51 replies to this topic

[manwest]

http://business.financialpost.com/20...t-carrierline/

Air Canada pilots are being warned to make sure they have a seat at the table if the airline pushes ahead with its low-cost carrier plans, or risk seeing it cannibalize the main line’s routes.

The country’s largest carrier is quietly exploring ways of launching its proposed low-cost subsidiary outside of negotiations with the Air Canada Pilots Association (ACPA), sources have said.

Those options include launching it as an international offshore joint-venture and as a North American subsidiary to compete more effectively on leisure routes with its lower-cost rivals, Air Transat, Sunwing Airlines and WestJet. Air Canada has said it doesn’t comment on “rumors and speculation.”

The model being considered is similar to the one Australia’s Qantas Airways Ltd. had with its Jetstar brand in 2003. As a result, Captain Brad Hodson, vice-president of the Australian and International Pilots Association (AIPA), is warning his Canadian counterparts not to let Air Canada push ahead with its LCC plans without having some say in how it is shaped.

Was just wondering if AC still has the naming rights for Canadi>n or Roots???  would they consider using these for the New LCC.  Guess they wouldn't use Tango Plus or ZIp 2 as choices.  Just wondering what it might be called????

[rudder]

The new name for LCC should be 'Air Canada'.

Fix the underlying problems at AC and there is no need for a gimmicky commercial initiative that will only further confuse the marketplace. AC generally has a stellar reputation for product and service. Diluting that through rebranding or using cheap labour is not a value-added proposition, it is just a hail mary pass as time runs out on the clock.

[Fido]

rudder, on 21 February 2012 - 01:08 PM, said:

.... a gimmicky commercial initiative that will only further confuse the marketplace. ....

The objective is to take away the confusion that is already out there.
The public already wonders why there is a vast difference between service levels dependent upon what city pairs they are travelling.  The differences of seats in Executive class or the non-existance of Executive class on some airplanes.

There needs to be a split between one style of airline (premium international long-haul) and the other (tourist class to soft destinations in Europe, Carib and even Pacific).

[DEFCON]

I’m sorry; I guess I’m in a foul mood, but this entire issue really makes me gag. It’s a given; regardless of the demonstrated poor performance of their industry, management has somehow continued to do ‘remarkably’ well over the last decade or so?

Wouldn’t it be nice if pilots had the ‘gonads’ to stand collectively across the western world, set a date, and let them know, ‘we’re mad as hell and not going to take it anymore’? On the selected date, pilots will refuse to fly until such time as the government recognizes the ‘value’ of a ‘real pilot’ and acts to remove the professional pilot from the MBA’s economic scam?

AC is soon to follow the path of the ‘Tower of Babel’, thoroughly dissected and its little pieces scattered to the wind. Accordingly, everything will have come ‘full circle’ when WJ is then considered the ‘highest unit cost’ outfit in Canadian airspace. The consequence; WJetters too will be required to give back in the name of competition. It’s all pretty damn sad if you ask me!

[Thebean]

DEFCON, on 21 February 2012 - 03:07 PM, said:

I’m sorry; I guess I’m in a foul mood, but this entire issue really makes me gag. It’s a given; regardless of the demonstrated poor performance of their industry, management has somehow continued to do ‘remarkably’ well over the last decade or so?

Wouldn’t it be nice if pilots had the ‘gonads’ to stand collectively across the western world, set a date, and let them know, ‘we’re mad as hell and not going to take it anymore’? On the selected date, pilots will refuse to fly until such time as the government recognizes the ‘value’ of a ‘real pilot’ and acts to remove the professional pilot from the MBA’s economic scam?

AC is soon to follow the path of the ‘Tower of Babel’, thoroughly dissected and its little pieces scattered to the wind. Accordingly, everything will have come ‘full circle’ when WJ is then considered the ‘highest unit cost’ outfit in Canadian airspace. The consequence; WJetters too will be required to give back in the name of competition. It’s all pretty damn sad if you ask me!

You want big government to set salaries? I guess it still happens to a certain extent in North Korea and Vietnam.

I'd love to make twice what I made last year.   I suspect I probably could, if I work a little harder.

I most certainly would not want some nameless bureaucrat in Ottawa determining my pay.

Edited by Thebean, 21 February 2012 - 03:27 PM.

[DEFCON]

"You want big government to set salaries?"


No Bean; not at all.

I would prefer the government only ‘recognize’ an ATP’s 'professional' status. With the formation of a true 'college', ‘we’ will remove ourselves from the clutches of present MBAs and ‘their’ marketing schemes. As it stands, aviation fuel suppliers don’t provide ‘give-backs’ to the troubled carrier; it’s pay or go bust. A quality built ATP is every bit as valuable to the safe operation of aircraft as is the necessary fuel. The two shouldn’t be regarded any differently.

