WestJet to launch ULCC???


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Rumour is that AC is looking for relief to grow Rouge ahead of current restrictions and fleet ratios. ACPA should say "make Rouge as big as you like - but there will be just one set of wages, work rules, and benefits for all AC pilots".

The WJ pilots should say the same. And while they are at it - sign the card.

All CDN airline pilots under one representative tent. Airlines compete - not pilots.

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I don't get the "brand" thing when it comes to airlines. AC lectures us at length about "brand", and I think they're wasting time and money.  People don't feel an emotional connection to the carr

I say ram the 250 seats in, give the passengers nothing but a 2 oz glass of stale ditch water and charge 12 bucks for a flight from YYC to YYZ along with a 1-800 "customer service" phone number that g

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The -800 hull (including the MAX8) is certified for up to 189 seats. That is a fairly common configuration for low cost and leisure travel carriers around the world. RyanAir has asked Boeing to provide a 200 seat configuration. Not sure the regulators will approve it or if it will pass evacuation criteria. The -900 hull requires 2 extra emergency exits for seating over 189.

https://www.seatmaestro.com/airplanes-seat-maps/air-transat-boeing-737-800/

http://www.flysunwing.com/flybetter/ourfleet.asp

Edited by rudder
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31 minutes ago, chockalicious said:

Couple things I found interesting with this.

Clive is rarely quoted in the media on the business anymore. By having the first person quoted be Clive instead of Gregg it is a deliberate tactic to sell this internally. Clive is still pretty much universally beloved, Gregg universally respected.

It was not uncommon to see Clive in Bob Cummings office (sometimes sitting at his computer typing with Bob looking over his shoulder) the day before some of the more controversial announcements have come out.

When the announcements would be released, many people would get outraged, suggesting that initiative A, B or C would never happen if Clive was still in charge.  Newsflash... Clive is still in charge.  Perhaps they learned this time to just put his name on it to avoid the internal fallout phase and move directly to the "we're the saviour of the traveling public" phase.

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21 minutes ago, chockalicious said:

New Leaf is proving that people will eat a crap sandwich to save a dollar. Still lots of people at WS who remember Jetsgo and what that did to the business, flight passes for profit share, reduced margins, etc.

A well funded ULCC with good operations will severely screw with both carriers.

I remember JetsGo too and replicating JetsGo would be difficult to impossible today. Regulators in Canada and the US have erected such high and arbitrary barriers to entry that ULCCs are an ethereal threat to the incumbent airlines. Just like Verizon and Vodafone weren't about to some swashbuckling into Canada neither are foreign airline investors. Ottawa, Conservatives and Liberals alike have scared them away.

The war chest Porter had to accumulate for their pretty modest undertaking a decade ago was ridiculous, but probably wouldn't be sufficient today.

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12 minutes ago, Super 80 said:

I remember JetsGo too and replicating JetsGo would be difficult to impossible today.

Hopefully that is because there no longer exist a group of pilots stupid enough to pay for their own training or fly for bargain basement pay rates.

There have always been scheisters looking to start an airline. There has not always been a supply of gullible pilots willing to make it a reality.

Edited by rudder
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1 hour ago, rudder said:

Rumour is that AC is looking for relief to grow Rouge ahead of current restrictions and fleet ratios. ACPA should say "make Rouge as big as you like - but there will be just one set of wages, work rules, and benefits for all AC pilots".

The WJ pilots should say the same. And while they are at it - sign the card.

All CDN airline pilots under one representative tent. Airlines compete - not pilots.

So how is the progress going towards unionization at WestJet?  The last news I saw on this was back in Dec. http://www.cbc.ca/news/business/pilots-union-cards-1.3883807

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Assuming that the ULCC will use 10 738s from WestJet's existing fleet, I gather that about 10% of what is currently mainline capacity will be turned over to the new carrier.  

It'll be interesting to see where WS reduces mainline service.

