

One can go on and on about how different the US market is from the Canadian one. Unfortunately, too many people are unwilling to accept this simple reality, and insist Canada's the same as the US, just 90% smaller. 'Taint quite so simple.
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Old Feb 10, 05, 12:57 pm
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But what city pairs in the US would AC be able to exploit that the US carriers haven't already? I think the pairs are few and far between.
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Old Feb 10, 05, 3:31 pm
  #33  
 
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Originally Posted by boymimbo
But what city pairs in the US would AC be able to exploit that the US carriers haven't already? I think the pairs are few and far between.
I think you'd be surprised at what AC might do if Canada and the USA exchanged cabotage rights. There are many underserved cities in the USA that have high fares. RIC comes to mind, but there are probably better cities where AC already has operations. AC could do YUL-RIC-LAX with 2x daily A319's. No carrier flies RIC-LAX non-stop....there's probably enough traffic to support 2 A319's without the feeder traffic from YUL, never mind with it. And on the return flight (RIC-YUL), AC could pick-up some connecting traffic heading for Europe.
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Old Feb 10, 05, 3:46 pm
  #34  
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Originally Posted by ACArbeiter
A) YYZ-FRA-CAI
Well, PAX already don't clear DE customs -- they clear DE immigration which is done on behalf of Schengen member states. PAX clear customs at ATH (ie. walk out the green or red sign).

B) MEX-YYZ- FRA
This type of transit area exists at YVR -- let's hope they build ones at YUL and YYZ.
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Old Feb 10, 05, 6:07 pm
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Originally Posted by Ken hAAmer
Then exactly how do you explain the number of airlines and number flights into and out of places like Green Bay, and Appleton, 35 minutes away by car?
The companies (HQ of major corp) in the area...
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Old Feb 11, 05, 5:06 pm
  #36  
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http://nb.cbc.ca/regional/servlet/Vi...rports20050209

MONCTON The president of the Greater Moncton International Airport is lobbying for more deregulation of the airline industry.
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Old Feb 11, 05, 8:29 pm
  #37  
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Loretta Woodcock, who speaks for the CAW, says an open skies policy would lead to intense competition, which in the long run would be bad for the entire industry.

"It will have a negative impact on customers and it will have a negative impact on employees," Woodcock said. "I think that this is going to be a deterioration, no only for airline employees in terms of their working conditions, but it's also going to be a deterioration in customer service in Canada."
http://nb.cbc.ca/regional/servlet/Vi...rports20050209

Really? Ms. Woodcock obviously has some very interesting thoughts on market forces and free economy. I especially like this "negative impact on customers". So it's bad for customers because they have more choice and more bargaining power? Or should people still be stuck with that 'shut up and fly' treatment over the past few years in Canada? Some unions are really hurting the people they try to protect. I guess she could learn a lesson from Wal-Mart...
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Old Feb 11, 05, 8:33 pm
  #38  
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Originally Posted by airbus320
SH: I agree.

Let's take YWG-YYZ-YWG as an example.

This city pair is profitable for AC. On 14 FEB: There are 8 flights YWG-YYZ (Two are RJ flights and the other six are a mix of 320 and 319) The same frequency and aircraft are found on YYZ-YWG pairfor the same date.

WestJet flies the same city pair. On 14 Feb, they fly 4 fllights in both directions.

JetsGO for the same date has 3 flights in both directions.

In total, 15 flights a day between those city pairs.

Introducing American carriers on this city pair would only hurt the Canadian carriers. I don't think that there is much more growth left in traffic and the American carriers would only syphon away from the Canadian carriers.

There is already competition on this route and this keeps prices down.

Legacy American carriers still have high cost and I don't see them making much money on YWG-YYZ-YYZ
Survival for the fittest. If there is profit to be made, then the U.S. carriers will enter YYZ-YWG. If not, then they won't. You think the Canadian carriers will be hurt but how can you be sure of that? For one thing, we don't even know if the U.S. carriers would want that route. While they may lose a bit with new entries, but they could gain elsewhere. Imagine if West Jet start to fly from Rochester, NY to JFK for example. "You win some and you lose some."
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Old Feb 11, 05, 11:03 pm
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Originally Posted by airbus320
SH: I agree.

