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

OTTAWA (CP) - Transport Minister Jean Lapierre says he intends to move "faster than you think" toward a deal with the United States that would allow American airlines to carry passengers between Canadian cities.

http://www.canada.com/travel/story.h...1-535174cbb83f

Hmmm... maybe it is worth going after SE again next year.

I would be interested in this development. Most to all of my domestic flying is between YOW and YYZ, or YOW to YVR (usually via YYZ - to maximize Aeroplan miles!). If various airlines from USA were to compete on these routes, I may or may not switch allegiances - factors in my decision would obviously include fares, and service. However, an alternate factor would be the frequent flyer benefits, and if the US competitor had greater benefits, I might switch. Even without switching, I suspect that AC and Aeroplan would have to, in the face of this competition, change the direction of the change of benefits year to year - from the current decrease of benefits, to a future increase in benefits.

But imagine FGII, boarding at U.S. Preclearance and then going on to YVR and deplaning at U.S. gates and have to go through CIC. That's getting pretty desperate for a very low fare...

Like I've said in other posts, this issue is a lot more complicated and would mean a change in the way both the U.S. and Canada deals with its borders and immigration processes. So, we need to wait and see what the Borders Task Force and those folks at PCO, PSEPC, FAC and DND come back with.

I think it's going to be a very long time before any of these ideas come to fruition. Well, several years at least.

I am assuming that the US flights would be cabotage flights (US airlines flying direct routes between 2 Canadian cities and reciprocally AC flying direct routes between 2 US cities); I certainly would not go between 2 Canadian cities via an intermediate US airport in transit, for the reasons that you mention.

Finally a Minister who understands what's best for Canadians and Canada. That said, like others have raised already, this project would have to come with a significant harmonization in our Immigration controls and checks. I am in favor of a EU style border between the U.S. and Canada. However, with the U.S. obsession on terrorism, I am afraid this would not be possible seeing how many U.S. Congressmen and Senators are so willingly to point finger at Canada for a problem that is really nobody's fault in particular.

Ideally, there should be one truly common border where U.S. and Canadian carriers can fly freely within North America and from any point in NA to any ports outside. I think more competition on YYZ-LHR or YVR-NRT for that matter is not such a bad idea. Of course, if Canadian carriers can fly routes like LAX-NRT, that would be equally as attractive.

These are issues that we should spend more time on as opposed to wasting money and times on many of the headlines recently.

Agreed, 100%.

I think that you'll both be surprised at how soon, the new routes will start appearing after the deal is completed. Money talks and at the right price and frequency there will be enough money to move things along nicely.

Personally I'm banking on it! because without this little shot in the arm, AP is going to become the FutureShop, ESSO frequent buyers club.

DF

I agreed with YOWKid, but it doesn't mean I don't want it to happen!

The routes will appear quickly once the agreement is in place. You need to put the horse in front of the cart and not the other way around.

Until we have a Schengen-style agreement with the U.S., I'm won't be counting the days.

But yes, I'd like to see this as well -- it'll be a nice and challenging test for AC.

I think AC has been through enough challenging tests lately, and I think allowing all airlines to compete in North America is a terrible idea. I realize that initially, AC will offer lower prices due to competition and that the selection of more flights to more places will be good for the traveller. It might also force AP to be more honest and comparable to US carriers.

On the other hand, Air Canada competing in a North American marketplace while having to adhere to legacy regulation (forced to HQ in Montreal, having dual language requirements, and higher taxes) will not bode well for AC.

Remember that most of the US carriers are losing lots of money due to competition. Delta, USAir, United are the big ones here. Only the LCCs are doing well. The US airline industry at its current state needs a serious adjustment to survive. Whether that's an airline being removed from the equation, further cost cutting, cutting routes, more alliances, etcetera.

As well, the US government was more than willing to bail out US carriers to the tune of $5B after 9/11, while the Canadian government granted AC no concessions during bankruptcy. Rules for bankruptcy are different in Canada than in the USA.

I can't see AC flying US only routes only either. What I see from the US carriers is them flying the major routes within Canada and competing directly with AC. And I think that US carriers will win this battle and knock AC out of the skies forever because they already have an unfair advantage.

Just my 2 cents.

Yes, just like Wal-mart was a nice, challenging test for Eatons
:mad:

With Westjet, Jetsgo and Canjet there is no lack of competition in our skies. Why would we invite the Americans in and help destroy Canadian companies. Does anyone really think the Americans will play fair. Hello, remember softwood lumber, pacific salmon treaty talks, bse etc etc?

