DEFCON Posted January 30, 2012 Share Posted January 30, 2012 One point; aren't advance bookings, especially J type, a pretty good indicator of where the economy's going? Link to comment Share on other sites More sharing options...
jkavafian Posted January 30, 2012 Share Posted January 30, 2012 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.Partly true. If Canada is 100% and WestJet is already in 80% of the markets, the remaining 20% hardly represents growth. The cost of acquiring the remaining 20% of market would be too high.There is no potential to stimulate the market. That was in the 1990s. Prices have come down sharply since then and besides, even if a ticket price is zero dollars, the taxes and fees add up to about $150. There is no opportunity to stimulate the market as before. Remember also that in regional markets, you either have to go or you don't. Market dynamics are different. If you look at Jazz's true regional markets, It's one way towards the big city on Fridays and one way back to the small city on Sundays with very little traffic in between.I'm sure the WestJet folks know all this but I am still skeptical. Link to comment Share on other sites More sharing options...
Boney Posted January 30, 2012 Share Posted January 30, 2012 After the news about the possibility of the "Prop Division", e-mails started flooding in from both pilots and cities wanting service. Rumour has it that 230 resumes came in from a certain company that have 250 pilots. Hmmmm.If the pilots at porter unionize, porter will be off the table unless the pilots are willing to de-certify. Take heed boys.The flow-thru minimum is 1 in 4. It can increase at company discrection. The minimum hrs for "mainline" is far higher than that for the "turboprop". Those that get on with the minimum hrs will have to build time before moving over, but that is a guarantee. One could build ones time at another airline but doesn't guarantee a position just because you have 5000+ hrs. The pilot at the "prop division" already had his/her interview and is just a matter of time before moving over.The 2 vs 1 list is the elephant in the room. I came to realize that AC have not only 2 lists with issues but worse issues with just one. I'm referring to the AC/Canadian merger. It's better to hedge one's bet by having 2 lists and a separate OC, so that one can observe the fallout and control that elephant, somewhat. Some years down the road, who knows, it will all become mute.Like many, I had lots of issues and asked questions of my management, who insisted on answering all questions and not dismissing them. In the end, apart from a small few, we back our team and move in the same direction.Rant over....cheers Link to comment Share on other sites More sharing options...
rudder Posted January 30, 2012 Share Posted January 30, 2012 The easiest and least expensive way to eliminate Porter as competition isn't to buy them (likely a waste of money) but simply to hire away ALL of their pilots and flight attendants. While you are at it, hire all of their AME's as well. It is a win-win for Porter pilots as either they move to the WJ system (assuming that the stupid notion of 2 tiers of WJ pilots is eliminated in the final product) or they get better wages and working conditions at Porter as Deluce struggles to bribe them into staying. Just watch, Porter will come up with a 5 year training bond Link to comment Share on other sites More sharing options...
DEFCON Posted January 30, 2012 Share Posted January 30, 2012 Is the grass all that much greener at 80% of market rate? Link to comment Share on other sites More sharing options...
Super 80 Posted January 30, 2012 Share Posted January 30, 2012 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.There is plenty of potential for stimulating traffic on regional level on previously uncontested routes, particularly when many of them are priced at levels that are highly discouraging to discretionary air travel. Link to comment Share on other sites More sharing options...
DEFCON Posted January 30, 2012 Share Posted January 30, 2012 If AC has the staying power, we'll see the day when WJ looks like the old 'Canadian', complete with all its tribulations and engaged in a perpetual life and death struggle with AC? Link to comment Share on other sites More sharing options...
Super 80 Posted January 30, 2012 Share Posted January 30, 2012 Partly true. If Canada is 100% and WestJet is already in 80% of the markets, the remaining 20% hardly represents growth. The cost of acquiring the remaining 20% of market would be too high.Yet if they didn't do it the analysts would be screaming about stagnation, incompetence, failure to build shareholder value and sizing up Saretsky for the Durfy Memorial Ejection Seat. Even if they never added another Canadian destination many of those routes would already be better served by a Q400 than a 737 adjusting for either frequency or demand. But the question ultimately goes back to growth - how does WS grow further having made their presence known in practically every Canadian market that can accommodate a 737? The barriers to entry of encroaching on Jazz in the regional market are much, much lower than jumping into the international widebody realm. It is also necessary if they are to tackle the rather substantial list of Air Canada destinations in the US served by Jazz. Link to comment Share on other sites More sharing options...
