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Westjet and Delta blame U.S. in scrapping joint venture

 

  • Calgary Sun
  • 22 Nov 2020
  • DAVID SHEPARDSON

WASHINGTON, D.C. — Calgary-based Westjet and U.S. carrier Delta Air Lines said late Friday they had s c rapped a proposed U.s.-canada joint venture after the U.S. government demanded changes the airlines insisted were “unreasonable and unacceptable.”

Last month, the U.S. Transportation Department, as part of its tentative antitrust immunity approval, said it would require the carriers to remove Swoop, an ultra-low-cost carrier affiliate of Westjet, from the alliance, and divest 16 takeoff and landing slots at New York's Laguardia Airport.

The airlines said in a filing that the U.S. demands were “arbitrary and capricious,” especially the slot divestitures. They had argued the alliance would “optimize aircraft utilization, enhance schedules, and lower costs.”

The airlines said in a joint statement they remain committed to developing a joint venture, “but in the meantime will explore deepening the alliance.”

The U.S. Transportation Department did not comment.

The Westjet-delta joint venture would have had a combined 27% share of scheduled air carrier transborder capacity, while the dominant carrier, Air Canada, has 45%. Westjet is owned by private equity firm Onex Corp.

Canada is the second-largest U.S. international passenger air market after Mexico, with Toronto flights accounting for more than 50% of transborder air travel demand.

U.s.-canada transborder flight capacity has grown 15% over the last five years to 39 million seats annually, but passenger traffic has plummeted sharply in the face of the COVID-19 pandemic.

The airlines' application had been pending with U.S. officials for more than two years. The Canadian Competition Bureau conducted its own review and granted an unconditional “no action” letter in June 2019.

U.S. air carriers had urged slot divestitures at Laguardia, noting American Airlines, Delta and United Air Lines control 83% of slots, with Delta controlling 45% of flights.

Westjet and Delta said losing slots would deprive them “of critical operating rights at one of the most important strategic hubs in Delta's global network at a time when Delta is investing billions of dollars of its own capital in a comprehensive facilities improvement project at this airport.”

They would be forced, the airlines added, “to sell these strategic corporate assets during a global pandemic that has inflicted an unprecedented crisis on this industry, virtually ensuring that they would be sold at a fire sale price.”

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What if Right sizing means getting rid of a large percentage of the fleet? Should a government help pay the rent or loan payments for underutilized/stored aircraft? I don't how many Westjet aircr

I think it was one of several prerequisites, as was a revised Transat deal.  If the government is to support the industry, it must be based on some kind of sustainable basis going forward. Trying

I have family that is transitioning from CERB as well.  Although they do qualify for EI they took another route.  They got a JOB.  

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1 hour ago, Malcolm said:

The airlines said in a filing that the U.S. demands were “arbitrary and capricious,” especially the slot divestitures.

I’m pretty sure Delta was forced to relinquish slots in LGA as a condition of their merger with Northwest.  16 of those slots were picked up by Westjet.  This JV, also referred to as a “virtual” merger by some, would see those slots returned.  Not sure I buy into the arbitrary and capricious comment.

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2 hours ago, Turbofan said:

I’m pretty sure Delta was forced to relinquish slots in LGA as a condition of their merger with Northwest.  16 of those slots were picked up by Westjet.  This JV, also referred to as a “virtual” merger by some, would see those slots returned.  Not sure I buy into the arbitrary and capricious comment.

More re the slots:

Delta, WestJet scrap JV plans

20 NOVEMBER 2020 BY SETH MILLER LEAVE A COMMENT

delta-westjet-tails-1024x662.jpg

LaGuardia is more important than the rest of the US-Canadian market for Delta Air Lines and WestJet. This is the message sent by the two carriers late Friday as they withdrew their application for antitrust immunity on their joint venture.

The loss of these slots would deprive the Joint Applicants of critical operating rights at one of the most important strategic hubs in Delta’s global network at a time when Delta is investing billions of dollars of its own capital in a comprehensive facilities improvement project at this airport. Moreover, it would force the Joint Applicants to sell these strategic corporate assets during a global pandemic that has inflicted an unprecedented crisis on this industry, virtually ensuring that they would be sold at a fire sale price far below their long-term economic value.



Citing the conditions imposed in the tentative approval as “arbitrary and capricious” the carriers withdrew the application, asking the Department to dismiss the proceeding and close the docket.

