Is AC challenging the government
Dec 13, 1999, 4:43 pm
#1
Company Representative - Air Canada
Original Poster
Join Date: May 1999
Location: Canada
Posts: 24,215
Is AC challenging the government
Milton & Co. is unbelievable...they set out a 45 page conditions to the government in order to complete the deal. Is this a challenge to them or what?
AC and Collenette are just shooting BS back and forth between each other. We all know if the deal fails, Collenette will be in deep *.
Regards,
Empress
OTTAWA (CP) -- Air Canada sent Ottawa a 45-page memo listing "deal breakers" that could scupper its purchase of Canadian Airlines soon after the transport minister laid out a framework for airline industry restructuring Oct. 26,government officials say.
The officials, speaking Monday on condition of anonymity, said Air Canada took exception to virtually all Transport Minister David Collenette's remarks before the Commons transport committee.
At the committee, Collenette promised consumer protection and said emerging airlines would compete with any dominant airline emerging from the current industry shakeout.
In remarks Oct. 26, Collenette announced legislation to protect the public was on its way and asked for Commons and Senate committee reports.
Air Canada was so alarmed by what it heard, it didn't wait for the reports, which were released last week.
Specifically:
Air Canada wants no changes to Section 66 of the Canada Transportation Act, which allows the Canadian Transportation Agency to act on complaints about basic air fares on monopoly routes. Collenette said he wants regulatory powers under the section expanded to deal with more types of fares. The airline objects to a Collenette hint that he might make the dominant carrier give up some landing rights at airports to smaller airlines to foster competition. Another possible "deal-breaker" was a Collenette promise to stamp out predatory behaviour. Air Canada wants no special regulatory measures against predatory behaviour. Predatory behaviour usually occurs when a dominant player takes deliberate money-losing measures, such as running empty planes, to force a weaker competitor to lose money as well.
Air Canada also balked at working up alliances with smaller airlines on connecting flights, ticket sharing, frequent-flyer programs and servicing. On these Collenette was less adamant, saying he was considering them.
The airline opposed two things Collenette did not propose --
divestiture of its regional feeder subsidiaries and allowing American carriers to pick up and deliver passengers inside Canada.
In an Oct. 22 report to the minister, the federal Competition Bureau said divestiture may be necessary to prevent Air Canada from enjoying too much of a monopoly.
The bureau said Ottawa should seek a treaty in which U.S. carriers become full players in the Canadian market, provided airlines from Canada enjoy the same access in the United States.
Peter Gregg, a Collenette spokesman, said discussions are continuing between Air Canada and Transport Canada on the memo.
Laura Cooke, an Air Canada spokeswoman, said the document was a draft and discussions continue.
She denied that Air Canada is threatening the government. It wants to know what regulatory environment it would face after taking over Canadian Airlines.
Outside the Commons, Collenette would not discuss what would be in the legislation, expected in February.
"There are discussions going on right now between the government and Air Canada," he said. "They have concerns; we obviously have concerns."
He reiterated that Ottawa's priority is to protect consumers and he is sure there will be a meeting of minds.
The minister said last week the government must be careful not to impose regulations so constricting that Air Canada could not operate competitively.
The officials, speaking Monday on condition of anonymity, said Air Canada took exception to virtually all Transport Minister David Collenette's remarks before the Commons transport committee.
At the committee, Collenette promised consumer protection and said emerging airlines would compete with any dominant airline emerging from the current industry shakeout.
In remarks Oct. 26, Collenette announced legislation to protect the public was on its way and asked for Commons and Senate committee reports.
Air Canada was so alarmed by what it heard, it didn't wait for the reports, which were released last week.
Specifically:
Air Canada wants no changes to Section 66 of the Canada Transportation Act, which allows the Canadian Transportation Agency to act on complaints about basic air fares on monopoly routes. Collenette said he wants regulatory powers under the section expanded to deal with more types of fares. The airline objects to a Collenette hint that he might make the dominant carrier give up some landing rights at airports to smaller airlines to foster competition. Another possible "deal-breaker" was a Collenette promise to stamp out predatory behaviour. Air Canada wants no special regulatory measures against predatory behaviour. Predatory behaviour usually occurs when a dominant player takes deliberate money-losing measures, such as running empty planes, to force a weaker competitor to lose money as well.
Air Canada also balked at working up alliances with smaller airlines on connecting flights, ticket sharing, frequent-flyer programs and servicing. On these Collenette was less adamant, saying he was considering them.
The airline opposed two things Collenette did not propose --
divestiture of its regional feeder subsidiaries and allowing American carriers to pick up and deliver passengers inside Canada.