Thebean Posted January 30, 2012 Share Posted January 30, 2012 Yet if they didn't do it the analysts would be screaming about stagnation, incompetence, failure to build shareholder value and sizing up Saretsky for the Durfy Memorial Ejection Seat. Even if they never added another Canadian destination many of those routes would already be better served by a Q400 than a 737 adjusting for either frequency or demand. But the question ultimately goes back to growth - how does WS grow further having made their presence known in practically every Canadian market that can accommodate a 737?The barriers to entry of encroaching on Jazz in the regional market are much, much lower than jumping into the international widebody realm. It is also necessary if they are to tackle the rather substantial list of Air Canada destinations in the US served by Jazz.Any regional route over 250 miles, especially where there are geographic barriers to driving, (rocks / water / winter weather), has a pretty good chance of being stimulated by low fares.People forget that by and large, the fares WJ introduced in 1996 were not unknown in the marketplace prior to their launch.There had been many examples of, for example, $118 round trip fares from Calgary to Vancouver prior to WJ arriving on the scene, however, they all required 14 day + advance purchase and a Saturday night stay.The stimulative factor occured as a result of the elimination of any stayover requirements, (which no airline that I'm aware of currently demands), the squeezing of advance booking requirements in order to achieve low fares, as well as the absolute reduction of close in / walkup fare levels.Prior to WJ launching, the walkup / unrestricted fare / no stayover fare, regardless of how fare in advance it was booked for YYC-YVR in January 1996 is permanently engrained in my memory: $294+ taxes. WestJet dropped it to $59, and that, quite frankly is what caused the explosion in traffic and where the economic damage was done to the incumbent carriers.As mentioned, stayover requirements have gone the way of the Dodo bird in Canada, but the other two attributes of an LCC remain in place, somewhat tempered by the increased costs of post 9/11 short haul travel. I did all the elasticity estimations / calculations, both prior to launch and thereafter. They are remarkably consistent.I have my opinions on the venture, and for once, I'll keep them to myself. Link to comment Share on other sites More sharing options...
Maverick Posted January 30, 2012 Share Posted January 30, 2012 I might be mistaken but this regional kind of looks like WJ circa 1995. Basically going against the incumbent(s) with a more efficient cost structure. Correct? Many of the strategies would be similar but this time using the most efficient aircraft available. Hmm, I'm liking this the more I think about it. I remember a quote from Clive (I think?) that basically stated that if WJ had started with new equipment it would have been more profitable than it was even accounting for exceptionally cheap fuel? As long as the new division has the strategic focus of the original one it should be very, very effective. Link to comment Share on other sites More sharing options...
Thebean Posted January 30, 2012 Share Posted January 30, 2012 I remember a quote from Clive (I think?) that basically stated that if WJ had started with new equipment it would have been more profitable than it was even accounting for exceptionally cheap fuel? That is indeed the case. However, it would have been far more risky, and investors tend to be risk adverse, both then and now.The goal of this, (and any other), business venture is to absolutely maximize the chance of success, minimize any opportunity for failure and keep capital and operating expenses as low as possible. It's always best to be profitable, then grow instead of attempting to grow into profitability. Link to comment Share on other sites More sharing options...
conehead Posted February 2, 2012 Share Posted February 2, 2012 Management at WestJet today disclosed that its proposed new regional subsidiary would be centred in Calgary and Toronto.WestJet last month unveiled its desire to launch a new turboprop operation to serve smaller Canadian cities and its employees are currently voting on the plan."We're wrapping up the voting in a few days and our board will make a decision in the coming weeks," the carrier told FlightglobalPro.Carrier CEO Gregg Saretsky told attendees at the Raymond James Global Airline conference on 2 February the new subsidiary would have a national footprint with two operations, one centred in Calgary and the other in Toronto to serve domestic and transborder city pairs.The new operation will have a three-pronged strategy, said Saretsky - targeting new destinations with a single competitor that charges monopoly fares, joining the dots on its own route map and schedule improvements to increase frequencies during off-peak times with smaller gauge aircraft operating with lower trip costs.Saretsky said WestJet is really building "something here for business travellers that provides them more utility".WestJet concludes there are 30 Canadian cities too small for the Boeing 737s it currently operates, and where fares on stage lengths of under one hour are upwards of $1,200 roundtrip.Saretsky explained WestJet's highest fare on a coast-to-coast flight in Canada is $600 one way, and there are markets from Canada to the north eastern US that are 45 minutes to one hour, "where you'll pay $1,500 one way".WestJet believes it can successfully replicate its low-fare model into the regional space and create a new stream of traffic to connect those small cities to its hubs, allowing for additional growth of its 737 fleet, Saretsky said.The regional operation would be a separate subsidiary owned by WestJet, with roughly 40-plus 70-seat turbroprops. Saretsky mentioned both the Bombardier Q400 and the ATR 72-600 as possible airframes. Link to comment Share on other sites More sharing options...