When someone seeks legal representation for a complex and or difficult matter, they’re going to get the best ‘experience’ their money can buy, not the guy that’s just been called to the Bar. Why should airlines be ‘allowed’ to employ people with the experience level of a newly minted CP, essentially a PP, for a position that requires real skill sets only acquired through experience, not rote training?

[Thebean]

Organize away..

If it's a good idea, it'll come to pass.

[bm330]

When Westjet started and through their early years, they wouldn't even look at a resume with less than 5000hrs.  The number was driven not by some "experience is everything" mantra, but by their insurance carrier.  What you pay is largely determined by who you get to do it.  Eventually your track record pushes the rates down and you can hire less experienced guys and depend on your corporate culture and training dept to keep up.  With the advent of Cadet programs and MPL's, experience is ebbing all the time.  It won't be the Govt or some College recognizing career pilots, it'll be insurance and leasing companies worried about their $120M aircraft.

[FA@AC]

Fido, on 21 February 2012 - 01:38 PM, said:

The objective is to take away the confusion that is already out there.
The public already wonders why there is a vast difference between service levels dependent upon what city pairs they are travelling.  The differences of seats in Executive class or the non-existance of Executive class on some airplanes.

If you work in airline industry management you may well know better than I do, but I don't think that AC's objective with the LCC is to reduce the level of confusion that is out there.  Continental Lite, Ted, Song, Tango, Zip and various other airlines-within-airlines have already gone away in part because they increased the level of customer confusion.  The only rationale I have heard for AC's plans around its next foray into the discount market is the need to lower costs.

[Fido]

FA@AC, on 21 February 2012 - 07:12 PM, said:

... Continental Lite, Ted, Song, Tango, Zip and various other airlines-within-airlines have already gone away in part because they increased the level of customer confusion.  ...

I do not share the view that these off shoots failed and most certainly not because of any confusion.  Instead, from the experiment, the mother corps found that passengers would accept lower amenities IF the price was cheaper.  Since it was just as easy to scale the fare levels lower and take away amenities from everybody they did not need the separate brand anymore.

The separate airline brand is still being used around the world.  Check out Germanwings and of course JetStar.

Now I do not understand CR's need to bring about separate pay scales for some wet dream of an LCC for leisure routes.  The savings are so small that there is little need.  Any LCC will not fail because of a 10% lower salaried pilot group.  I see instead that the LCC was brought forward as a bargaining chip to be given up at the last minute to let the pilots think they have won.

The LCC at Air Canada is operating today (3 B767-300's and 2 A319's) but it does need a totally separate name to discount the customers hopes of an Executive Class 'pod' on HNL, BGI, CUN et al.

[FA@AC]

I agree with some of the points you make, but I doubt whether AC's LCC plans are being advanced only to lower the expectations of the 24 or so people who pay a bit extra to sit up front on the 3 wierdly-configured 767s that AC currently operates.  The 2 319s you mention are already sold as Y only, but are sometimes deployed on flights to MEX which is to my understanding a route with decent yields--certainly higher yields than we get to any other point in Mexico.

There has been talk of a fleet of 40+ aircraft for AC's LCC.  Some of that could, as you suggest, be nothing more than a negotiating tactic, but I think that AC has far bigger plans for its LCC than 3 767s and 2 A-319s.  I would expect a much higher density seating arrangement than what we now have on those aircraft, and I'd be surprised if a 10% savings on pilot salaries alone would achieve anywhere near the degree of cost savings that AC has in mind.  In TA1 for the FA group the top rate of pay for a LCC FA would have been almost 30% lower than the current FA max.  Had TA1 passed, work rules for the LCC would have been negotiated later, but I'm sure that we'd have seen significant cost reductions there too.  The CAW agreement, as far as I know, contains no LCC language, but with more and more CAW functions being automated, perhaps AC was content to let that one slide.  A hefty charge for checking baggage on the LCC might serve to make some of the IAM-performed work on the ramp unnecessary also.

The other thing that gives me the impression that AC is serious about the LCC is that our senior management seems not to have much else.  I read, but haven't yet replied to Dagger's post about AC now paying down debt as a priority, but aside from waiting for the Dreamliner to change the economics of certain markets, they have no strategy and no plans that I'm aware of to return AC to profitability other than to launch their LCC.  If not for the LCC plans they'd remind me of AA's management that was content to wait for everybody else's labour costs to rise in order that they'd again be competitive and would avoid CH11, or the managment at UA whose only plan was to wait for somebody to buy them.

