Virgin Pacific

[Jumpy]

From AVCANADA;

IFALPA Daily news;

IFALPA News has received so far ubsubstantiated reports that Virgin Group Chairman Sir Richard Branson will shortly announce the launch of Virgin Pacific. The Vancouver based airline will initially operate a fleet of 737-800s on Canadian domestic routes with 777s for trans Pacific operations expected to follow in the medium term.

[melcrothers]

It will be interesting if it happens..... how does he skate around the 49% foreign ownership rules?

[DEFCON]

With a CPA?

[Bobcaygeon]

Foreign ownership - big deal. They skated around it in the US so it will be easy here (no patriot act).

Russ Peyton happens to have a 737-800 in yyz ( ex-Air Berlin) and an AOC (Skyregional). Coincidence??

[Thebean]

http://finance.yahoo...-190000980.html

$107m ytd losses, and losses through the ying yang since start up?

I can't think of a better time for SRB's minions to convince him to involve himself in yet another airline.....

Like Virgin America, there's no niche / market segment to fill.

At least Virgin Blue's timing was good....they launched in August 2000 and Ansett shutdown in Sept 2001.

[Fido]

They do not need a niche.

Between WS and AC they have restricted Domestic capacity to either no growth or minimal growth. They have opened up the market to a new entrant. Ten percent market share is not hard to acquire.

[Thebean]

They do not need a niche.

Between WS and AC they have restricted Domestic capacity to either no growth or minimal growth. They have opened up the market to a new entrant. Ten percent market share is not hard to acquire.

WJ remains more than nimble enough to be able to effectively compete on costs with any new entrant. All stakeholders are smart enough to understand the implications of a lower cost entrant arriving in the domestic market.

That being said, WJ would not have gained traction in the market had it's costs been 10-15% less than their competition. They have to be 30%+ lower. It's unlikely anyone will achieve that anytime soon in the domestic market.

It's a little more complex than max'ing out seating capacity. If it were that easy, the graveyard of failed LCC / AWA startups would not be as close to 100% as it is. Success is the exception, not the rule.

Virgin America was been a financial sinkhole for Virgin. To continue those types of losses unabated and simultaneously launch yet another brand to go head to head with one of the leanest, slickest operations in the market, with an all - important, and poised to exponentially grow, domestic feed network, together with amongst the highest cash reserves per tail of any airline on the planet seems, at best, a rather foolish business plan.

SRB is incredibly protective of his brand. His minions are not going to get into bed with anyone who's not going to create a "Virgin-like" product, which, by definition, is not as low cost as it needs to be. We also know that SRB likes to challenge conventional wisdom and rarely gets into bed with "status quo" operations. Witness the No Way BA-AA campaign.....

However, there's always another dreamer with a silk scarf and a leather flying helmet waiting around the corner ready to be separated from his cash.

[Boney]

To coin an old aviation question...How do you make a small fortune in the airline industry? Start with a large fortune.

[better4me]

Virign Pacific was last years April Fools joke for the new name of Virgin Blue (know called Virgin Australia). The joke was to have Justin Beiber as thge spokesperson and do a cover of Madonna's "Like a Virgin".

Also there is a truck transport company based in Vancouver Island with the trade name Virgin Pacific.

If there really is to be a new Canadian airline from Virigin group, it should be called Virigin Canada in keeping with the Virgin America and Virgin Australia titles.

[Flying Phoenix]

I for one hope that Virgin enters the Canadian market. Canada does not have a true low cost environment - only a lower wage one - for now. Australia for example, has a real low cost environment, however, wages for those flying with Jetstar and Virgin Australia, while considerably lower than QANTAS (which frankly border on the ridiculous), are actually quite respectable when viewed from our side of the ocean. Much of the reason is this is due to the competition for qualified pilots. Perhaps another airline in Canada, one which will need experienced flight crew, will find that they need to pay wages more in line with market forces. And believe me, there is no reason to believe that market forces are not on our side. Another low cost carrier does not have to translate into low wages and crap working conditions. In my view low cost is simply the new credo for 'this is the way we are going to run our business'. Careers at legacy carriers are becoming increasingly more insecure as they continue to fail to reach agreements with their unions on working conditions. For those wanting longer term career opportunities, the 'best jobs' may not be the ones we all dreamed about when we were kids.