In an Oct. 22 report to the minister, the federal Competition Bureau said divestiture may be necessary to prevent Air Canada from enjoying too much of a monopoly.
The bureau said Ottawa should seek a treaty in which U.S. carriers become full players in the Canadian market, provided airlines from Canada enjoy the same access in the United States.
Peter Gregg, a Collenette spokesman, said discussions are continuing between Air Canada and Transport Canada on the memo.
Laura Cooke, an Air Canada spokeswoman, said the document was a draft and discussions continue.
She denied that Air Canada is threatening the government. It wants to know what regulatory environment it would face after taking over Canadian Airlines.
Outside the Commons, Collenette would not discuss what would be in the legislation, expected in February.
"There are discussions going on right now between the government and Air Canada," he said. "They have concerns; we obviously have concerns."
He reiterated that Ottawa's priority is to protect consumers and he is sure there will be a meeting of minds.
The minister said last week the government must be careful not to impose regulations so constricting that Air Canada could not operate competitively.
Regards,
Empress
Dec 13, 1999, 5:40 pm
#2
Join Date: May 1999
Location: Ottawa
Posts: 8,564
Partly it's posturing. They know how much spine ( <= jellyfish*) Collenette has and realize they won't likely hurt themselves by pushing him around (unlike say, the banks with Paul Martin).
Secondly, I have to admit they have a point. CP is heading down the toilet fast and no one seems interested in helping out (except us FF'ers but we don't count for anything). AC has reasons why they'd like to take over parts of CP, but let's face it, they'll get a virtual monopoly whether they buy CP or let it die.
Why _should_ they buy CP and saddle themselves with all sorts of restrictions? I believe the business issue for AC is how much government restriction makes the benefits of getting control over CP too expensive. I think the Saturday Globe article included a quote that AC was only buying CP because the government wanted them to. To some degree I think that's accurate.
[* "<=" means "less than or equal to"]
andrew
Secondly, I have to admit they have a point. CP is heading down the toilet fast and no one seems interested in helping out (except us FF'ers but we don't count for anything). AC has reasons why they'd like to take over parts of CP, but let's face it, they'll get a virtual monopoly whether they buy CP or let it die.
Why _should_ they buy CP and saddle themselves with all sorts of restrictions? I believe the business issue for AC is how much government restriction makes the benefits of getting control over CP too expensive. I think the Saturday Globe article included a quote that AC was only buying CP because the government wanted them to. To some degree I think that's accurate.
[* "<=" means "less than or equal to"]
andrew
Dec 14, 1999, 5:30 pm
#3
Suspended
Join Date: Apr 1999
Location: Promoted to Chairman of the Most Wonderful Continental Airlines Highly Valuable OnePass Program Security and Ideological Purity Bureau
Posts: 4,129
Another two cents on the topic:
1. Of course AC is going to flex a little muscle in this situation. They have nothing to lose, and a monopoly to gain in any outcome. Subsequently, Collenette is put in something between a rock and a hard place. Unless...
2. The Canadian govt. itself takes over CP, and subsidizes much in the same way it used to do for AC. However, this is extremely unlikely, even with a Liberal govt., as taxpayers are increasingly unwilling to shoulder additional finanical burdens such as a failing "semi-national" airline. On the other hand, it may be the ONLY way to save airline competition in Canada. I would recommend that the FT'ers who are most affected by the AC/CP/govt. "fiasco" write to the appropriate authorities suggesting this option.
1. Of course AC is going to flex a little muscle in this situation. They have nothing to lose, and a monopoly to gain in any outcome. Subsequently, Collenette is put in something between a rock and a hard place. Unless...
2. The Canadian govt. itself takes over CP, and subsidizes much in the same way it used to do for AC. However, this is extremely unlikely, even with a Liberal govt., as taxpayers are increasingly unwilling to shoulder additional finanical burdens such as a failing "semi-national" airline. On the other hand, it may be the ONLY way to save airline competition in Canada. I would recommend that the FT'ers who are most affected by the AC/CP/govt. "fiasco" write to the appropriate authorities suggesting this option.
Dec 14, 1999, 11:37 pm
#4
Company Representative - Air Canada
Original Poster
Join Date: May 1999
Location: Canada
Posts: 24,215
I got a sense of how badly CP is doing lately. On my YYZ-YYC afternoon flight today, 11 people in J class, 8 were upgraded, 1 employee and 2 were on points, so the whole J class was non-rev. 79 in Y, but about 40 or 50 were a tour. On my YYC-YYZ flight, the guy beside me was a regular Canadian Plus member and still got upgraded, J cabin still had 2 empty seats.
Regards,
Empress
Regards,
Empress