Let's take YWG-YYZ-YWG as an example.

This city pair is profitable for AC. On 14 FEB: There are 8 flights YWG-YYZ (Two are RJ flights and the other six are a mix of 320 and 319) The same frequency and aircraft are found on YYZ-YWG pairfor the same date.

WestJet flies the same city pair. On 14 Feb, they fly 4 fllights in both directions.

JetsGO for the same date has 3 flights in both directions.

In total, 15 flights a day between those city pairs.

Introducing American carriers on this city pair would only hurt the Canadian carriers. I don't think that there is much more growth left in traffic and the American carriers would only syphon away from the Canadian carriers.

There is already competition on this route and this keeps prices down.

Legacy American carriers still have high cost and I don't see them making much money on YWG-YYZ-YYZ


Nothing says that AC has to continue serving Canadian city-pairs at all, if it chose not to and if open-skies was to become a reality. After all, Americans who have a choice of flights between US/Canada usually prefer AC, so if AC has access to US city-pairs, what would stop it from moving its larger aircraft south of the border? See what's left then (& what aircraft would be used) to service Canadian city-pairs!
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Old Feb 12, 05, 1:16 am
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Lots of great points on this topic!

There are three major players in the US with true frequent coast-to-coast operations: UA, DL, and AA. NW, US, and AS also contribute quite a bit as well. But all of the major cities have hubs. My thought is that if you add more competition to that equation (AC) in a market that most people believe is saturated by competition already, someone's going to go bankrupt.

I'm all for competition, supply and demand, and all of that fun stuff. But the playing field truly isn't fair. 1/2 of the major US airlines are in bankruptcy protection, and yet they still compete and get bailed out by the government. The rules of competition are unfair. The legacy airlines have not learned their lessons because they continue to lose money. Competition works when the playing field is fair. Bankruptcy protection works like an economic subsidy; the airlines are allowed to operate and pay its creditors pennies on the dollar for its debt; how is that fair competition? If United can offer a fare for $200 and pay its creditors only 50 cents on the dollar for doing so, is it fair for AC to pay its creditors in full? How can AC offer the fare and not lose money?

We have to remember as much as we love AC, it is also a legacy carrier forced to play by Canadian regulations, taxes, and rules. It may be cheaper to operate in the United States, but it's pretty expensive as a company to be based in Montreal.

In the end, the American carriers are bigger. They will compete better (even if they lose money doing it) and knock AC out of the US.

On the other hand, I could see a US carrier opening an international hub in
YYZ. Think regional US cities flying there as a hub instead of ORD or DTW. All of that mid-west and north-eastern regional service going to YYZ, with connections to all of the major US centres and Europe.

That's two more of my cents! Fun topic!
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Old Feb 12, 05, 2:52 am
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Originally Posted by Guava
Survival for the fittest. If there is profit to be made, then the U.S. carriers will enter YYZ-YWG. If not, then they won't. You think the Canadian carriers will be hurt but how can you be sure of that?
I agree with what you're saying, but just one thing. If there is profit on YYZ-YWG, that is not a guarantee that American carriers will fly it. If they can make more profit flying a different route, they will fly the different route instead. Opportunity cost....

Originally Posted by californiadreamin'
Nothing says that AC has to continue serving Canadian city-pairs at all, if it chose not to and if open-skies was to become a reality. After all, Americans who have a choice of flights between US/Canada usually prefer AC, so if AC has access to US city-pairs, what would stop it from moving its larger aircraft south of the border? See what's left then (& what aircraft would be used) to service Canadian city-pairs!
AC does not need open-skies to stop flying domestically. They can stop flying domestically any time....they choose to fly domestic routes because that's the best use of their capital. And secondly, who cares if AC reduced its domestic capacity and increased intra-USA capacity? There are ample alternatives in the market with WestJet, JetsGo, and CanJet. Even if AC stopped flying domestically (not going to happen, but let's say it does), the amount of competition between WestJet, JetsGo, and CanJet (and their rapid expansion to suck up all of AC's former passengers) would be sufficient to keep out American entrants.