[Thebean]

I for one hope that Virgin enters the Canadian market. Canada does not have a true low cost environment - only a lower wage one - for now. Australia for example, has a real low cost environment, however, wages for those flying with Jetstar and Virgin Australia, while considerably lower than QANTAS (which frankly border on the ridiculous), are actually quite respectable when viewed from our side of the ocean. Much of the reason is this is due to the competition for qualified pilots. Perhaps another airline in Canada, one which will need experienced flight crew, will find that they need to pay wages more in line with market forces. And believe me, there is no reason to believe that market forces are not on our side. Another low cost carrier does not have to translate into low wages and crap working conditions. In my view low cost is simply the new credo for 'this is the way we are going to run our business'. Careers at legacy carriers are becoming increasingly more insecure as they continue to fail to reach agreements with their unions on working conditions. For those wanting longer term career opportunities, the 'best jobs' may not be the ones we all dreamed about when we were kids.

According to the WSJ, Virgin America has incurred cumulative losses of more than $550 million since it's launch in 2007 and lost more money in 2Q 2012 than in 2Q 2011, a quarter when everyone else was printing money.

If you think that's a recipe for job security and rising incomes, you are sadly mistaken. I'll bet you there isn't a Virgin America pilot who hasn't got a CV in somewhere else and it'll be at the bottom of the totem pole. They'd be fools not to given the venture's hapless financial history.

Let's be clear. With an ASL of almost 1,600 miles, almost double that of Air Canada and about 600 miles longer than WJ's, and a casm pushing 11 cents, Virgin America is anything but a low cost operator.....

I'd love to sit in on an investor presentation coming from the rocket scientists that had anything to do with Virgin America's strategic vision. Did anyone ever think that it might be better to generate a profit and THEN grow? Would anyone on Bay Street give them the time of day to pitch a concept that will require a massive amount of highly risk adverse Cdn capital just to get off the ground given Virgin America's futile fiscal track record?

Given Canada's tendency to tax everything to the hilt, the only thing that matters is to compare costs amongst carriers operating within the same market, (ie, Canada). Trying to compare US domiciled airline costs to Cdn domiciled airline costs will drive you nuts. The impact of our tax heavy environment is deeply embedded everywhere, far deeper than the GST/PST/HST sees on the the end product, the "ticket".

Within that environment, WJ's unit cost to fly a sched economy class seat over virtually any stage length remains comfortably below any one else trying to accomplish the same feat.

With the entrance of WJX, the Tholian web continues to expand which will make it exponentially harder for anyone to gain a profitable toehold.

Anyone can make money in the airline business during the good 150 to 180 days a year. The trick is not have to pi$$ it all away the rest of the days. A sure fire way of ensuring that happens is to try and run a pure O&D sched in Canada during those crummy 180+ days a year.

There may be a legitimate opportunity for a new entrant in Canada at some point down the line as costs continue to mature. Southwest had a solid 35 year run.

The question becomes whether WJ is clever enough to recognize the cost / life cycle and take innovative, proactive steps early enough along the way to deal with it.

[Rookie]

Anyone remember this article?

Air Canada eyes Asia for low-cost airline

BRENT JANG - TRANSPORTATION REPORTER

The Globe and Mail

Published Tuesday, Jun. 12 2012, 6:39 PM EDT

Last updated Tuesday, Jun. 12 2012, 6:43 PM EDT

Air Canada is shifting its strategy for launching a discount operation, focusing on locating a new low-cost international carrier in Vancouver in a bid to tap into the potential of Asian destinations.

Plans call for the new entity to take over Air Canada's overseas flights in and out of Vancouver on wide-body aircraft. Some pilots and flight attendants will be from Canada and others could be based offshore.

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Vancouver has emerged as the focal point because Asian markets offer the best growth prospects while the euro zone debt crisis has relegated Europe to a lower priority for Air Canada.

“Vancouver has been an underperforming market for Air Canada on international routes,” said one industry official. “Air Canada is trying to figure out how to make Vancouver work.”

The quest to attract more traffic to and from Asia will pit the Air Canada-backed entity against carriers that already have a strong customer base, such as Cathay Pacific Airways.

In an effort to start the discount carrier by the spring of 2013, Air Canada is seeking to bring in an airline partner and a financial investor to avoid having to obtain approval from its pilots' union to forge ahead.

The Air Canada Pilots Association (ACPA) possesses veto power over any new venture controlled by the Montreal-based carrier. But Air Canada envisages an ownership structure that would keep its stake at less than 50 per cent, while giving minority stakes to a foreign airline and a financial player yet to be confirmed.

Air Canada chief executive officer Calin Rovinescu first disclosed plans for a low-cost carrier based in Central Canada in April 2011, targeting markets in Europe initially, and later Mexico and the Caribbean.