LaGuardia slot loss would decrease competition

The carriers argue that losing the slots would guarantee a reduction in competition in the NYC-Toronto or even the general trans-border market that the two carriers intended to operate in. None of the carriers likely to secure the slots – Southwest Airlines, JetBlue, Spirit Airlines or Allegiant – operate to Canada today. And eight slots at LaGuardia would not change that situation.

Moreover, Delta cites a litany of other airports around the country where the dominant carrier holds more slots than its 45% at LaGuardia:

United has at SFO (49%), Denver (53%), and Houston (82%); than American at Dallas/Ft. Worth (86%), Charlotte (90%), Miami (74%), and Washington National (57%), which is slot-controlled; and smaller than Southwest at gate-restricted Dallas Love Field (92%).

To claim that the West Jet slots “exacerbates Delta’s dominance at LaGuardia “ignore the basic reality of a hub and spoke business model” according to the filing.



Other objections

The carriers also objected to the Swoop carve-out, claiming “no support for the assertion that including Swoop in the JV would ‘restrain capacity and competition.'”

While the applicants write of including Swoop in the JV as though its flights would participate in the immunized service. But the original filing would only include the ULCC “for financial purposes, but not for the purpose of integrating Swoop’s operations into the metal-neutral JV, because Swoop’s low-cost business model is as incompatible with the commercial strategy of the proposed JV as it is with that of WestJet.”

Delta and WestJet argue the Rouge did not face similar scrutiny under the Air Canada/United Airlines JV but that argument fell on deaf ears at the DOT.

The carriers also opposed the requirement for WestJet to offer interlining services to any carrier that comes asking, converting “WestJet’s Canadian network into a de facto public utility for almost any U.S. carrier as the price of ATI, forcing WestJet to partner with and provide transborder access to its U.S. competitors.”

They also point out that the cost of implementing the interline service could be significant, as the DOT does not mandate a new entrant arrive with any particular technology platform minimums:

The mandatory interlining condition would force WestJet to bear the costs (e.g., IT, personnel and resources, PSS providers) of setting up and maintaining interline relationships with no ability to obtain a return on investment. Indeed, WestJet cannot even estimate the costs of this condition because there is no requirement that the interlining U.S. carriers have compatible technical platforms, thereby leaving open the possibility that WestJet would need to determine how to enable interlining with carriers that lack standard industry capabilities. The Department does not appreciate the commercial and technological complexity of the forced interline relationships which it is trying to artificially engineer by regulatory fiat. In a deregulated environment, it is an abuse of discretion for the Department to industrial engineer forced access to WestJet’s Canadian network.

But none of that matters, because the DOT ruling is set. And the two carriers are unwilling to accept these conditions.

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For the sake of history.  Posted from 2010

 

https://ca.proactiveinvestors.com/companies/news/74208/-air-canada-and-united-airlines-form-joint-venture-deal-for-us-canada-flights-9035.html

Air Canada (AC.A:TSX) and United Airlines struck a revenue-sharing joint venture deal on Thursday for transborder flights between the US and Canada, potentially generating substantial service and pricing benefits for consumers traveling between the two countries.

The airlines said that the deal, which is expected to become effective in early 2011, will allow them to compete more effectively.

 

This Transboarder joint venture was also abandoned because of the divestitures required by the DOT.  If it was resurrected I missed it.  Which makes this statement confusing.  Moreover Rouge didn’t exist in 2010

Delta and WestJet argue the Rouge did not face similar scrutiny under the Air Canada/United Airlines JV but that argument fell on deaf ears at the DOT.

 

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  • 2 weeks later...

Interesting since WestJet doesn't currently schedule any nonstop flights to Hawaii from Toronto. 

WestJet expands pre-travel Hawaii testing to Ontario


NEWS PROVIDED BY

WESTJET, an Alberta Partnership 

Dec 07, 2020, 14:53 ET

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Negative COVID test exempts travellers from Hawaii quarantine

CALGARY, AB, Dec. 7, 2020 /CNW/ - WestJet today announced it has collaborated with LifeLabs in Ontario to offer State of Hawaii-approved pre-departure testing. A negative COVID test within 72-hours of departure will exempt the guest from the state's required 14-day quarantine.

Through its FlyClear™ program, LifeLabs will provide WestJet guests with a convenient online method to book a COVID-19 test online at a participating Shoppers Drug Mart across Ontario ahead of travelling to Hawaii.

