Westjet 5x week to HNL and 2x to Maui from YVR
Sep 21, 2005, 11:38 am
#46
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Sep 21, 2005, 12:29 pm
#47
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Originally Posted by Sebring
In any case, quite a porridge of thoughts.
1. Hawaii: Westjet is very late to the game this year, presumably because of regulatory concerns - they wouldn't want to sell a flight they might not be allowed to operate. AC and other carriers have already sold a lot of capacity, so the cheapest seats are gone, and the fares triggered on the web site tend to reflect a healthy pre-sale through ACV, other wholesalers, cruise lines and retail agents. AC also benefits by being able to bring in more people from more places in Canada. Westjet's fares will go up as its aircraft fill up. By next year (winter of 06-07), the typical fares showing in September for December on both carriers will be a little less that what you see now for AC and a little more than what you see on WS.
2. WS enjoys a cost advantage over AC - but it is no longer 40% or anything close. And when you factor in a 220-seat aircraft, then AC's unit costs on the route are probably about 15-20% higher at most, offset by the fact AC has at least a small RASM advantage - not as big as on business routes to be sure, but some people will buy up for the big seat in S or J or however AC is selling the flight. The 763 also carries 12,000 kg of freight - fresh fruit, connecting freight off the JL/NH routes in HNL and off other Asian carriers. WS will carry little or no freight.
3. A few channels of stored content between YVR and HNL. Good. AC has a movie all the way now, and the refurbished 763s will have 30-odd channels of VOD.
4. As for YHM, I guess you haven't been East in a while. WS can't half fill an aircraft on YUL-YYZ, so it's hard to see how they could have done even that well on YUL-YHM. AC has an astronomical market share on Rapidair, and it continues to build, but rather than keep adding capacity on the YYZ routes, spinning off some of the demand onto YHM is a smart strategy. People living in Hamilton or Brantford or the Niagara Peninsula can skip the whole QEW/403 thing, the $21 parking tab at Pearson and so on by using YHM. With only a 50-seat jet to fill and a breakeven load factor of maybe 30 passengers, lower Jazz costs, AC believes it can make a go of these routes.
1. Hawaii: Westjet is very late to the game this year, presumably because of regulatory concerns - they wouldn't want to sell a flight they might not be allowed to operate. AC and other carriers have already sold a lot of capacity, so the cheapest seats are gone, and the fares triggered on the web site tend to reflect a healthy pre-sale through ACV, other wholesalers, cruise lines and retail agents. AC also benefits by being able to bring in more people from more places in Canada. Westjet's fares will go up as its aircraft fill up. By next year (winter of 06-07), the typical fares showing in September for December on both carriers will be a little less that what you see now for AC and a little more than what you see on WS.
2. WS enjoys a cost advantage over AC - but it is no longer 40% or anything close. And when you factor in a 220-seat aircraft, then AC's unit costs on the route are probably about 15-20% higher at most, offset by the fact AC has at least a small RASM advantage - not as big as on business routes to be sure, but some people will buy up for the big seat in S or J or however AC is selling the flight. The 763 also carries 12,000 kg of freight - fresh fruit, connecting freight off the JL/NH routes in HNL and off other Asian carriers. WS will carry little or no freight.
3. A few channels of stored content between YVR and HNL. Good. AC has a movie all the way now, and the refurbished 763s will have 30-odd channels of VOD.
4. As for YHM, I guess you haven't been East in a while. WS can't half fill an aircraft on YUL-YYZ, so it's hard to see how they could have done even that well on YUL-YHM. AC has an astronomical market share on Rapidair, and it continues to build, but rather than keep adding capacity on the YYZ routes, spinning off some of the demand onto YHM is a smart strategy. People living in Hamilton or Brantford or the Niagara Peninsula can skip the whole QEW/403 thing, the $21 parking tab at Pearson and so on by using YHM. With only a 50-seat jet to fill and a breakeven load factor of maybe 30 passengers, lower Jazz costs, AC believes it can make a go of these routes.
1. Launching the route in mid Sept for a Xmas launch is plenty of time to build advance bookings. I have property in Hawaii and visit 3-4x a year. I'm pretty typical in that I've booked my 2005 flying, but none of my 2006 flying.
