Change Coming to our Industry

[acsidestick]

 

[Don Hudson]

Simply brilliant.

[Guest]

Possible plans for expansion:  http://www.theglobeandmail.com/report-on-business/air-canada-reports-757-rise-in-quarterly-profit/article32695732/

Air Canada may expand Rouge to compete with new low-cost airlines

Air Canada is assessing whether to expand its Rouge discount airline within Canada as a way to compete with new low-cost carriers that are preparing to enter the market, chief executive officer Calin Rovinescu says.

“As competition comes into the marketplace, by definition we need to have a tool to respond, so we will consider that,” Mr. Rovinescu said Monday. “Obviously Rouge has given us an opportunity to do things that we didn’t have in the past.”

Mr. Rovinescu spoke on Air Canada’s third-quarter financial results conference call, less than a week after the federal government announced that it plans to increase the limit on foreign ownership of Canadian airlines to 49 per cent from 25 per cent.

The change announced last week includes exemptions from the 49-per-cent limit for Canada Jetlines Ltd. and Enerjet, two carriers that have been struggling to get up and running. The exemption is expected to allow them to offer scheduled service as soon as next year.

Mr. Rovinescu’s comments and an announcement made by WestJet Airlines Ltd. on Monday indicate that Canada’s two established carriers are already preparing for the challenge they will face from new domestic competition.

WestJet said it will begin offering flights between Vancouver and Hamilton, Ont., beginning next April. Hamilton is one of three southern Ontario airports being targeted by Vancouver-based Canada Jetlines as a potential hub for its domestic network and trans-border operations.

Air Canada will do what is necessary to stay competitive, said Mr. Rovinescu, who criticized the government Monday for allowing the exemptions to Canada Jetlines and Calgary-based Enerjet.

Rouge, which has lower costs than Air Canada’s mainline service in part because of specific contract provisions with pilots and flight attendants, has been used mainly on overseas destinations as Air Canada’s method of competing with such low-cost rivals as Air Transat.

But “having built Rouge, we now have a tool that is much more cost-competitive and we feel that, especially in some of the longer-haul missions, including inside Canada, Rouge could well be deployed at the right time to be competitive, as needed,” he said.

Rouge planes flew five domestic routes last summer, including Calgary-Halifax and Toronto-Charlottetown.

This winter, Rouge Airbus A319 planes will fly between Toronto and Kelowna, B.C., and Toronto and Deer Lake, Nfld.

Rouge contributed to record third-quarter financial results for Air Canada as measured by earnings before interest, taxes, depreciation, amortization and aircraft rent (EBITDAR). That figure was $1.25-billion, compared with $1.08-billion a year earlier, which was the previous record.

Net income stood at $768-million or 2.74 a share, compared with $437-million or $1.48 a year earlier. The third quarter is Air Canada’s most profitable quarter because of the summer travel season.

The EBITDAR figure “is clear testimony to the success of our fleet investment strategy and the profitable expansion of our international network,” Mr. Rovinescu said.

Air Canada’s capacity grew in the third quarter, notably in flights to the United States and across the Atlantic and Pacific Oceans. Domestic capacity grew 6.3 per cent, U.S. seats and flights jumped 4.5 per cent, capacity across the Atlantic grew 28.1 per cent and availability of seats to Pacific destinations soared 34.8 per cent.

But in each of those markets, passenger revenue per available seat mile fell.

The drop in revenue per available seat mile also exceeded the decline in costs per available seat mile.

Investors cheered the news, however, sending Air Canada’s shares up 7.45 per cent to $12.83 from $11.94 in trading on the Toronto Stock Exchange

[Super 80]

3 hours ago, Malcolm said:

Air Canada is assessing whether to expand its Rouge discount airline within Canada as a way to compete with new low-cost carriers that are preparing to enter the market, chief executive officer Calin Rovinescu says.

I really don't see how this is going to work, mirroring ULCC routes out of YHM, YEG and YXX seems doomed to be a financial black hole.