Milton's embracing of this reminds me of the Yank who came up here to run MacBlo and sold it out to Weyehauser. I don't care if he's now got a Cdn passport or not, has he renounced his US citizenship? Has Brewer?

Somethings are worth preserving and I don't think saving another $10 on a flight is worth selling out my country for.

What's MacBlo? :D

Actually, we'll be saving $11, not $10 :p

Milton is a Canadian citizen now apparently, but look at AC's last four CEOs:

Hollis Harris - American
Lamar Durret - American
Robert Milton - American (then later Cdn)
Monte Brewer - American

Bingo! I agree. That's the point exactly. We'll be forced to play by the US's rules and get flattened in the process. I don't mind co-operation, I do mind handing over our sovereignty to the US. We are not an adjunct US state,and that's the way I want it to stay.
Nationality doesn't matter as long as a person can do the job. I don't agree with all those arch-Canadian nationalists who think that Farley Mowat should be running AC, but regardless of what passport RM is carrying, his sympathies will certainly be compromised. And maybe leaning a little towards the US.
I was going to add 'or perceived to be', but I don't believe that. That would be to say that he may have no such leaning, which is something that even I don't believe. And as for Brewer, God knows, but I don't.

It cannot come soon enough. Just had a rude agent on SE Desk.Unfortunately it is too late for me to book YYZ-YUL for Sunday with UA via ORD,so I hung up called Westjet and booked with them. What a pleasant experience. So I will lose some status miles and will not have MlL access.
AC has continued to give its passengers poor service in spite of JETSGO & WESTJET,because they know that status hungry passengers will continue flying them. AC does not see Jetsgo & WJ as a threat.
With US Airlines within Canada,AC will be forced to improve its service,no longer the only game in town for status hungry passengers.
AP Benefits will improve.Like getting 100% status miles on all non-Tango fares as we do on transborder.

We'll get 100% benefits, sure, until AC is bought out or bankrupted by some other airline(s). Then that's the end of *A in Canada.

And as for the "status hungry" passengers, I am quite sure that the 180 or so pax on a typical 767 YYZ-YVR are not all looking for status; they are looking for a good flight time, a meal, a safe plane, decent service, and connections, all at a competitive price.

All the US airlines will do is continue to lose money, get bailed out by their government, offer cheap "loss leader" fares, force the other Canadian carriers to follow suit, and then reap the rewards when AC goes belly-up! I am talking about the most pessimistic situation mind you, but does anyone see a long term healthy, profitiable AC out of this measure? Does Milton think that AC can compete and win against the US carriers? Will AC compete with US hub cities? Maybe AC will start its own hub in St. Louis? New Orleans? Can't see it.

This argument parallels free trade agreements I know. Free trade ultimately drives further competition, and improves pricing and service, as long as the protectionist barriers are not there. In the end, the hope is that we end up with the winner being the consumer whom will reward the airline with the best safety, value, and service out there. My hope is that AC doesn't go bankrupt trying to be that way, as three other US carriers currently are and as AC just was.

Exactly,if AC has competition it will be force to improve the service,have good flight times and all other issues you have mentioned.And AC will survive,people tend to support companies which give them value for their money.AC's survival be in its hands.
RM is a fighter and I am confident he make the neccessary improvements.
It is only in the last two years that AC's service has gone downhill.In the late nineties as I have posted in my other posts,you could not get me to fly on another carrier if AC flew that route.
I recall,I met many American passengers who would rather fly AC from Europe via YYZ not because of low fares,but because of AC service.Many told me that they could have got lower fares on US carriers.This was well before pre 9/11.
It is amazing what competition can do.

I think what everyone is missing here is if it does happen the US carriers will have a definate advantage. They are taxed alot less than the airlines in Canada and therefore they would have an unfair advantage. Also they would come in and compete on all the cherry routes and that would be it. If you think that you would see AA fly from Winnipeg to Toronto or any smaller route then you are fooling yourself.

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 sooner the better!
 

Open markets are better for everyone. I don't even care if AC makes it. Let Jet Blue merge with WJ and it will all be good.

One is tempted to ask what the he!! you're doing on the AC forum then. As to WS merging with Jet Blue and it will all be good - how exactly?

