Air Canada Asia Lcc

[mrlupin]

And don't you see that the only reason AC had ACTS and Aveos into the 21st century was by federal mandate? That airlines around world are getting out of doing their own heavy maintenance. If not for the ACPPA, Air Canada would have gotten out of air frame maintenance many years ago, and that the workers who have been doing it have been receiving many years of over-market wages and benefits. Had they been working at any other airline, they would been laid off for good 5-15 years ago. And yet the economic drag on the company has been huge.

But whine on about executive pay, which is a tiny, tiny fraction of the burden imposed by outmoded, uncompetitive labour concepts.

Sure, I'd tell the executives to work for a bit less, I'm that kind of guy, but you don't want to hear what I would do to the unions.

I am fully conscious of ACTS and the ACPPA. The point I am trying to get across is that internal culture is affected by such actions. I do not know how one would get around that but after seeing it happen, it affects culture and mindset. Would you agree?

Culture starts at the top (see Bean previous post), CEO greasing their wallets do not create team cultures.

That having been said, the company that needs to change its culture, its modus operatus, has a disadvantage against companies that never had to deal with the legacy structure. Would you agree?

I do not contest the burden imposed by outmoded uncompetitive labour concepts. I would like to point out that AC has done very little to change these labour concepts. It's in-ability to mobilize its work force is only matched by its ability to piss them off. This too come from the top. At a lower level, the airline might as well be recognized as a red tape company. It's internal functioning appear modeled on governments.

For those with ten minutes and a desire to laugh, the following comics mimics well AC's internal structure. Every task seems to take the same effort as in the clip... An old Astérix and Obelix clip.

[DEFCON]

"It's been like this for decades, and I think Calin's got it right. One by one, the biggest obstacles to sustainable profitability can and will be eliminated, either directly or by arbitraging down overall costs through the creation of an LCC"

What a complete & utter pile of crap!!

The single biggest obstacle to sustainable profitability continues to be a lack competent management. It’s only the lousy craftsman that lays the blame for failure on his tools.

[Fido]

The pension advantage can't be that big. AC has not been making contributions for the pension plan shortfall for years and doesn't plan to in the future. It has been kicking the proverbial can down the road since 2003. It is only funding current employee pension benefits.

Not true.

There was a period from April 2009 to December 2010 that no past service costs were made but the bill last year was $150million, this year $175million and next year $225million.

The total pension bill in 2011 was $385million and this year it is expected to be $426million.

[Guest rozar s'macco]

I've lost count at the number of "low cost airline within an airline" ventures that have been created on paper by earnest MBA's that have never worked in practice.

Low cost is a state of mind and starts at the very top.

If the executive group doesn't completely and utterly buy into the low cost state of mind, the low cost mentality can never be expected to trickle down to the rank and file and permeate through the organization, no matter how promising the airline looks on paper. Without that mentality hard wired into the corporate DNA, the ventures are pretty much DOA.

I had high hopes for Scoot, but I fear the sponsors at SIA will inevitably turn it into a flawed, under performing, yield canibalizing, and very expensive three year or so experiment. Jetstar's supposed success has purely been at the expense of Qantas. Air Asia, a successful shorter haul LCC has already withdrawn from KL to Europe flying.

If it were as simple as the legions of MBA's and high priced consultants claim, all the various attempts over the past 20 years or so would still be operating, creating profits for both the LCC and the mainline operation.

That has never occured. Enough said.....

:worship: Ok I'll admit it, I like Thebean.

Not insignificantly, after AC shopped this dog of an idea around the world- THE WORLD- the only two partners even remotely interested were a third-rate mainland China carrier (Hainan) and Virgin, of which a majority shareholder is...wait for it...Singapore!

So, either Singapore is looking for somebody to unload their Scott Gomez onto (Scoot), share the pain with, or to have some like-minded company in the B777-LCC fan club (population: 2).

Not promising.

[Guest rozar s'macco]

$18,000/30= $600. Is this a sign of a management team who knows at all what they are doing?

[dagger]

$18,000/30= $600. Is this a sign of a management team who knows at all what they are doing?