For the record, I'm Prestige, but up to now I've used Harmony exclusively to Hawaii as they are far better in all respects to AC's service. I'll be switching to WJ as their service levels are better than HMY's.
2. WJ's unit costs remain 40-50% below Air Canada's. It's all there in black and white on each carriers quarterly statements. Look at CASM and average stage length, remembering that the longer the flight, the lower the casm, and the shorter the flight, the higher the casm.
ACE tried to pull a fast one in the 2nd quarter by taking the average flight length of AC mainline and the same number for Jazz and averaging the two to come to an average of about 850 miles. Anyone with a brain knows that given Jazz represents about 5% of ACE's capacity, this is a completely bogus number.
In the first 6 months of the year, AC mainline had an ASL of 1,319 miles operating 26.57 billion asms. AC consolidated reported 28.05 billion asms, meaning Jazz and all the others contributed 1.48b asms to the total, or 4.2% of the capacity.
Show me the math to get down to a weighted average flight length of 860 miles from 1,319 miles when Jazz is 4.2% of the total capacity.
For the record, Jazz's average stage length would have to be -9,604 miles for the weighted consolidated average to be 860 miles. Instead of providing an industry standard number, ACE took the straight line average of 1319 and 401 to come out to 860. At best, it is cheeky, at worst, it borders on being fraud.
They did this to try and disguise the fact that on a stage length adjusted basis, their costs are not even remotely close to WJA's.
Here's the math:
(.042x)+(.9579*1319)=860
(.042x)+1263=860
.042x=-403
x= -9,604.7
Check:
-9,604*.042 = -403
.9579+1319 = 1263
1263+(-403) = 860
Where .042 is Jazz's % of ACE's total consolidated ASMs, X is Jazz's average stage length, .9579 is AC mainline's proportion of consolidated asms, 1319 is ACE's reported mainline's average stage length, and 860 is ACE's claimed consolidated average stage length.
What's important is the weighted average which is about 1,250 miles with a cost of 16.5 cents, vs WJ at 12.1 cents over 812 miles. Without taking in account for the huge difference in average stage length, WJ's costs are 27% below AC's. Now you need to consider what WJ's costs would be over an average flight of 1,250 miles, or conversely, ACE's costs over an 812 mile flight. That differential takes the cost differential way beyond 40%, likely closer to 50%.
Now, we all know how Southwest is kicking the you know what out of the US legacy carriers.
Well, here's some food for thought: Year to date June 30 2005, Southwest's casm, (with fuel hedged at $27), was 7.76 cents and Continental, widely thought of as the best of the legacy carriers, costs were 10.23 cents. In otherwords, SWA's straightline casm differential was 24.1%, vs WJA's 27% straightline casm differential to ACE. Southwests asl was 601 miles vs 1,362 miles at Continental. All things being equal, the advantage WJ enjoys over ACE, (even with unhedged fuel), is as great as, if not greater than SWA has over the best of the US legacy carriers. How many of you would care to bet that Continental will manage to out survive Southwest? The answer is obvious, and no different in Canada.
3. WJ will have something in the order of 4 channels of stored content, (ie movies), + live TV when available. WJ will have a 100% consistent product as of March 2006 so if you get on in Moncton, you'll have the same product all the way to OGG. On ACE, the product will be different on every sector. At about $1m per aircraft, ACE simply can't afford to put consistent IFE on the entire fleet.
4. WJ forced all the traffic from the west to points east over YHM and then sold local traffic $69 fares on the YHM-YUL/YOW sectors. Even doing that, they couldn't come close to breaking even, even with unit costs half of ACE. With ACE using CRJ's, their unit costs will be astronomical compared to WJ's. Mesa operates a couple of hundred CRJ's and the best they can do with far lower labor costs and a 385 mile asl was us11.5 cents, far higher than SWA's 7.76 cents. It remains to be seen if all the local traffic will come out of the woodwork to pay fares twice as high as WJ's to fly in a lawn dart from YHM to YOW or YUL. I doubt it and expect the YHM shorthaul experiment to be wound down by April 06.
WJ has learnt that you can't march into a market in Canada and start with 10x daily on an O & D route, (a la Jetsgo). You start with 2. Then 3, then 4, then 5, then 6, etc.
