WestJet CEO plots bigger (or smaller?) fleet

[Maverick]

Not difficult but accuracy be damned.

From wikipedia, seems like Jazz fits the parameters.....

Regional airlines are airlines that operate regional aircraft to provide passenger air service to communities without sufficient demand to attract mainline service. There are three ways for a regional airline to do business:

• As a feeder airline, contracting with a major airline, operating under their brand name, filling two roles:
  
  • Deliver passengers to the major airline’s hubs from surrounding communities (this is known as regional feed or regional traffic), and
    
  • Increase frequency of service in mainline markets during times of day/days of week when demand does not warrant use of large aircraft.
    

  [*]Operating under their own brand, providing service to small and isolated communities, for whom the airline is the only reasonable link to a larger town. An example of this is Peninsula Airways, which links the remote Aleutian Islands of Alaska to Anchorage. In this role, the term commuter airline is generally used.

  [*]As an independent airline larger than an air taxi or commuter airline service, that operates scheduled point-to-point transit service under its own brand, that does not meet the descriptions above or fly larger "mainline sized" (over 100 seats) aircraft". Mokulele Airlines and the independently branded Expressjet Airlinesoperations to larger and medium size cities, would be examples of this type of operation in the U.S.

[wizard]

Company Overview

Chorus Aviation Inc.

Chorus Aviation Inc. (“Chorus”) was incorporated on September 27, 2010 and is the successor to Jazz Air Income Fund. Chorus is a dividend-paying holding company that owns Jazz Aviation LP.

Chorus is traded on the Toronto Stock Exchange under the trading symbols of CHR.A, CHR.B and CHR.DB.

About Jazz Aviation LP

Jazz Aviation LP (“Jazz”) is wholly owned by Chorus Aviation Inc., and has a strong history in Canadian aviation with its roots going back to the 1930s. Jazz’s predecessors have generated some of the strongest operational and financial results in the North American aviation industry.

Under a capacity purchase agreement with Air Canada, Jazz provides service to and from lower-density markets as well as higher-density markets at off-peak times throughout Canada and to and from certain destinations in the United States. Jazz currently operates scheduled passenger service on behalf of Air Canada with over 790 departures per weekday to over 85 destinations in Canada and in the United States with a fleet of Canadian-made Bombardier aircraft.

Jazz also operates Boeing 757-200 aircraft on behalf of Thomas Cook Canada for the winter seasons to various destinations in the Caribbean, Mexico and Central America from four Canadian gateways – Toronto, Ottawa, Montreal and Halifax.

Why Chorus?

The name Chorus and the dragonfly word mark were selected for their connection to our operating subsidiary; Jazz Aviation LP. Chorus represents a company that is all about teamwork, unity, and a feeling that anything is possible when people come together. It’s about harmony and diversity as our corporate structure grows to include different entities.

A chorus understands that a flawless performance requires hard work and dedication – something our employees demonstrate every day. Just like a chorus, our people are passionate about what they do. And it shows.

Chorus is a natural extension of the Jazz brand, as both names bring positive associations of music, creativity, and collaboration.

After a period of intensive research, we selected the dragonfly for the Chorus word mark. The design is bold, strong and confident. The olive green colour, while sophisticated and professional, also feels organic and from the earth – representing the start of our new brand journey.

The dragonfly dates back to prehistoric times when dinosaurs roamed the earth and it still exists today. Though Jazz did not operate that far back in history, our heritage goes back to the earliest days of Canadian aviation. In addition to saluting the past, the dragonfly is also believed to represent change and symbolizes prosperity, good luck, strength, and harmony.

[Spinnaker]

Sorry if you are offended but this thread did follow 'Regional Airline' conjecture. Who knows... maybe a CPA with Jazz is the right move. They can obviously cover the 757 stuff too! One stop shopping.

[UpperDeck]

Wkipedia as an authority? Hmmm. What do we know of the provenance of the author(s)?

Seriously, nothing particular revolves around the definition per se; the exception is more as to how the word "regional" is used---most often as a diminuative.