Originally Posted by boymimbo
My thought is that if you add more competition to that equation (AC) in a market that most people believe is saturated by competition already, someone's going to go bankrupt.
And this is exactly why AC wouldn't try to compete on saturated routes. AC will only fly the routes that will make them money....so let AC try and find them. Those routes are out there. Profit maximizing behaviour of American legacy carriers dictate that they route traffic through their hubs. If AC flew a route direct that no American carrier flies direct, AC would have a competitive advantage.....and it would not be in the best interests of an American legacy carrier to challenge them. Take the PHL-CLT route. Only 1 carrier flies this route non-stop, and fares are sky-high. You'd think other American carriers would come in and fly this route non-stop, but they don't. It's in their best interests to route the traffic via their hubs instead of non-stop.

Originally Posted by boymimbo
In the end, the American carriers are bigger. They will compete better (even if they lose money doing it) and knock AC out of the US.
Just because they're bigger doesn't mean that they'll compete better. In fact, the bigger an airline is, the harder it is for it to compete. That's why all of the profitable airlines in North America today are the smaller ones....

- notam
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Old Feb 12, 05, 7:44 am
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I think we need to look at some of the preparations underway at AC today.

Firstly Milton et alles have wrung out some very significant cost concessions from the unions,and despite the wildcat type blips, AC will enjoy a predictable period of wage and labour stability. The costs are low enough that AC, although a full service carrier can compete head to head with the LCC's.

The LCC's on the other hand will only see their costs going up, because the repeat consumers, FF's, will eventually want more. Why is WJ putting in seatback video?? Certainly not to keep their costs down!

Secondly the fleet is being upgraded with several dozen RJ+ type acft and there are more recent rumblings of larger longhaul type acft being added. What that means is there will be some lift capacity that can be used for other routes. My guess is that a reconfigured 762 with all Y seating in 34 pitch and updated IFE could compete quite nicely with a Jet Blue on a YUL-LGA-FLL type route.

The new 70-90 seat RJ's according to AC will be used for direct point to point service on medium density routes like YYZ-ATL, YYZ-DFW etc. so once the new planes come into service, there will be many RJ-200's looking for something to do. I can see many of these bening put into service in the NE feeding traffic into a mini hub like LGA for onward souther connections. If you are living in places like MDT, ASH etc you might be interested in hopping onto a nice shiny AC - RJ200 as the beginning of your trip to points south.

To ensure the viability of cities like ASH, AC could use an RJ200 to operate routes like YQB-ASH-LGA, or YHZ-BGR-LGA etc. In the end it'll be interesting to see what AC comes out with, but I think they can compete head to head with anybody and win. The caveat is that winning a route skirmish and having a long term growth strategy are not the same thing.

DF
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Old Feb 12, 05, 2:56 pm
  #43  
 
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I agree that costs are down, and that now is a good time to get back into the airline business again. And AC seems to look profitable coming out of bankruptcy. But I don't think AC is quite ready to go head to head with any US carrier. Its cost is still high compared to LCC and while much healther than it was before, we have to trust the RM won't drive it into the ground again.

Canadians want FF benefits as well, but most non-business travellers (which I think excludes most of us) will take the cheapest flight. That's Tango. WJ has decent seat-pitch, friendly service, and is getting IFE in its planes. They have a wide enough array of destinations and flights. Their load factors are high and their costs are still low. I think WJ is already a formidable opponent to AC.

My hope is that AC doesn't expand too rapidly and get into cost issues again. The American market is still very tough and I really don't think there are many routes that AC can take advantage of and make a decent profit on. If all of the legacy airlines operating in the US are losing money, and given AC's track record, what makes us so positive to believe that AC will do any better operating in the US? What makes us think that the execs of AC won't screw up? Who remembers Canadian, Canada3000?