What's your point? It takes two flight coupons per round trip, or did you not read the fine print? In the summer, the current undiscounted tango RT fare for YEG-HKG is $1750 all in with GST, in the winter, it's $1200 all in with GST, and that's without any seat sale discounts. The firm pays up front for 30 credits, or 15 round trips, good for a year. The price doesn't include GST. That's extra. When you consider this is net, it's a reasonable discount to offer. It might save money in summer, but there is a lot less business travel in summer. It might make more sense to use them in the fall/winter, when fares are lower anyway.

The airline locks in the cash, can allocate presumed space utilization to the lowest pods, and the flights must be booked in N class. They won't displace higher paying fares, like Latitude. Unlike a Tango fare, which can be cancelled and turned into a credit against other AC purchases, unused flight pass credits expire unless extended for three months at a cost of $500 each.

There are no upgrade rights, which makes it more restrictive than higher fares which may qualify the individual to an upgrade.

The firm is basically buying 15 Tango round trips, which may or may not be a bargain depending on how they use them, and if they fail to use even one, it's likely no bargain at all.

[jkavafian]

What's your point? It takes two flight coupons per round trip, or did you not read the fine print? In the summer, the current undiscounted tango RT fare for YEG-HKG is $1750 all in with GST, in the winter, it's $1200 all in with GST, and that's without any seat sale discounts. The firm pays up front for 30 credits, or 15 round trips, good for a year. The price doesn't include GST. That's extra.

There you go again. International flights are not subject to GST. Trying to sound informed again??

[Gumbi]

I still think an all-B767 LCC is the cheapest, quickest, lowest-risk way to combat Transat, Sunwing and WestJet, to the Caribbean, Europe, and heck even across the Pacific of that's the latest and greatest.

But the day you start allocating your newest, best aircraft to the discount division (that doesn't yet exist) is the day you signal intent to kill your company. If I'm a shareholder I'm starting to wonder just W, TF are they smoking up in the "war room"?

This is getting embarrassing.

Are we going to war?

[milehighclub]

Are we going to war?

Only if you merge with them ( or try to...)

[Guest rozar s'macco]

It's all nonsense, dagger; what you're saying. It sounds intelligent, and complicated, but the result is that they are selling their product below cost, well in advance. Why not blow it out below cost at the last minute, when there is no other option? Cover your costs, and then you can provide extras ad hoc, rather than committing to lose money, and then hoping to make up the shortfall by jamming people with extra fees. It's backwards in my opinion. Why lock in a loss?

[milehighclub]

It's all nonsense, dagger; what you're saying. It sounds intelligent, and complicated, but the result is that they are selling their product below cost, well in advance. Why not blow it out below cost at the last minute, when there is no other option? Cover your costs, and then you can provide extras ad hoc, rather than committing to lose money, and then hoping to make up the shortfall by jamming people with extra fees. It's backwards in my opinion. Why lock in a loss?

Maybe they just want to lock that money out of the boat before it sinks

[Fido]

....the result is that they are selling their product below cost, ....

It would be interesting to know what the 'cost' of a seat is and whether it has any relevance in the airline world?

[Guest rozar s'macco]

.15 per mile for AC (give or take). At $600 to go YYZ-HKG that is selling for about .08.

[Fido]

.15 per mile for AC (give or take). At $600 to go YYZ-HKG that is selling for about .08.

Balance that out with an Executive Class fare of $11,000 or a full economy of $7,800 (and yes they do sell these).

But since one cannot sell enough of the full J or Y fares the airline still needs to scale the aircraft inorder to sell as many seats as possible at as high an average fare as possible.

I suggest that setting your minimum price at $1,200 will leave seats empty on all but a few flights.

[Thebean]

.15 per mile for AC (give or take). At $600 to go YYZ-HKG that is selling for about .08.

AC's CASM in 1Q 2012, including interest, was 19.18 cents over 16.3B asms.

AC's CASM drops significantly every year in Q2 and Q3 as they work the fleet harder, (ie in 3Q 2011, they generated 18.8b asms and drove the CASM down to 16.24 cents.), then pops back up in 4Q and 1Q when they fly far fewer ASM's.

