A simple question

[Guest bigdig]

Why does AC have to maintain their head office in Quebec? I know the political reasons, the disgusting and appalling 'vote buying' practices of the Liberals, but i was just wondering if there is some valid reason for this apparent absurdity.

Imagine if the reverse were true and the feds dictated some other company had to maintain their head office in a certain area. I believe the francophones and the rest of Canadians would not accept such legislation. Why is it accepted without so much as a hint of indignation from the rest of Canada when it happens to AC?

And don't tell me simply that it was a term of agreement for privitization as that is not an acceptable reason.

Imagine the pressures and political lobbying that goes on everyday, that results in similar results without any of us knowing about it.

I'm not anti-Quebec by any stretch of the imagination, but I am sick of the preferential treatment that is pathetically justified by comments of national unity, etc. It just doesn't wash with me.... its all 'vote buying' at someone's expense. Free market my arse!

[jkavafian]

A simple question by a big idiot. It was the Conservatives that put that requirement on AC not the Liberals. Montreal is a great city why wouldn't the head office be there?Go get yourself a hood and wear it.

[Mitch Cronin]

I remember once asking you if you were aware that some of your posts made you sound nasty... Now I clearly see you're well aware of it. It is quite evidently your intent here... Are you bitter about realizing how wrong you've been lately?

[jkavafian]

Man you read a whole lot in a simple post don't you Mitch? How relevant is Air Canada's head office location? I am kust sick of hearing the "I am not a racist, but..." or "I am not anti-Quebec, but...." crap.

Montreal is a great place to keep a head office.

[Guest ACNSK]

Real estate's probably cheaper, too. Infrastructure is already in YUL. What would be the advantages of moving to YYZ or elsewhere? Taxes? Write-offs? Anything?

[Guest Patrick Bergen]

You guys are missing the point. There is absolutely nothing wrong with Montreal. The problem is any government restriction to doing business that is unfair with respect to the competition. What if Quebec City or Flin Flon Manitoba offered a fantastic tax rebate and the building costs were cheaper?

[Financial Guy]

Yeah, I'm sure those employed at AC's Head Office love the higher tax rates in Quebec, as opposed to Ontario.

[Don Hudson]

Wow.

[Don Hudson]

Exactly, Patrick. That was the intent of asking the original question.

Why is there an ACPPA? Why not a similar WJPPA or an ATPPA? Those airlines are both traded publicly just like AC is.

Why not? Because it makes no sense if the business is to be run as a private corporation. The government can't have it both ways.

Can you see Beddoes or LeBlanc accepting that their company has to do their business in accordance with an Act of Parliament which required their business to maintain certain administrative, logistical and physical features which have nothing to do with making a profit for investors, creditors and employees?

That's the question.

And the question, as originally written, does not attempt to deflect attention away from what employees have done and are being asked to do again.

The question is about attractiveness of investment, (comfort) and competitiveness. All investors thus far have picked up on the need for a level playing field. That's what the question is about and you picked that up immediately.

I have no idea why such a question, if understood in its original intent, would get into a Toronto vs Montreal slugfest, except that when one's words become public domain, their interpretation is beyond one's control.

[dagger]

You have to be careful about tax issues. Quebec doesn't charge an explicit employer health tax like Ontario - see the current debate in Ontario over pro sports teams - and it also has begun lowering its capital tax - which Ontario hasn't. In fact, Quebec's capital tax will sunset over the next five years, which is a pretty good thing for an airline that may wish to start buying some of its aircraft again. Ontario has just reversed corporate tax breaks the former Tory government was providing.

Quebec is also "supporting" AC in a number of ways which I suspect Ontario doesn't. Quebec has more "soft" money for things like labor worker training that the airline has tapped into in the past. Also, for individuals, compare the price of housing on the West Island of Montreal for nice mature districts like Beaconsfield or Pointe Claire vs similar mature areas of Toronto.

The income tax issue is but one part of the equation.

I grew up in Quebec. I moved to Toronto as an adult. I could probably make money moving back to Quebec because my townhouse (and its lousy 20-foot frontage) would cost me at least 25% less in Montreal.

[vanishing point]

Thanks for a real reply to a simple question. What is the answer though? Why isnt this issue receiving more attention as an obvious cost savings and inequity amongst the Canadian carriers?

[CAT3DUAL]

You're more than welcome to post here, but as far as I'm concern you have achieved "TROLL" status.

[Guest Dockjock]

...or Alberta

[Fido]

If Montreal is such a great place to have a head office, then why does there have to be a law that says Air Canada must be there???

Your comment 'Go get yourself a hood and wear it', is the typical racist comment of someone from the east.

[Don Hudson]

Hello Vanishing Point;

Re "Why isnt this issue receiving more attention as an obvious cost savings and inequity amongst the Canadian carriers?"

Well, I think given some of the statements made in the media by Deutsches Bank, GECAS, the federal government and others regarding a "level playing field", I believe the matter is receiving the attention it deserves.

As Dagger has rightly (in my opinion) pointed out, these changes are no panacea nor are they "the silver bullet", (there are no silver bullets).

But in terms of investor "comfort" going forward (dislike that term) and for a more level environment in which competition between rivals is to be had, these changes are a reasonable area to investigate. The amounts saved will be for others to determine.