Further debasing mainline seems unlikely to yield acceptable results, how long did YVR-LAX and YVR-SFO last on Rouge? Yeah, yeah base closing. They're still flying YVR-LAS on a Rouge airbus.

[Guest]

Looks to be an answer to the Carry on problem as long as it is policed, I wonder how long this will take to spread to other "low cost" or indeed traditional carriers?

Spirit Airlines: Major US budget carrier reduces size of free carry-on bags

Spirit Airlines is cutting the size of its free cabin bag
The Independent Travel

America’s most hard-core low-cost carrier, Spirit Airlines, is putting the squeeze on free carry-on bags by cutting the size allowed by one-quarter. 

From 4 April this year, the volume allowed for the single bag allowed to qualify for Spirit’s “Bare Fare” shrinks from 2,688 to 2,016 cubic inches.

Passengers whose oversized cabin bag is identified at the boarding gate will typically pay a penalty of $100 to take it on board. Travellers can pay in advance for larger pieces of cabin baggage, starting at $26.

Spirit is based near Miami in Florida, and has an extensive network across the US as well as the Caribbean and Latin America.

The move comes after two “full-service” rivals, American Airlines and United, introduced Basic Economy fares. The cheap tickets are aimed at countering the rapid growth of “ultra-low-cost” carriers such as Spirit and Frontier.

The travel blogger Ben Schlappig, who runs the One Mile At A Time site, said: "You know it’s a sad day when Spirit Airlines makes their policy worse so they’re not being more generous than the legacy carriers."

The two leading European budget airlines are much more generous in their cabin-baggage policies: easyJet’s allowance is almost twice as big, while Ryanair offers one-third more volume as well as the chance to take a second bag on board free of charge.

In Europe, Wizz Air was first to introduce charges for larger pieces of cabin baggage. It allows a small bag on board for free, and typically charges £16 to carry a larger case into the cabin.

[Guest]

Airline CEOs Seek Tillerson Meeting on Feud With Gulf Carriers

by

Michael Sasso

More stories by Michael Sasso

‎February‎ ‎2‎, ‎2017‎ ‎9‎:‎23‎ ‎AM

• Dispute focuses on subsidies from Middle East governments
• U.S. airlines had pushed Obama administration to open talks

Rex Tillerson

Photographer: Andrew Harrer/Bloomberg

The three biggest U.S. airlines asked for a meeting with new Secretary of State Rex Tillerson to discuss their long-held contention that billions of government subsidies enable the Persian Gulf carriers to compete unfairly for passengers.

Emirates, Qatar Airways Ltd. and Etihad Airways PJSC are receiving help from their governments that undermines “the basic principles of fair and open competition that are the foundation” of air treaties that regulate service between countries, according to a letter signed by the chief executives of American Airlines Group Inc., Delta Air Lines Inc. and United Continental Holdings Inc.

 

“The subsidies allow the Gulf carriers to operate without concern for turning a profit, unlike U.S. airlines, and therefore focus entirely on stripping market share and driving out competition,” according to the letter signed by American’s Doug Parker, Delta’s Ed Bastian and United’s Oscar Munoz. “The subsidy-enabled capacity dumping by the Gulf carriers has nearly eliminated U.S. carrier service to the Middle East and India.”

 

The U.S. airlines have long pushed the federal government to open discussions with Qatar and the United Arab Emirates over the issue of subsidies, which the U.S. companies allege to be more than $50 billion. The Obama administration said it would hold informal technical discussions with the two nations last year, but never took formal action.

The Gulf carriers have said American, Delta and United have received their own government assistance through debt forgiveness in the bankruptcy process.

Some smaller U.S. airlines and cargo carriers, notably FedEx Corp., have opposed any broad changes to Open Skies agreements with the U.A.E. and Qatar.

[Guest]

Note the reference to Enerjet.