That's over a reported system asl of 892 miles, which is significantly lower than WJ's. Assuming the asl is calculated using the same methodolgy as WJ and most other North American airlines, , (ie ASM's/# of departures/avg seats per departure), that means AC's cost to fly an 892 mile sector was 19.18 cents in 1Q 2012.

The question then becomes what is the cost to operate a 6,392 sector from YVR to HKG or a 7,810 mile sector from YYZ to HKG.

I can assure you it isn't anywhere close to 19.18 cents.

Whether or not the current economics on the trans pacific routes make any sense would require further analysis that's best left to high priced consultants with time on their hands.

I haven't a clue nor the time and intellectual curiosity to try and figure it out.

[IFG]

....I can assure you it isn't anywhere close to 19.18 cents. It's probably about half that.

Whether or not the current economics on the trans pacific routes make any sense would require further analysis that's best left to high priced consultants with time on their hands. I haven't a clue.

Quite so. And then there's the breakdown of actual CSM for 40-odd premium seats occupying the real estate of about 200 more Y seats (per dagger's seat chart). Would bean's CSM be calculated on the basis of apr 350 seats, averaged out? If so, the CSM properly allocated for the Y product would be lower yet, and about x5 higher than that for seats up front.

But regardless, the relationship between market value and CSM is pretty elastic. For those who don't get it at all, consider a hypothetical sked operated with a 3-pax C172, with a trip cost of $500, and 2 pax (66%LF), one prepared to pay $400, the other, $150. The trick is keeping BOTH pax happy. Rationalize the fare to $300 or so? One happy pax, and a $200 loss. Make them all cheap seats, BELF is over 100%. Stop selling the cheap seat, still lose $100. Exprapolate that sort of consideration over hundreds of pax, several fare buckets for each sector (and product), and one can begin to see what voodoo airline marketing is.

Flight crew can only just say hello/goodby/thanks etc. to the pax, and provide a safe, enjoyable and efficient flight, hoping the witch doctors' incantations work

Cheers, IFG

[J.O.]

... hoping the witch doctors' incantations work

"Objection your honour. He's assuming facts that are clearly not in evidence."

[Thebean]

^{This may have been posted previously. Apologies if it is old news.}

^{Jetstar flight crew recruiting terms}

^{http://www.yousendit...6TStvQnN3anNUQw}

^{I did some preliminary research on housing costs over there last summer. A comfortable flat for a small family in Singapore anywhere I'd want to live would run about $8,000 a month.}

[rudder]

8 days off in 28 days? That would have CR licking his chops.

[Guest rozar s'macco]

I nearly croaked when I saw that an A330 CA is being offered at (approx) CAD$150k. Then I searched and found that Singapore's top marginal tax rate is 20%, which one only reaches above SGD$500k. Likely a pilot on that contract will pay an average rate of around 13%.

For a Canadian airline to remunerate an employee such to match the take home pay of an expat on that contract they would have to offer double. So...what is the root cause of our "uncompetitiveness", unions or government. Salaries/benefits or taxes, fees, rents, surcharges.

We will lose our entire industry to less onerous jurisdictions if this is not addressed forthwith.

[Don Hudson]

IFG, re, "Exprapolate that sort of consideration over hundreds of pax, several fare buckets for each sector (and product), and one can begin to see what voodoo airline marketing is."

Which is the reason I don't get it and am so glad to be at the "all-those-complicated-dials-instruments-and-switches" pointy-end where things actually do make sense! I don't do "voodoo airline marketing" well but thanks for the lesson !

rozar, from the latest Flight Global:

Eran-Tasker says government figures show that the number of would-be pilots presenting themselves for training, and the number of licences being issued, are both going down because the appeal of ­piloting as a career is plummeting.

He ascribes this to industry instability, the high entry cost, ­unsocial working patterns, and the fact that ­piloting is now less well paid than some other professions.

(I said this fifteen years ago, not that it matters now).