A business case to retain the ACPPA and aspects of the CTA (Canada Transportation Act) cannot be made successfully if Air Canada is to be truly released from all fetters, the goal being to make a profit.

If however, the goal is to keep Air Canada under the government's thumb in terms of "quiet" control of the market place and other "administrative aspects of Air Canada's business, then the CTA, the ACPPA and the Competition Bureau make "sense".

Clearly however, that is not what the market wants. As can be easily observed from the circumstances, Members of Parliament and the Ministry of Transport cannot have it both ways.

(How does the Competition Bureau view the Monopolistic GTAA? Is it time to reign the GTAA in and resurrect Pickering, to be run, say, by the Vancouver airport people? The land is still there, available.)

Just kidding.

My own peculiar view on labour is grounded in an historical understanding, beginning with Fordism, Taylorism, the Wagner Act in the US (closely followed by the corporate success in the Taft-Hartley Act) and so on. I don't expect anyone to a) know about this stuff, or be impressed by it...its just a fascination which I spend time on, but where labour's rubber meets the corporate road is an important if not historical interface and I view the current crisis (and demands) at Air Canada in that context.

So I know that if labour gives up everything, Air Canada will be a brilliant investment and make a huge profit.

But at what cost? Is the result sustainable? Labour's resistance is understandable both from a legal and from a political point of view. Doesn't mean its right, nor does that mean the corporations are right.

But does that secure our futures? Do we know that if labour gives up even another 20%, does that makes the enterprise viable? And if labour yields that 20%, will another "due diligence" require another 10%? Five percent? With TTI signing on to invest, and then unilaterally changing the conditions of investment after labour had agreed to roll-backs last May, why would labour be trusting of any subsequent entreaties?

And if labour gives (again), who among the stakeholders doesn't have to give? We know now I think, that the creditors and the suppliers have taken a huge hit, (discussed in my response to Dagger). Will the airports? Will the federal government? Dagger brought up the fuel tax. Will that be addressed?

In the way these things are done, (messy), perhaps all of this will be addressed but not fully. Perhaps the words "muddle through" conjur up the wrong perception of its opposite, (perfection) and that such affairs are always messy, perfection or the ideal being unachievable. The other aspect of this which I have written about is the "surprise" factor. Something emerges which none had heretofor considered.

I keep the overriding principle in mind that most people involved in this want a successful outcome, success being the survival of the airline in a form which makes money for its investor(s) and suppliers and secures its employees' futures.

[Seeker]

This is my first and last reply to you. I find your attitude to be abrasive and rude. I've watched you on various news and business shows and you are obviously capable of a higher level of courtesy but choose not to use it here. A very odd way to communicate with the very people that are the subject of your livelihood and in my opinion this speaks volumes about your personality.

seeker

[jkavafian]

Please support your claim because I believe it is wrong.

[jkavafian]

Because there is no cost savings. This is not a cost issue. It is a "why in Quebec" issue? Don't dress it up any other way.

[proview]

bigdig has asked: "Why does AC have to maintain their head office in Quebec"

The answer is not that simple. The bald truth is that the management of Trans Canada Airlines back in the 40's or 50's requested that the owners (the government) allow them to move the head office to Montreal from Winnipeg because Montreal is where most of their operations were centred at the time. The government agreed reluctantly, because of political concerns.

I suppose that today people in Toronto would say that a move to that city is justified on similar grounds, seeing as Air Canada has its hub (perhaps its only hub?) in Toronto. However, I don't know if I agree that the head office location is such a big deal in this age of modern communications technology. There can not be that great a savings to be had in moving a few hundred jobs a few hundred miles from a large operations centre to an even larger one.

There are probably much greater costs associated with the location of the maintenance centres than with that of the head office. However, it would probably cost hundreds of millions to move, and the company does not have the cash.

Incidently, I have followed the aviation industry in this country (from the sidelines!) for many years, and I have always been struck by the intensity of the ill will towards Quebec and Quebecers held by many members of the aviation community. This small minded meanness often goes far beyond any legimate quibbles. I am from Alberta and we yield to no one in our ability and willingness to bash easterners.

Sorry about the rant! :-)

[zipped]

It appears to me and many that the "hood" would look better on you. Just a disgusting comment from you mr j.k.

[zipped]

Ask WestJet why they don't move there H.O. to YUL. Lousey business climate in Que compared to other parts of Canada.

[zipped]

any where except QUE. It seems to me YUL is not a central place at all for a HO.

[dagger]

That qualifies for the stupid answer of the day. Westjet is located in Calgary because that's where the founders live, where the airline first started, where it has its main base and a lot of loyal clientele. There is no compelling reason for them to move ANYWHERE. It has nothing to do with Montreal, Toronto or Timbuktu.

[dagger]

Canadian National Railways is HQ's in Montreal and running up consistently large profits. BCE is headquarterd in Montreal. Alcan is headquartered in Montreal. Montreal is the site of AC's major maintenance base. It a significant point of operations, with double daily service this summer to London, Frankfurt and Paris (and I might add Montreal operating costs are 20% or more lower than GTAA costs, so you may see more international expansion from YUL). The Quebec market is a pretty good supporter of AC.

[zipped]

My point being that YYC was/is a much better aviation business climate than say.....most other parts of Canada. Too many bureacrats out east. Nowhatimean.