Top airline investor launches budget carrier in Chile, eyes Latin America

 

ReutersFebruary 3, 2017

 

By Gram Slattery and Felipe Iturrieta

SANTIAGO, Feb 3 (Reuters) - Bill Franke, one of the world's most-influential investors in budget airlines, debuted a low cost carrier in Chile on Friday that aims to expand regionally in the coming years.

Franke, co-founder and managing partner of airline-focused investment fund Indigo Partners, said new carrier JetSmart plans to operate three Airbus A320s this year in Chile and add another six in 2018. Once established in Chile, JetSmart will eye regional expansion, he said.

"We haven't gotten to that yet, but we have a lot of interest expressed by other countries," Franke told Reuters after the debut in Santiago.

"We need to get the base of operations here, stabilize the airline...and then we will expand the airline."

Franke's Indigo Partners, which already controls Denver-based Frontier Airlines and owns part of Mexico's Volaris, is known for unbundled or a la carte fares in so-called ultra-low-cost airlines, where passengers are offered cheap base prices with the option of paying more for extras.

Indigo Partners is also in talks to acquire part of Canada's Enerjet, and Franke told Reuters the fund was currently talking with regulators to better understand foreign ownership rules.

Canada's transport minister announced in November that the nation would lift foreign ownership caps in airlines to 49 percent from 25 percent in a bid to aid start-ups seeking investors.

"There's no final decision," Franke said.

"We've hired advisers, and we're in the process of talking to the government about ways we might be able to invest in a Canadian airline, but it's really an issue between the regulators."

Regarding Europe, Franke said the airline scene is ripe there for consolidation, echoing various other industry leaders who have made similar comments in recent months.

"I think over time that will happen in Europe, and we will be a motivator to consolidation," he said.

Franke said Chile's large middle class, relaxed foreign ownership rules, and clear regulations made the country attractive for Indigo Partners' entrance into Latin America.

In neighboring Argentina, which Franke called a "nice market," the budget airline industry is also heating up, as low-cost Norwegian Air Shuttle ASA and start-up Flybondi have announced plans to enter the market. That nation's transport minister told industry executives in December that the government expects $1.7 billion in budget airline investment over the next four years.

"We know Argentina well....It's a nice market, we like the market, but it's more complicated than Chile," Franke said.

"So we want to have a nice, stable platform, which we think Chile provides." (Writing by Gram Slattery; Editing by Anthony Esposito and Cynthia Osterman

[Kip Powick]

Hmmmm ..........maybe el Beano has changed his name ???

[Guest]

Frontier and Volaris to launch codeshare

• 16 January, 2018
• SOURCE: Flight Dashboard
• BY: Ghim-Lay Yeo
• Washington DC

Frontier Airlines and Volaris have signed a codeshare agreement, with sales to begin in the coming months.

The two-way codeshare, subject to regulatory approval, will allow the two airlines to add 20 new destinations, says Volaris chief executive Enrique Beltranena.

He estimates that 80 new routes will be launched between the USA and Mexico. Sales of the codeshare flights will begin in the spring, say the two carriers.

Frontier is wholly owned by Indigo Partners, which is an investor in Volaris.

"Many customers travelling between the US and Mexico are forced to pay high fares to fly, and this agreement will provide lower fares to a vast majority of the US and Mexico population," says Frontier chief executive Barry Biffle.

Volaris has a growing US network, currently serving more than 20 destinations including Frontier's Denver hub, FlightGlobal schedules data show. Frontier operates to three Mexican destinations: Cancun, Los Cabos and Puerto Vallarta.

The two airlines currently do not overlap on any routes, FlightGlobal schedules data show.

Both carriers operate Airbus A320 family aircraft, and recently boosted their orderbooks with an order for 430 A320neo family aircraft by Indigo that was firmed up in late 2017. Frontier will receive 100 A320neos and 34 A321neos, while Volaris will take delivery of 46 A320neos and 34 A321neos.