In my position, I'm content to let AC have at it with the LCC and to let things stagnate at the mainline carrier just as QF is doing with Jetstar if that will restore profitability.  There likely isn't anything our union could do to stop it anyway.  The marketplace has changed, and that's about all there is to it.  For those with fewer years on the job, and for the pilot group whose salaries depend entirely on what equipment they operate, it will be a much tougher sell, and I fully understand their concern.

Edited by FA@AC, 21 February 2012 - 09:31 PM.

[Fido]

As you point out, there is no LCC language in the final Flight Attendant agreement.  But it was there at the start and your negotiating committee bargained it out (which is what the pilots negotiating committee will do eventually).

[FA@AC]

You might be giving CUPE too much credit there.  I'm not at all sure that they bargained the LCC out of our agreement.  They might have given up the right to represent the FAs at the LCC and enabled AC to go around us if/when they start the LCC up.  I shouldn't be too critical, as they wouldn't exactly have been cheered by their membership if they had ultimately agreed to LCC language, but that's the way I see it.

What ACPA does--or is forced to do--remains to be seen.  If they take the advice that they're now being offered by their counterparts in Oz, they'll hammer out a LCC agreement with AC.  That the ACPA leadership has been having forty fits about AC and its LCC plans lately suggests that they're in no doubt that AC is serious about it, but it's always possible that they're misreading things.

[Fido]

FA@AC, on 21 February 2012 - 09:45 PM, said:

....  That the ACPA leadership has been having forty fits about AC and its LCC plans lately suggests that they're in no doubt that AC is serious about it,

ACPA leadership having fits and focusing the troops on this issue fits in with being able to look like heros when the LCC goes away.


Now if they accept LCC language then CR wins also.  Although in my opinion it is not a big win.

[Gumbi]

Fido, on 21 February 2012 - 08:12 PM, said:

  Instead, from the experiment, the mother corps found that passengers would accept lower amenities IF the price was cheaper.

I'm wondering what AC could take away, amenety wise, from the present status to make it an LCC and justify charging less?

On the contrary, they'd have to start offering free meals and wine to be competitive on the Caribean market...

[Fido]

Gumbi, on 21 February 2012 - 10:42 PM, said:

I'm wondering what AC could take away, amenety wise, from the present status to make it an LCC and justify charging less?

Just put more seats in the airplane and there is no reason to charge any less.

[jkavafian]

Fido, on 21 February 2012 - 11:13 PM, said:

Just put more seats in the airplane and there is no reason to charge any less.

That's what I don't get. The solution is so simple as you suggest.
Many destinations that AC presently flies with widebodies do not require the J seats it has. Put 250 seats on a 767 that currently has 211 seats and bingo your cost just went down by 20%.

[dagger]

jkavafian, on 24 February 2012 - 07:53 AM, said:

That's what I don't get. The solution is so simple as you suggest.
Many destinations that AC presently flies with widebodies do not require the J seats it has. Put 250 seats on a 767 that currently has 211 seats and bingo your cost just went down by 20%.

Would 20% eliminate the cost gap between Air Canada and Westjet, or Air Canada and Canjet?

And if AC wants to create a higher average positive margin across the board, keeping in mind some mainline routes might have a 5% op margin, why not push for 25% or 30% cost reduction at the LCC?

Merely matching density with your competitors isn't enough if they have cost advantages in other areas. Or maybe, they are being subsidized by foreign governments? Maybe they are even Canadian carriers being subsidized by foreign governments?

http://www.royalgaze...ESS/702249969/0

[Fido]

jkavafian, on 24 February 2012 - 07:53 AM, said:

That's what I don't get. The solution is so simple as you suggest.
Many destinations that AC presently flies with widebodies do not require the J seats it has. Put 250 seats on a 767 that currently has 211 seats and bingo your cost just went down by 20%.

I do not understand why CR 'does not get it' too.

[Fido]

dagger, on 24 February 2012 - 09:23 AM, said:

...
Merely matching density with your competitors isn't enough if they have cost advantages in other areas. ....

Seating density is the only variable left to airlines to play with costs.

2012 cost silos:
< 20% labour
> 30% fuel
~ 10% maintenance
< 10% landing, navigation and airport fees
~ 30% to everything else. Aircraft rent, depreciation, food, sales and distribution, IT,

Air Canada does not have a 'cost gap' between itself and any other airline.  The costs are ostensibily the same for everyone.  It is only how they are distributed per seat.