CanadaEH Posted February 8, 2012 Author Share Posted February 8, 2012 Pass privileges are exactly the same for both groups. Link to comment Share on other sites More sharing options...
props2you Posted February 8, 2012 Share Posted February 8, 2012 Pass privileges are exactly the same for both groups.So they didn't screw over the regional, as AC just did for post-2006 hires. Link to comment Share on other sites More sharing options...
chockalicious Posted February 8, 2012 Share Posted February 8, 2012 I guess we wil have to wait and see all of the details before there can be a comparision. I would bet in the area of other benefits including wages Chorus could be ahead.Why would you bet that? Link to comment Share on other sites More sharing options...
DEFCON Posted February 8, 2012 Share Posted February 8, 2012 If I'm a Westjet shareholder / owner, do I get a vote on the direction the Company is going to take? Link to comment Share on other sites More sharing options...
rudder Posted February 8, 2012 Share Posted February 8, 2012 If I'm a Westjet shareholder / owner, do I get a vote on the direction the Company is going to take?Yes, via the WJ BOD. Link to comment Share on other sites More sharing options...
DEFCON Posted February 8, 2012 Share Posted February 8, 2012 "Yes, via the WJ BOD"Huh? Link to comment Share on other sites More sharing options...
rudder Posted February 8, 2012 Share Posted February 8, 2012 "Yes, via the WJ BOD"Huh?One can only presume that WJ strategic planning, particularly that which requires significant capital spending, must receive BOD approval. A shareholders voice is typically expressed via the shareholder representatives - the BOD members that were elected (or in some cases acclaimed) by the shareholders at the AGM. Link to comment Share on other sites More sharing options...
Seeker Posted February 8, 2012 Share Posted February 8, 2012 So they didn't screw over the regional, as AC just did for post-2006 hires.AC does not own Jazz/Chorus - it's a commercial agreement. Why do you think you should have the same travel benefits as the AC employees? Link to comment Share on other sites More sharing options...
chockalicious Posted February 8, 2012 Share Posted February 8, 2012 to name but one: Pensions. I don't know what the details of what Chorus pays out as a pension. I would be curious to see if contributing 10% of salary to WS stock which the company then matches ends up netting out a better return over the years than contributing to a DB pension. In the comparisons I have seen the DB usually does poorer but their is more onus on the employee to be disciplined about their own retirement with a WS type of self directed pension. Link to comment Share on other sites More sharing options...
boestar Posted February 8, 2012 Share Posted February 8, 2012 Jazz has a DC pension plan as well as an ESOP. both of which have a company match component. Link to comment Share on other sites More sharing options...
DEFCON Posted February 8, 2012 Share Posted February 8, 2012 "I don't know what the details of what Chorus pays out as a pension. I would be curious to see if contributing 10% of salary to WS stock which the company then matches ends up netting out a better return over the years than contributing to a DB pension"That really is a good question? The concept is novel and another good example out of the box thinking on WJ's part. It's just too bad it'll take so long to see an answer to the question. Link to comment Share on other sites More sharing options...
mrlupin Posted February 9, 2012 Share Posted February 9, 2012 "I don't know what the details of what Chorus pays out as a pension. I would be curious to see if contributing 10% of salary to WS stock which the company then matches ends up netting out a better return over the years than contributing to a DB pension"That really is a good question? The concept is novel and another good example out of the box thinking on WJ's part. It's just too bad it'll take so long to see an answer to the question.Nothing like betting the livelihood you will receive when older on the perpetual growth of an airline stock... That's not a pension plan... it's a foolish gamble if you leave the money in there. At least if the employees have the sense to diversify out of Westjet stock as soon as the shares vest they might have a chance of having money for retirement.Never bet your nest-egg on an airline stock. Link to comment Share on other sites More sharing options...
chockalicious Posted February 9, 2012 Share Posted February 9, 2012 Nothing like betting the livelihood you will receive when older on the perpetual growth of an airline stock... That's not a pension plan... it's a foolish gamble if you leave the money in there. At least if the employees have the sense to diversify out of Westjet stock as soon as the shares vest they might have a chance of having money for retirement.Never bet your nest-egg on an airline stock.That is what most WestJetters do. Most like being in charge of the own future future. Link to comment Share on other sites More sharing options...
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