WJ started with 2x daily YYC-YVR and after almost 10 years, they are at 12x daily on a route that is a fraction the size of YYZ-YUL. After about 2 years, they are at 6x daily YYZ-YOW, 5x daily YYZ-YUL and 5x daily YYZ-YVR.
Who says there aren't any growth opportunities for WJ in Canada?
http://www.newswire.ca/en/releases/a.../22/c3948.html
WJ's l/fs are not stacked with up to 15% low yield aeroplan redemptions. Did you ever notice that ACE's record load factors coincide precisely with the following announcement?
Sep 21, 2005, 1:47 pm
#48
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Did you ever notice that Westjet never wants to talk about actual passenger growth? They talk about RPM growth and ASM growth, but never want to discuss growth in passenger boardings.
The reason is contained in the charts of their 2004 annual report. It is embarrassing to the 'Big Shots' that the 'growth' is almost stagnant.
The reason is contained in the charts of their 2004 annual report. It is embarrassing to the 'Big Shots' that the 'growth' is almost stagnant.
Sep 21, 2005, 2:25 pm
#49
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Originally Posted by exAC
Did you ever notice that Westjet never wants to talk about actual passenger growth? They talk about RPM growth and ASM growth, but never want to discuss growth in passenger boardings.
The reason is contained in the charts of their 2004 annual report. It is embarrassing to the 'Big Shots' that the 'growth' is almost stagnant.
The reason is contained in the charts of their 2004 annual report. It is embarrassing to the 'Big Shots' that the 'growth' is almost stagnant.
As stage length increases, passenger growth will decline. That should be obvious to you.
Last time I checked, the standard measurement of capacity and growth in the airline business is ASM's and RPM's.
And WJ's passenger l/f is increasing at a faster pace than ACE's.....
Sep 21, 2005, 2:39 pm
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Originally Posted by Girard737
...Last time I checked, the standard measurement of capacity and growth in the airline business is ASM's and RPM's.
....
....
Pax boardings, trip cost, seat cost, leasing expense, back office equipment upgrades and law suit expense also enter into the whole picture.
Sep 21, 2005, 3:35 pm
#51
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Originally Posted by Girard737
Launching the route in mid Sept for a Xmas launch is plenty of time to build advance bookings. I have property in Hawaii and visit 3-4x a year. I'm pretty typical in that I've booked my 2005 flying, but none of my 2006 flying.
For the record, I'm Prestige, but up to now I've used Harmony exclusively to Hawaii as they are far better in all respects to AC's service. I'll be switching to WJ as their service levels are better than HMY's.
For the record, I'm Prestige, but up to now I've used Harmony exclusively to Hawaii as they are far better in all respects to AC's service. I'll be switching to WJ as their service levels are better than HMY's.
^
Sep 22, 2005, 10:32 am
#53
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Originally Posted by exAC
Did you ever notice that Westjet never wants to talk about actual passenger growth? They talk about RPM growth and ASM growth, but never want to discuss growth in passenger boardings.
The reason is contained in the charts of their 2004 annual report. It is embarrassing to the 'Big Shots' that the 'growth' is almost stagnant.
The reason is contained in the charts of their 2004 annual report. It is embarrassing to the 'Big Shots' that the 'growth' is almost stagnant.
Plus, the first page of their annual and quarterly reports usually mentions the total "guests" carried and if not, it is carried in the corporate profile. So total # of passengers is one of the items highlighted in places meant to ensure it is seen by shareholders and analysts.
They aren't hiding anything from a growth perspective.
Sep 22, 2005, 11:30 am
#54
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Anything can be manipulated.
I can raise ASM's by dumping shorthaul flights and adding one or two longhauls. Just like WS is doing.
I can drop ASM's and make it look like we are conserving by canceling one or two widebodies on longhaul routes. (been there, done that and met my objective with ease).
RPM's can go down and profitability will increase because the RASM has gone up.
CASM can go down because we squeezed another row of seats into the economy cabin, ala AC and the 320's. ASM's went up also.
Pull out the stops on fare levels and flog them cheap and L/F rises. Pull some capacity by using smaller aircraft and it goes up even faster. The crunch comes when you can't get anymore bodies on the airplanes because all of the seats are full. Air Canada's problem right now.
The point is that Westjet love to crow about their fast growth, their declining CASM and the more RPM's, ASM's that they are generating, but it has a large artificial component to it. They don't like to talk about the actual numbers of passengers carried as it does not match the corporate mantra.