I think most would agree that the function of carriers operating smaller aircraft has changed and continues to change. Notwithstanding consolidation amongst large international carriers, their use of "feeder" airlines is being reduced. Aircraft used in point-to-point operations and through hubs are becoming larger----125 seaters are more economical than 50 seaters---and many pilots with such large airlines are engaged in operations that a few short years ago, were the realm of "regionals".

AA 67 captain----MIA>BOS>EGE>BOS>MIA

Operate the same routes in a 90 seater or 125-----rhetoricaly, what then is the difference from a pilot's perspective between "mainline" and "regional"?

[Kip Powick]

............AA 67 captain----MIA>BOS>EGE>BOS>MIA..............

.............................Operate the same routes in a 90 seater or 125-----rhetoricaly, what then is the difference from a pilot's perspective between "mainline" and "regional"?

The first thing that crops up is...the pay.

[Guest rozar s'macco]

How is WestJet's concept any different from Porter? Porter has an island monopoly at least, yet the consensus in here is that they are a lit fuse. Not sure I see a gold mine.

[CanadaEH]

Porter doesn't have the benefit of feeding into and getting feed from a large, established, and profitable carrier. Porter doesn't benefit from the infrastructure of the aforementioned carrier.

[DEFCON]

‘Feeder’ is often employed as a tool of denigration and directed at what was once known as a ‘regional carrier’.

I was sitting on a gate delayed ABC flight some years ago. We were waiting for a late arriving then AC ‘mainline’ ‘regional jet’. The Captain of the ABC Dash 8-3 made a PA advising the passengers that we were waiting for connecting passengers from “our feeder”, AC’ to arrive, etc, etc.

For one reason or another, that announcement allowed me to see the nature of the relationship between the two carriers as it really was; ‘feed’ is the base which supports a symbiotic relationship between carriers, not an airplanes size or the distance it moves. The latter forces are only the product of pilot ego or imagination, not at all unlike the present portentous notion suggesting a 73 somehow requires a higher level of skill to operate than does the Dash 8-4.

It’s related, but as an aside to the feed issue; if WJ goes ahead with separate ops based on the ‘apprenticeship model’, they will contract the same disease that has plagued AC for decades. Can anyone even begin to quantify the ‘cost’ of that experience to AC’s bottom-line and shareholder trust / return?

[DEFCON]

"The first thing that crops up is...the pay"

Not at Chorus.

[Guest rozar s'macco]

Porter doesn't have the benefit of feeding into and getting feed from a large, established, and profitable carrier. Porter doesn't benefit from the infrastructure of the aforementioned carrier.

So, point to point is dead? Hub strategy, from what I can observe at other airlines, is a drain on utilization because you must by definition become more cognizant of the timing of the flights that are getting the feed. A mainline flight that left at x:xx forever now leaves 1:15 later because that's when the feed gets there. Downline, now the late night XYZ departure is no longer possible with that aircaft, so it overnights instead. Never mind DOF operational delays, I'm talking about the schedule. Multiply that over 90 aircraft and there is a lot more wasted utilization; sure the aircraft appear to fly more full, but the network is more expensive.

Anyhow, my observation of WJ's cost advantage was basically the point to point model, and single fleet type. Ignoring the cultural and employee engagement risks (secondary consideration at BEST, for most airlines), this is a major departure from the inherent simplicity that drives your costs below those of other airlines that, in many cases, actually pay their employees the same or less. Where did the savings come from then? Happiness (not really)? Magic?

Using jet blue as an example, yes they have two fleet types, but they are both used as "mainline" airplanes. There is no "feed". That strategy appears more to be one of right-sizing the aircraft to the city pair; the second type can be argued to fit in with the overall model.