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3 minutes ago, Super 80 said:

Dedicating ten 737-800s to mirroring Newleaf's nascent schedule doesn't seem like a great use of resources.

I see it more along the lines of what AC FA suggested. Substitutions on existing routes. There are no WJ -800 leases expiring anytime soon so these are either existing fins or WJ would have to go find 10 more 800's. That is unlikely.

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I think it would probably more likely swing back and forth seasonally between domestic "VFR" and sun routes looking for organic growth, displacing mainline service with something that sounds significantly worse than Rouge would be "aggressive" to say the least.

Air Canada had to retreat from Rouge on a number of routes.

Edited by Super 80
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1 minute ago, Super 80 said:

I think it would probably more likely swing back and forth seasonally between domestic "VFR" and sun routes, displacing mainline service with something that sounds significantly worse than Rouge would be "aggressive" to say the least.

Air Canada had to retreat from Rouge on a number of routes.

AC has markets where J class is expected. AC has been able to keep J class inventory on many routes using AC Express. Higher CASM but lower trip cost. Allows AC to offer greater frequency and more connections. AC is in the process of increasing J class seating inventory on the AC Express 76 seat jet fleet (from current 9 seats to 12 seats and hot meals/wi fi/ in seat entertainment on all flights by year end).

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2 minutes ago, blues deville said:

Thanks. :)

Movie stars expect a certain level of service......

That is why VA has been a success and AS will blow it if and when they diminish the VA product (or worse by replacing the Airbuses with 737's)

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2 hours ago, Malcolm said:

So how is the progress going towards unionization at WestJet?  The last news I saw on this was back in Dec. http://www.cbc.ca/news/business/pilots-union-cards-1.3883807

Since bill C4 went back to the house and a vote is still required (still can't certify with just a card count), I'll imagine we'll see a vote soon...assuming they have the numbers they claim to.

Edited by Critter
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3 hours ago, Malcolm said:

So how is the progress going towards unionization at WestJet?  The last news I saw on this was back in Dec. http://www.cbc.ca/news/business/pilots-union-cards-1.3883807

I have an answer to my question:

WestJet Pilots Seek ALPA Representation

WASHINGTON, April 20, 2017 /CNW/ - WestJet pilots filed membership cards today with the Canada Industrial Relations Board (CIRB) to hold an election for representation by the Air Line Pilots Association, International (ALPA).

"WestJet pilots told us they are ready for a certified union," said ALPA president Capt. Tim Canoll. "Now is the time for them to take the next step and vote for ALPA in order to obtain the resources available to secure their goals."

In the next few weeks, the CIRB will verify the membership cards and schedule an ALPA representation vote. ALPA expects that the secret-ballot election will be conducted in May.

"WestJet pilots have demonstrated the pilot unity needed to certify a union on the property, and we believe WestJet pilots will be successful in their election for ALPA representation," Canoll said. "The WestJet pilots work for a profitable and productive company, and with the vast resources available through ALPA representation, they will begin the process to legally negotiate the terms of their employment and establish a collective bargaining agreement under the Canada Labour Code that other union-represented aviation groups in Canada enjoy today."

ALPA Canada president Capt. Dan Adamus added, "WestJet pilots play a crucial role in the success of their airline and we look forward to their contributions to advancing success with ALPA as we work together to achieve our mutual objectives."

Founded in 1931, ALPA is the world's largest pilot union, representing more than 55,000 pilots at 32 airlines in the United States and Canada, including the flightcrew members who fly for Air Georgian, Air Transat, Bearskin, Calm Air, Canadian North, First Air, Jazz Aviation, Kelowna Flightcraft, and Wasaya. Visit the ALPA website at www.alpa.org or follow us on Twitter @WeAreALPA.