A year ago Westjet was growing their ASM/RPM figures and they 'forgot' to optimize their pricing and revenue management systems and lost $20 million as a result. They didn't keep their eye on the ball.
I can raise ASM's by dumping shorthaul flights and adding one or two longhauls. Just like WS is doing.
I can drop ASM's and make it look like we are conserving by canceling one or two widebodies on longhaul routes. (been there, done that and met my objective with ease).
RPM's can go down and profitability will increase because the RASM has gone up.
CASM can go down because we squeezed another row of seats into the economy cabin, ala AC and the 320's. ASM's went up also.
Pull out the stops on fare levels and flog them cheap and L/F rises. Pull some capacity by using smaller aircraft and it goes up even faster. The crunch comes when you can't get anymore bodies on the airplanes because all of the seats are full. Air Canada's problem right now.
The point is that Westjet love to crow about their fast growth, their declining CASM and the more RPM's, ASM's that they are generating, but it has a large artificial component to it. They don't like to talk about the actual numbers of passengers carried as it does not match the corporate mantra.
A year ago Westjet was growing their ASM/RPM figures and they 'forgot' to optimize their pricing and revenue management systems and lost $20 million as a result. They didn't keep their eye on the ball.
Sep 22, 2005, 11:42 am
#55
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Actually, he is just forgetting one key component in his argument. Just plain wrong. But presumably in good faith, otherwise I don't think he would have been hammering us with his crap, posting the same thing at least three times.
Sep 22, 2005, 1:01 pm
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Originally Posted by Girard737
WJ's l/fs are not stacked with up to 15% low yield aeroplan redemptions. Did you ever notice that ACE's record load factors coincide precisely with the following announcement?
1. How do you know AC's AP yields, especially with AP inventing more flexible redemption options that are obviously higher yield?
2. So AC's FF redemptions are somehow bad in your eyes, but Westjet's cutrate chartering for Transat - which it doesn't break out in its traffic stats either - are good, and somehow WJ doing an alliance with CX is good, even though the costs and chea pro-rates will hardly make it worth the airline's while.
3. What are your Air Miles redemptions?
You see, WJ has a lot of fluff in its numbers, and if you add in the inevitable 2-for-1 sale going on somewhere, there is a lot more padding than you let on.
Further more, I have challenged you, and you have ducked the challenge, to compare AC's non-ASM producing costs with Westjet's CASM. You don't tackle the challenge, Mark, because it obliterates your argument. Don't accuse Air Canada of trying slight of hand with the numbers when you come here to play your deceitful little parlour tricks to try to convince the people here that the world is really square.
Last edited by Sebring; Sep 22, 2005 at 1:05 pm
Sep 22, 2005, 1:23 pm
#58
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Why do you refer to me as a founder of WJ? You seem to be very hung up on this and I can't figure out why. Is this guy the only guy on the planet that is entitled to these opinions? In any event:
What has AP yield got to do with average stage length?
What has the Air Transat deal got to do with average stage length?
What has the supposed deal with Cathay got to do with average stage length?
What have airmiles got to do with average stage length?
What have non asm producing costs have to do with anything? Does any other airline produce that statistic? I've never seen anybody else report it.
I will grant you that the most important thing is that rasm exceeds casm in an airline. It doesn't matter where the total rasm comes from, nor does it matter where the total casm comes from. If rasm is higher than casm by 8-10% on a year round basis, you've got a winner. Wouldn't it be great if everyone met that criteria?
Now, please tell me how ACE comes up with that average stage length. Just the math please. It's just numbers, anyway.
What has AP yield got to do with average stage length?
What has the Air Transat deal got to do with average stage length?
What has the supposed deal with Cathay got to do with average stage length?
What have airmiles got to do with average stage length?
What have non asm producing costs have to do with anything? Does any other airline produce that statistic? I've never seen anybody else report it.
I will grant you that the most important thing is that rasm exceeds casm in an airline. It doesn't matter where the total rasm comes from, nor does it matter where the total casm comes from. If rasm is higher than casm by 8-10% on a year round basis, you've got a winner. Wouldn't it be great if everyone met that criteria?
Now, please tell me how ACE comes up with that average stage length. Just the math please. It's just numbers, anyway.