But the country's largest carrier has run into resistance from ACPA and watched tour operator Transat A.T. Inc. struggle amid fierce competition to fly travellers between Central Canada and Europe. Air Canada has now turned its attention to reinventing its presence in Vancouver, which would serve as the new operation's base for service to and from China, Japan, South Korea and other Asian countries.

Air Canada will remain a member of the Star Alliance of airlines and still handle domestic flights in and out of Vancouver, as well as provide service between Vancouver and the United States, Mexico and the Caribbean.

Mr. Rovinescu was in Vancouver last week during a meeting of the Star Alliance. He met with a senior B.C. government official to provide a briefing on Air Canada's vision for raising Vancouver's profile as an international aviation hub.

There will be an impact on employees in Vancouver at Air Canada, but new jobs will be created at the low-cost operation, so the airline is banking on political support in British Columbia for the transition.

While Air Canada declined comment Tuesday, Mr. Rovinescu said last week at the company's annual meeting that “we are evaluating various low-cost carrier business models.”

Ben Smith, Air Canada's chief commercial officer, is spearheading the project to make Vancouver the centrepiece of the discount unit's launch. Under the original strategy, Air Canada would have signed a code-sharing pact with its planned low-cost division to co-operate on flight reservations and baggage handling, but a revised proposal calls for the West Coast entity to be effectively independent and have the flexibility to align with a partner that doesn't necessarily belong to the Star Alliance.

Union leaders are upset that Air Canada wants to borrow major elements of the strategy deployed by Australia's Qantas, which runs the low-cost operation Jetstar with airline partners in an array of Asian markets, including service to Japan, Singapore and Vietnam. Qantas has expansion plans slated next year in a Hong Kong-based joint venture with China Eastern Airlines Co. Ltd. for China, Japan and South Korea.

Vancouver is currently served by Asian carriers such as Cathay, Japan Airlines, Korean Air and Taiwan-based EVA Airways.

Mr. Smith has held meetings with prospective partners such as Cathay, Air China Ltd. and International Airlines Group, parent of British Airways and Spain's Iberia, but a deal remains elusive.

Air Canada would like to sign up a partner from China, though it is also possible that the Vancouver-based joint venture could instead involve a European-based carrier such as Virgin Atlantic, which is 51 per cent owned by British billionaire Richard Branson and 49 per cent by Singapore Airlines.

---------------------

40% Virgin

40% Air Canada

20% someone else (Aero Bee?)

[CanadaEH]

"Lacking focus" is the phrase that comes to mind.

[Lakelad]

.

Air Canada suspends talks for low-cost Pacific carrier over timing concerns

Oct. 22 2012 - Globe and Mail

Brent Jang

Air Canada's strategy to branch out into discount international service to and from Vancouver has stalled after the airline suspended talks for a joint venture with Virgin Group Ltd. to launch Pacific flights.

Air Canada had retained Boston Consulting Group to help develop a low-cost carrier for service between Vancouver and Asia. But after months of studying and planning, Canada's largest airline has opted to shelve the initiative amid concerns about whether the timing is right to strengthen Pacific routes.

Ben Smith, Air Canada's chief commercial officer, spearheaded planning earlier this year for the joint venture, which had the code-name VP; short for Virgin Pacific.

Montreal-based Air Canada would have owned a 40-per-cent stake, Virgin Group 40 per cent and an undisclosed financial partner 20 per cent, said an industry insider. Boston Consulting Group and Air Canada executives held a corporate retreat at Mont Tremblant, Que., last spring in an effort to forge ahead with the Vancouver-based project, he said.

Air Canada officials also met with B.C. government representatives in June to express optimism about bolstering the airline's Asian flight schedules. The carrier also lined up a public relations firm to help market the joint venture's Pacific flights.

An Air Canada spokesman declined comment Monday. Air Canada chief executive officer Calin Rovinescu said at the company's annual meeting last June that 'we are evaluating various low-cost carrier business models'

'Because Toronto has been able to attract healthy traffic on Asian routes, the growth in demand in Vancouver has been slower than expected for overseas flights,'

.

[conehead]

What a bunch of "smoke and mirrors".

[FA@AC]

A corporate retreat (whatever that is), a PR firm and Boston Consulting. I wonder if Ben is in for another fat bonus for wasting all that money.

Meanwhile, they manage to double the Q2 loss, and while they enjoy their summer "corporate retreat" the operation deteriorates to the point where it can barely crack the 50% mark for OTP. Farcical.