All I know is that when we open up our borders to competition with the US, we get squeezed or get treated unfairly. The tax regime is different here and the rules of competition are unfair in this industry.

I hope AC opens up more frequency and more routes, especially overseas to China, Japan, and Latin America. I hope that it finds some more cities in the US to fly to, especially outsite of YYZ. YVR/YYC/YEG is far underserved to US destinations (but RJs can't serve these destinations as US centres such as SFO, DEN) are too far away.
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Old Feb 12, 05, 3:25 pm
  #44  
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Originally Posted by californiadreamin'
Nothing says that AC has to continue serving Canadian city-pairs at all, if it chose not to and if open-skies was to become a reality. After all, Americans who have a choice of flights between US/Canada usually prefer AC, so if AC has access to US city-pairs, what would stop it from moving its larger aircraft south of the border? See what's left then (& what aircraft would be used) to service Canadian city-pairs!

AC of JAZZ will continue to serve every profitable city in Canada, if only to feed onward passengers into the AC NAmerican or international system. The transborder routes will be upgraded as needed to feed American passengers onto overseas flights [we've seen the lower prices ex-US cities].

And AC could fly a number of high density US routes with enough frequency to skim the cream off the US carriers. They would not serve off-line city pairs because the infrastructure costs would be too high. But flying between US cities where it already maintains staff would be the logical way to exploit this type of Open Skies. For example, DCA to ATL or ORD or DFW. It could also fly EWR-LAX or SFO if the market could sustain such service [the problem with NYC is the restriction placed on distance aircraft can fly from LGA, the major hub].

Of course, the CAW is worried about further deregulation as AC is the ony unionized airline [aside from AirTransAt] in the domestic market, and this puts pressure on wages they can negotiate from AC. But they do have a point in that when fares get pushed too low, and airlines cannot make money, losses increase and wages fall. [Even WestJet's profit sharing suffers when that airline's profits are reduced.] This is the scenario that led to the collapse of CP, and C2K/Royal. And is now playing itself out in the US with its legacy carriers. At some point, banks and investors are going to stop throwing good money after bad.
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Old Feb 12, 05, 3:32 pm
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Originally Posted by boymimbo
The American market is still very tough and I really don't think there are many routes that AC can take advantage of and make a decent profit on.
"Not many routes" and "no routes" are two different things. Even if AC decided to take on the "not many routes" and they make big profit, it is a winner for AC.

Originally Posted by boymimbo
If all of the legacy airlines operating in the US are losing money, and given AC's track record, what makes us so positive to believe that AC will do any better operating in the US? What makes us think that the execs of AC won't screw up?
And the American legacy carriers are still in bankruptcy protection, is AC? I don't think it's a question of better operating in the U.S. because AC wouldn't be stupid enough to go for highly risky routes resulting in losses -- it would take risks, but smart risks and only ones where they are pretty darn sure they will make money on. In other words, I don't see AC going for JFK-LAX, but more of the underserved and unique routes.

As for screwing up, you can't blame AC entirely for going into CCAA. No one could have predicted 9/11, the Iraq War, and SARS. That just screwed everything up not only for AC, but for many other carriers too.

Originally Posted by boymimbo
Who remembers Canadian, Canada3000?
But that's not entirely a fair comparison to make.

C3 screwed up because a) it expanded too quickly into an area that it didn't have expertise in, and b) it bought Royal from a crook who got a heck of a lot more money than he deserved. C3 did very very well as a charter company. I would argue that it would still exist today if it didn't try to take on the skeded market. Of course, September 11 brought C3 its coffin and nailed C3 in it for them.

As for CP, that is a different ball game too. Don't forget, CP had fierce competition from WS in the west. AC, before the merger, never really had its foot in the west -- I would argue that they were Eastern Canada's airline. CP and AC were already two very weak airlines and WS did CP in because AC pretty much let them fight it out. Besides, Canada doesn't have the population to support two flag carriers -- one yes, not two. Canada's economics are also quite a bit different from the U.S. although the large commonality is the geographic landmass.

Last edited by YOWkid; Feb 12, 05 at 3:35 pm
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