To me, adding another type, whilst at the same time switching to a more hub-centric strategy (feeders) is a major major change in the way WJ is approaching the business. The employee issues look to be sorted, or at least all the boosters on here seem happy. So we'll see where the utilization weakness gets buried. Bets on the feeder. If Porter is believed to not make money, and Chorus is believed to be supported by an overly rich CPA, how will this be any different? Side-by-side mainline/feeder companies, symbiotically supporting each other's networks but each with a low cost mandate. The search for the holy grail continues. Good luck!

[airt]

‘Feeder’ is often employed as a tool of denigration and directed at what was once known as a ‘regional carrier’.

I was sitting on a gate delayed ABC flight some years ago. We were waiting for a late arriving then AC ‘mainline’ ‘regional jet’. The Captain of the ABC Dash 8-3 made a PA advising the passengers that we were waiting for connecting passengers from “our feeder”, AC’ to arrive, etc, etc.

For one reason or another, that announcement allowed me to see the nature of the relationship between the two carriers as it really was; ‘feed’ is the base which supports a symbiotic relationship between carriers, not an airplanes size or the distance it moves. The latter forces are only the product of pilot ego or imagination, not at all unlike the present portentous notion suggesting a 73 somehow requires a higher level of skill to operate than does the Dash 8-4.

It’s related, but as an aside to the feed issue; if WJ goes ahead with separate ops based on the ‘apprenticeship model’, they will contract the same disease that has plagued AC for decades. Can anyone even begin to quantify the ‘cost’ of that experience to AC’s bottom-line and shareholder trust / return?

While there is no denying that AC/Jazz have a dysfunctional relationship , I fail to see how that is supposed to guarantee the same is inevitable at WestJet.

AC , rather CALPA , rather ACPA , treated their collegues like dirt. The end result was so obvious. All it would have taken was an acknowledgement of the regionals important contribution to the health of the "mothership" via flowthrough (date of hire would have been even better). I never understood the "your'e good enough to fly our dash-8's but not necessarily good enough to fly our jet's attitude". I believe that was the ROOT of the dysfunction and that will not be the case at WestJet. You fly the dash and you will eventually get to fly the 737 and 787.

The details are yet to be worked out but I'm quite confident that WestJet and its pilots will make this work to EVERYONES advantage.

[UpperDeck]

The company never said; "You're good enough to fly a Dash but not a 320". The difficulty in relationships derives from the perpetuation of the notion that a pilot operating larger aircraft is somehow "better" than one piloting a smaller aircraft. As Kip noted in another thread, many airlines base pilot pay on payload. Therefore, there is an income progression as one moves from smaller to larger.

So long as that type of pay progression exists, there is a natural desire to protect one's progress "up" that payscale from encroachment by interlopers even if those interlopers come from within the "family".

We've seen how vitriolic one can become at the very notion that a pilot with fifteen years seniority accurued with Carrier "A" should transport some portion of those years onto a merged list.

Change that process (yeah, sure!!) and you'll significantly reduce the madness. Status pay is a VERY good way to start.

[airt]

The company never said; "You're good enough to fly a Dash but not a 320". The difficulty in relationships derives from the perpetuation of the notion that a pilot operating larger aircraft is somehow "better" than one piloting a smaller aircraft. As Kip noted in another thread, many airlines base pilot pay on payload. Therefore, there is an income progression as one moves from smaller to larger.

So long as that type of pay progression exists, there is a natural desire to protect one's progress "up" that payscale from encroachment by interlopers even if those interlopers come from within the "family".

We've seen how vitriolic one can become at the very notion that a pilot with fifteen years seniority accurued with Carrier "A" should transport some portion of those years onto a merged list.

Change that process (yeah, sure!!) and you'll significantly reduce the madness. Status pay is a VERY good way to start.

"interlopers"

That is my whole point.

There are many at WestJet who lived it. The rest of us watched from outside and shook our heads in disbelief.

There will be no "interlopers" at WestJet. I think we have all learned what not to do.

[DEFCON]

I thought Rozar raised some good points above.