SOURCE Air Line Pilots Association, Intl rt.gif?NewsItemId=C2899&Transmission_Id=

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WestJet and the leap into no-frills flying

The message for passengers? You're on a plane flying somewhere, so be happy that's it, says tourism expert

By Tracy Johnson, CBC NewsPosted: Apr 21, 2017 5:00 AM ET Last Updated: Apr 21, 2017 5:34 AM ET

Calgary-based WestJet is launching an ultra-low-cost carrier later this year. (Darren Bernhardt/CBC)

Tracy Johnson
Business reporter

Tracy Johnson is the senior producer of CBC's western digital business unit. She's been a business reporter/producer with CBC on radio, television and online for 15 years. @tracyjohnsoncbc

A flight on an ultra-low-cost carrier can be a trying experience.

There's the limited leg-room, of course, and ULCCs, as they are called in the business, have an almost magical ability to "unbundle" the trip.  

Passengers pay extra for food and luggage; we're all used to that. There's a fee for carry-on baggage as well, in most cases. You want to get on early, so that you can stow that bag in the overhead compartment?  There's a fee for that. Can't print your boarding pass at home. That'll cost you. The innovation is limitless. Uzbekistan Airways and Samoan Air charge passengers by weight. Just saying.

'We put you in a plane and we fly you from Ireland to Eastern Europe, or something like that. Be happy, that's all we're doing for you.'- Frederic Dimanche, Ryerson University

 

Most Canadians have flirted with ULCCs in Europe or the U.S., or even here in Canada with NewLeaf in the past year, but the no-frills airline is going mainstream now with WestJet's entry into the market.

Pending an agreement with its pilots (which just got trickier because of an upcoming unionization vote) the airline's plan is to take 10 of its existing Boeing 737s, paint them, add more seats, hire a cheaper crew, and get in the air with low prices and no-frills service. It hasn't said where it will fly, but has hinted that the U.S. is in its sights.

 

It seems obvious that Canadians are keen for lower fares and will probably put up with at least some additional misery. But are there enough people and places to go to sustain another airline?

WestJet defends its turf

WestJet's move may have come as a surprise to employees, analysts and Canadians at large, but it makes more sense when you look at how the aviation market has developed in the past decade, particularly with the entry of NewLeaf last summer, and the expected entry (now questionable) of two other ULCCs.

NewLeaf stumbled out of the gate, having to delay its launch and then cancel destinations as WestJet targeted its routes. The head of NewLeaf said at the time that it was a case of the big guy trying to squash the little guy.

"WestJet realizes that the proposed low-cost carriers in the market were primarily targeting WestJet's core domestic routes," said Fred Lazar, an associate professor at York University who follows the aviation business.

"They decided they might as well just go head to head with NewLeaf and try to stop any new entrants."

WestJet couldn't do that with its existing cost structure, which is much lower than Air Canada's, but much higher than Ryanair's.

Passengers both love and hate ULCCs

There's not much question that ULCCs are a success particularly in Europe. Passengers seem to love and hate them in equal measure. Ryanair carries more passengers than any other airline in Europe. It and EasyJet dominate inter-city travel in Europe, increasingly pushing the legacy carriers like British Airways to the long-haul market.

This comes despite the fact that the travel can be miserable.

"If you look at the rankings of airlines, the ULCCs always come in at the bottom," said Lazar. "The quality of service on the ULCCs makes United look like the premier airline in the world, and their service really sucks."

Ryanair in particular doesn't apologize for its service, said Frederic Dimanche, professor at Ryerson University's School of Hospitality and Tourism Management.

"We put you in a plane and fly you from Ireland to Eastern Europe, or something like that. Be happy, that's all we're doing for you."

However, Dimanche isn't totally convinced the formula will work here.

They have a much bigger market to work with," he said. "Europe has lots of destinations and lots of population that they can draw to their flights. It remains to be seen within Canada if the market is large enough for an ultra-low-cost carrier."

Bay Street unconvinced

The market was not totally convinced, judging by WestJet's share reaction on Thursday when the airline announced plans to launch an ULCC by the end of the year. Its shares dropped on a day when the broader market was higher and Air Canada's stock barely budged.