I'm surprised the Liberals are pushing this Mulroney-era-think crap. The business media love to moan how Cdn incomes are standing still and then blame it on taxes. Why not blame it on the real culprits like corporate greed and offshoreing jobs. One can only hope the coming meltdown caused by GW Bush and his out of control deficits etc will discredit this kind of economic theory for another generation. :mad:

Don't forget, Martin is a Red Tory... or Ble Liberal depending on whether you look at the glass half empty or half full. ;) :D

I think the first step would be to come to an agreement on selling YVR-YYZ tickets via ORD and LGA-SEA tickets via YYZ. That's the first step. See how that goes and then phase in the second process if both countries agree.

I don't think there's much harm in doing the first part. The second part is another debate altogether.

I agree. Willy nilly open skies would be more destructive than constructive, IMHO, and I would favor a more graduated process as you've proposed. But what makes good sense and what government delivers are most often very different things...

If Canada and the USA would grant eachother reciprocal cabotage rights, AC would have a major competitive advantage against the American legacy carriers. Let's take a look at the breakdown:

#1) The Canadian domestic market is saturated with respect to airlines. Competition is fierce, and I don't think any American legacy carrier would even want to try and compete on ANY Canadian route. They'd lose their shirt, and they've got their own problems to worry about.

#2) American legacy carriers fly very few point-to-point routes. For instance, how many big-6 carriers fly DTW-LAX non-stop? Only 1 - NW. The rest connect traffic through their hubs. Given this fact, I highly doubt any big-6 US carrier would fly YYZ-YVR non-stop. They'd rather connect traffic through their hubs.

#3) No American legacy carrier will setup a hub in Canada unless they've lost their mind. AC might benefit from setting up a hub (or mini-hub) in the USA.

#4) After the new terminal is built at YYZ, USA-USA connections might not require passing through Canada Customs. Any Canadian flying YYZ-ORD-YVR (or similar) would have to pass through US and Canadian customs. Point for AC.

#5) Say DL decided to fly SLC-YYZ-YUL. Everybody would have to deplane at YYZ and clear customs. Now say that AC decided to fly YYZ-DTW-SLC. Nobody would have to clear customs in DTW (although the bags would need to clear security). AC wins again.

The big question in my mind is whether is whether American legacy carriers could fly YYZ - LON non-stop or AC could fly LAX-NRT non-stop. This wouldn't be covered by cabotage rights, and I'm doubtful the Canadian gov't would want this, but even if they did allow this, I think the American carrier would need consent from the "other" country too (England in my example). As long as AC is Canada's sole international carrier, they're guaranteed a life.

-notam

No, but American Eagle might fly short routes. Or Mesaba feeding a Northwest operation.

=aw

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?

I agree that for some cities, the Canadian market is saturated. I also can't see the US airlines opening any kind of hub in Canada. Someone made a point about the number of flights in and out of Green Bay and nearby Appleton. It's pretty incredible to see AA UA DL NW flying out of these smaller cities. I don't know if it makes sense, but it is incredible.

I guess Green Bay with a metro area of 220K which would compare to say Kelowna or Charlottetown?

It's pretty clear that the regional model with the hub is quite alive and well. AC has this model well in place with little or no competition. So, will the US airlines come in and complete in Canada with US hubs? Say, buy a ticket from Thunder Bay to Charlotte with choices of DL (CVG), UA (ORD), or NW (MNL)? I could see this happening fairly quickly and be good for consumers. It would force AC to compete on connection routes and would drive down the prices overall there.

I can't see US airlines opening intra-Canada services just as I can't see AC opening intra-US services. But I could see US carriers opening up regional services in Canadian cities with connections to hubs in Cleveland, Cincinnati, Chicago, Boston, and Minneapolis. Whether anyone would use these hubs to connect to other Canadian cities doesn't really make sense, unless you were on say, YUL/YOW/YYZ to a western Canada service. Even then, the natural shortest route for these flights are usually over YAM or further north, so even a stop in Minneapolis seems to be a bit out of the way. I guess it depends on how cheap the ticket is?

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

Int'l Customs
 

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.

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.

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).

This type of transit area exists at YVR -- let's hope they build ones at YUL and YYZ.

The companies (HQ of major corp) in the area...

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.

http://nb.cbc.ca/regional/servlet/Vi...rports20050209

Really? :rolleyes: 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...

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."

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!

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!