Okay; let's pretend both operations are up and running today and hiring is ongoing. WJ claims it'll take three 'off the street' newbies into WJ for every one from it's 'apprenticeship feeder program'. Believe me, that concept will bring the 'fight' out in people simply because they're individuals and self-made pilots first, not WJetters.

And let's not forget the pay issues; from what I'm reading, the WJ plan seeks WACON at an 'apprenticeship' grade level for the 2nd tier as well? Add that to the 3 to 1 WJ hiring formula and just watch the fun begin. The entire program, at least according to media reports, would appear to be the pure creation of legacy style thinking.

[airt]

I thought Rozar raised some good points above.

Okay; let's pretend both operations are up and running today and hiring is ongoing. WJ claims it'll take three 'off the street' newbies into WJ for every one from it's 'apprenticeship feeder program'. Believe me, that concept will bring the 'fight' out in people simply because they're individuals and self-made pilots first, not WJetters.

And let's not forget the pay issues; from what I'm reading, the WJ plan seeks WACON at an 'apprenticeship' grade level for the 2nd tier as well? Add that to the 3 to 1 WJ hiring formula and just watch the fun begin. The entire program, at least according to media reports, would appear to be the pure creation of legacy style thinking.

Gotta disagree.

Unlike the AC/Jazz thing , these new employee's will be 100% part of the WestJet team. The team working towards the same goal. The team that doesn't waste valuable time and energy fighting amongst themselves. There will be a few who fall into the "stinkin thinkin" trap. There always are.

I didn't like that unfortunate use of the word apprenticeship. I think it will be a great opportunity for most pilots , just greater for the younger ones due to the extended career opportunities.

A book could be written on the possible WACON conditions. All I'll say is that I'm confident that whatever they come up with will be fair. From there it is up to the prospective new employee to determine for themselves if it is or isn't. If not , for heavens sake don't take the job.

A thought struck me as I was out walking the dog. If all the AC pilots had the chance to turn back time , would they have done things differently with regard to their regional collegues if given a second chance. I would like to think they would after seeing the end result today.

This is one of the greatest advantages WestJet and its pilot's has. They have a map before them on not what to do. I think they will follow it.

[jkavafian]

So, point to point is dead? Hub strategy, from what I can observe at other airlines, is a drain on utilization because you must by definition become more cognizant of the timing of the flights that are getting the feed.

To me, adding another type, whilst at the same time switching to a more hub-centric strategy (feeders) is a major major change in the way WJ is approaching the business. The employee issues look to be sorted, or at least all the boosters on here seem happy. So we'll see where the utilization weakness gets buried. Bets on the feeder. If Porter is believed to not make money, and Chorus is believed to be supported by an overly rich CPA, how will this be any different? Side-by-side mainline/feeder companies, symbiotically supporting each other's networks but each with a low cost mandate. The search for the holy grail continues. Good luck!

WestJet will need more than luck to make this one work. It wants to become a legacy carrier without legacy products. I'm hearing a lot of examples in the media such as Regina-Winnipeg flights being better served by smaller aircraft. Who cares if that city-pair is not served. WesteJet will try to do exactly what AC should not be doing: flying every possible city-pair in the country.

WestJet has been a very successful airline for its first 10-11 years of existance. In the past five years it has been spinning its wheels. The next 10 years will be very challenging. Just my opinion.

[Guest rozar s'macco]

Gosh it is so easy to pick holes after the fact, but this is a watershed decision for WJ.

It seems that growth is the only story that CEO's know these days; the era of churning out, year after year, a solid strategy and returning a portion of the profits to investors if a business model that interests nobody but our (dead) grandfathers anymore. Why expand at all? Fraught with risk, and with limited returns at best. Winnipeg-Regina in a turboprop? THAT'S the pot of gold?!

Of course we have the luxury of being bystanders but, wouldn't the counterculture, contrarian move, when looking what to do with your mountain of cash, be to increase the dividend? And not a point, but like 5 points. Imagine if WJA paid 6%. You can always cancel it, it would drive the stock up, it would keep shareholder and "owners" alike happy, and it is as close to risk-free as possible. Airline CEO's all seem hell bent on betting the company every 5 years, is it too boring to brag about a dividend at the golf course? No, gotta talk about all the "fins" and "shells" and "hulls" you're buying. What justifies growth? The economy is not growing.