In a research report, Ben Cherniavsky of Raymond James said he views WestJet's decision to launch a ULCC as a defensive move, but that he's not sure the tactic will work, in part because of the mixed history of having an "airline within an airline."

Cherniavsky wrote that, "the problem with the model is that usually any cost savings related to denser seats and a cheaper crew (which is usually the extent of the savings) is offset by yield cannibalization, increased complexity and brand confusion."

In other words, WestJet will be competing with itself with the new airline.

However, Lazar thinks that it had no choice. "It's better that you cannibalize your market than let a competitor do it

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Not surprising:

Enerjet committed to airline venture despite no-frills proposal by WestJet

 A local company that has been working for years to launch an ultra-low-cost airline in Canada said it remains committed to its plan, in spite of a surprise announcement from WestJet that it will launch its own no-frills carrier by the end of the year.

Calgary-based Enerjet, which is pursuing regulatory approvals for a low-priced commercial air service offering routes nationwide, said it has known all along that WestJet would take action to defend its market position against new lowcost entrants.

“We were wondering how they were going to do that — now we know,” Enerjet’s chief commercial officer, Darcy Morgan, said in an interview. “The best thing we could have is clarity, because this just makes it easier for us to plan.”

Morgan said his company is not scared off by WestJet’s size or the quick time frame in which it has said it will get its low-cost flights in the air. He said Canadians have long been paying too much for flights through Air Canada and WestJet, and are hungering for fresh competition.

“How Canadians buy airfares is about the value statement that they perceive on the day that they buy,” Morgan said. “The entity that can produce its widgets at the lowest unit cost is the one that has the strategic advantage ... and that is how we plan to compete.”

Canada remains the only G7 nation without a true ultra-low-cost carrier in operation. Winnipegbased discount airfare company New Leaf Travel styles itself as an ultra-low-cost carrier, but the company isn’t actually an airline — it is a ticket reseller that sells unused seats on a charter service’s planes.

Around the globe, ultra-low-cost carriers — such as Europe’s Ryanair and Easyjet — offer passengers discounted fares by lowering their own operating costs, often by charging extra for things like food, inflight entertainment, reserved seating, even carry-on bags.

Calgary-based WestJet said Thursday that its version of a nofrills carrier will start with an initial fleet of 10 Boeing 737-800s reconfigured to hold more seats and passengers. In an interview, WestJet executive vice-president Bob Cummings declined to say where the new airline will fly or what services passengers might have to pay extra for, though he said customers will be able to expect fares that have been discounted “quite a bit” from the company’s main line carrier.

“We’ve looked at the size of the price sensitive traveller market in Canada ... and we’re at the point where we’re making the decision to segment our business to serve that end of the market,” he said. “We believe that we’re well suited to do that with our routes — that we will win and own that end of the market.”

Cummings acknowledged the prospect of fresh competition on the low-fare end of the market — from NewLeaf as well as potential new entrants like Enerjet — played into WestJet’s decision to move quickly to establish a no-frills option for travellers.

“That’s definitely part of it, the competitive set,” he said.

WestJet’s decision to launch an ultra-low-cost carrier changes the landscape at the bottom end of the market, said Chris Murray, an analyst with AltaCorp Capital.

“We believe the launch of a flanker brand significantly complicates the plans of other participants seeking to start ULCC’s in Canada and protects WestJet from market erosion in the highly sensitive fare category of travellers,” Murray wrote in a report.

Developing an ultra-low-cost carrier makes way more strategic sense for WestJet than a significant expansion of its wide-body fleet, Murray added. WestJet has promised to provide details soon around a plan that could see the carrier make a major investment in larger jets capable of flying longer distances overseas, but Murray said the company is more likely to find success in the discounted domestic space.

NewLeaf Travel — which has flown over 235,000 passengers since the launch of its low-cost model in July 2016 — said it is “flattered” by WestJet’s imitation.

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