The article is worth reading. It discusses "evidence-based training", an interesting development which considers FOQA trends, incidents and accidents as a basis for what to train. Simplistically, under the heading of "nothing new", while I think that such information is worth linking to training when one is already a seasoned professional, somehow, some way, and notwithstanding the success of the guy who created the notion of the MPL, you need to know how to fly an airplane, how to read the instruments, and how to think and communicate so that learning from FOQA, incidents and accidents like stalling your transport aircraft (as has occurred a dozen times in the past eight or so years!), is actually avoided because one understands flight and airplanes and isn't just a "button-pushing flight manager". There are times when one simply has to take over and fly the machine. The skills to do that do not end with knowing how to make the machine go up or down and this is being missed in the attractiveness of brilliant automation solutions to ordinary flight problems. But when you actually have to manipulate the controls, you also actually have to think and anticipate. Frankly, the FDM data is telling us that the problem isn't automation, it is the inability to think and be constantly situationally aware regardless of the level of automation chosen, and this is an aviator's skill, not a manager's or an engineer's skill. What's more, IT CAN'T BE TAUGHT.

Sorry for yelling with the caps but quite frankly I'm seeing stuff and nonsense regarding solutions that are being made out to be far more complicated than they need to be. Flying is a physical, psycho-motor and cognitive skill and, for most young pilots entering commercial aviation it needs tons of hours of pure practice, practice, practice. A year's worth of autoflight on international routes gives each pilot up front about three to five hours of actual handling of the airplane. It is illegal to disconnect the autopilot in RVSM airspace. Hand-flying is intimately connected with cognitive perception and skill - one cannot "Powerpoint" one's way into the cockpit or into being a professional.

That's the rant for today as I'm fed up with psycho-babble and noise from casual observers, academics, managers and lawmakers who don't do the actual work of flying a transport and who don't know the unique fatigue or fear that aviation engenders, at least in the observant.

Concurrent with these growing illusions about the route to competency and skill is the statement from Bloomberg News entitled, "Airline Crash Deaths Too Few to Make New Safety Rules Pay"

The benefits of aviation rules are calculated primarily on how many deaths they may prevent, so the safest decade in modern airline history is making it harder to justify the cost of new requirements.

"If anyone wants to advance safety through regulation, it can't be done without further loss of life," said William Voss, chief executive officer of the Alexandria, Virginia-based Flight Safety Foundation.

Don

[xxx]

Thanks Don, you continue to hit the mark.

That is why I come to this fourm.

[Guest rozar s'macco]

Regarding advancing safety through regulation: it is the only way, however suboptimal it is.

In that same Flight Global article, mention was made of airlines moving, "beyond compliance" in other areas but not in training. I have not observed this. Compliance is the ONLY metric in a world where your flight safety is managed by somebody with Six Sigma training. "We have to get rid of all this excess safety margin", -actual quote (fourth hand) of a manager. Six sigma, a manufacturing QA program, is to my mind an unsuitable mode of thinking in flight safety however it heavily influences the policy process at the airline I work for; excess margin is considered like waste material in a manufacturing process- waste. Quality is viewed as the absence of cost, not the completion of the mission per se. Abnormalities are viewed as normal occurances to be expected and dealt with by the crew who, at this point in Canada at least, are still highly, highly experienced. Regulation is the only answer for the future.

To wit, here is an actual quote from an operations bulletin dated this month. I will take it out of context so as to not run afoul of corporate privacy policy, however it illustrates my point perfectly:

"Since they are not required by regulation, allowances for [...] have also been removed."

There you have it. Beyond compliance? I haven't seen it.

[boestar]

Six Sigma has nothing to do with QA. Six Sigma is a methodology whereby a process can be imporved to be more efficient. Yes it cuts waste but it also looks at what can and cannot be cut from a process. All factors are considered in the process development. LEAN is an addition to the methodology the "streamlines" the process and eliminates that which hinders the process or what can be considered waste or "Lost Time"

That being said it is NOT the Six Sigma methodology that is doing what you state above but rather the misguided individuals that are examining the process. They are taking an easy cost cutting measure at the expense of employee engagement. They are not factoring in the intangible loss of production in disengaging the workforce whereby there "cost cutting" has the opposite effect due to a decrease in production because of the disengagement.

While that all sounds like double speak, in simple terms. Pissing off the employee to save cost drives up sick time and decreases efficiency due to **bleep** off employees losing interest.