Again, good luck but the employee morale and culture story is a sideshow.

[airt]

Gosh it is so easy to pick holes after the fact, but this is a watershed decision for WJ.

It seems that growth is the only story that CEO's know these days; the era of churning out, year after year, a solid strategy and returning a portion of the profits to investors if a business model that interests nobody but our (dead) grandfathers anymore. Why expand at all? Fraught with risk, and with limited returns at best. Winnipeg-Regina in a turboprop? THAT'S the pot of gold?!

Of course we have the luxury of being bystanders but, wouldn't the counterculture, contrarian move, when looking what to do with your mountain of cash, be to increase the dividend? And not a point, but like 5 points. Imagine if WJA paid 6%. You can always cancel it, it would drive the stock up, it would keep shareholder and "owners" alike happy, and it is as close to risk-free as possible. Airline CEO's all seem hell bent on betting the company every 5 years, is it too boring to brag about a dividend at the golf course? No, gotta talk about all the "fins" and "shells" and "hulls" you're buying. What justifies growth? The economy is not growing.

Again, good luck but the employee morale and culture story is a sideshow.

You have my vote for a dividend increase. I believe the WJ BOD have neglected the shareholders.

As for the turbo prop operation , I don't think that it is so much that it is going to be a big moneymaker. More like it has to be put in place before larger aircraft (larger profits?) are brought onstream. Corporate equivalent of "go big or go home" I guess.

Pretty hard to put a monetary value on employee morale and culture but I'm thinking it's worth something .

[J.O.]

You're going to want to keep that question mark handy when discussing larger aircraft and larger profits. It's rare that they get mentioned in the same sentence.

[jkavafian]

As for the turbo prop operation , I don't think that it is so much that it is going to be a big moneymaker. More like it has to be put in place before larger aircraft (larger profits?) are brought onstream. Corporate equivalent of "go big or go home" I guess.

If you cannot profitably fill Vancouver-Narita/Seaoul/Shanghai flights with your existing network of the top 7 or 8 cities, it's not the addition of Flin Flon that's going to make a difference. And if you need the extra traffic from the small cities in Canada to make an international route work, then you should not be flying that route at all. We are once again beginning to hear the stupid "feed traffic" crap.

[Super 80]

Mehf... If they weren't doing this in six months you analysts would have torches alight demanding to know where the next growth spurt was going to come from. There is much traffic to be stimulated or stolen by way of a regional fleet even if they never go down the international widebody road.

[CanadaEH]

There is much traffic to be stimulated or stolen by way of a regional fleet even if they never go down the international widebody road.

Well said.

[Fido]

If you cannot profitably fill Vancouver-Narita/Seaoul/Shanghai flights with your existing network of the top 7 or 8 cities, it's not the addition of Flin Flon that's going to make a difference. And if you need the extra traffic from the small cities in Canada to make an international route work, then you should not be flying that route at all. We are once again beginning to hear the stupid "feed traffic" crap.

So true

The small aircraft, small market feed works if you have a couple dozen flights to connect with at your big hub.

[Seeker]

There is much traffic to be stimulated or stolen by way of a regional fleet even if they never go down the international widebody road.

Yeah, sounds good to me - the guest can buy a $49 "walkup" fare to get to YYZ or YVR and then become a passenger for the $1000 flight on AC to their final destination. This latest plan might work to our advantage!

[Guest rozar s'macco]

Additional flights do not "stimulate" traffic in the regional market- the demand is either there or it is not. If air travel was causal for economic growth, governments would be all over stimulus packages to airlines. Rather, airlines lag economic growth, responding to increased activity. The stimulating argument worked in 1996, but now that the business is locked in a permanent fare war, travel has never been cheaper.

Steal traffic yes, create new, doubt it.