WESTJET__an_Alberta_Partnership_WestJet_
WestJet today announced it has collaborated with LifeLabs in British Columbia to offer State of Hawaii-approved pre-departure testing. (CNW Group/WESTJET, an Alberta Partnership)
 

"WestJet is pleased to facilitate additional pre-departure travel testing across Ontario in time for the start of our Hawaii flying from Calgary and Vancouver," said Billy Nolen, WestJet Vice-President Safety, Security and Quality. "COVID-19 testing is key to ensuring safe and confident travel. We are pleased to be working with LifeLabs and select Shoppers Drug Mart locations to offer testing approved by the State of Hawaii for our Ontario-based guests."

"As Canada's largest medical laboratory, LifeLabs has been focused on providing Canadians with COVID-19 testing solutions that keeps them safe – whether it's in their own communities or when travelling abroad," said Charles Brown, President and CEO of LifeLabs. "We are proud to partner with WestJet to provide their guests with access to convenient testing and high-quality, reliable results."

"Our stores and pharmacy teams are a convenient, trusted resource for Canadians, and have continued to play an important role as the country looks for ways to manage COVID-19. Through this program, we can help WestJet guests fly safely and with confidence, a first start as we find ways to safely reopen the economy," said Ashesh Desai, Executive Vice-President, Pharmacy and Healthcare at Shoppers Drug Mart.

Those wishing to book a pre-departure test from Ontario can do so through LifeLabs for $199 plus tax, payable by the guest, by visiting LifeLabs.com/FlyClear. All information on WestJet's testing offers and processes can be found at westjet.com/covidtesting.

Guests travelling to Hawaii are responsible for ensuring they receive a test within 72-hours of their flight departing to Hawaii in order to avoid quarantine and will be required to display their negative test result prior to boarding. If test results are not available before boarding the final leg of the trip, the traveller must quarantine for 14 days or the length of the stay, whichever is shorter.

All visitors intending to visit Hawaii must register prior to travel: Hawaii entrance requirements are found at https://hawaiicovid19.com/travel/

Last month, WestJet announced its December schedule including twice-weekly, non-stop service between Vancouver and Honolulu and Vancouver and Maui. The airline will also be flying non-stop Dreamliner service between Calgary and Honolulu and Calgary and Maui in partnership with DynaLife.

Route

Frequency

Departing

Arriving

Effective

Vancouver – Maui

3x weekly

10:30 a.m.

3:02 p.m.

December 18, 2020

Maui – Vancouver

3x weekly

10:30 a.m.

6:08 p.m.

December 19, 2020

Vancouver – Honolulu

3x weekly

1 p.m.

5:34 p.m.

December 18, 2020

Honolulu – Vancouver

3x weekly

10 a.m.

5:45 p.m.

December 19, 2020

Calgary – Maui

2x weekly

10:30 a.m.

2:12 p.m.

December 19, 2020

Maui – Calgary

2x weekly

10 a.m.

6:53 p.m.

December 20, 2020

Calgary – Honolulu

1x weekly

11 a.m.

2:25 p.m.

December 20, 2020

Honolulu – Calgary

1x weekly

11 a.m.

7:56 p.m.

December 21, 2020

Since the beginning of the pandemic, WestJet has implemented more than 20 additional health and safety measures during the travel journey and continues to evolve its cleaning protocols to meet the needs of guests and WestJetters through its Safety Above All program.

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WestJet expands pre-travel Hawaii testing to British Columbia

westjet-e1587425867506.png?w=1024

Negative COVID test exempts travellers from Hawaii quarantine

CALGARY, AB, Dec. 7, 2020 /CNW/ – WestJet today announced it has collaborated with LifeLabs in British Columbia to offer State of Hawaii-approved pre-departure testing. A negative COVID test within 72-hours of departure will exempt the guest from the state’s required 14-day quarantine.

WESTJET__an_Alberta_Partnership_WestJet_ WestJet today announced it has collaborated with LifeLabs in British Columbia to offer State of Hawaii-approved pre-departure testing. (CNW Group/WESTJET, an Alberta Partnership)

“WestJet is pleased to facilitate pre-departure travel testing in British Columbia for the start of our Hawaii flying,” said Billy Nolen, WestJet Vice-President Safety, Security and Quality. “COVID-19 testing is key to ensuring safe and confident travel. We are pleased to be working with LifeLabs to offer testing approved by the State of Hawaii for our guests travelling from BC.”

As Canada’s largest medical laboratory, LifeLabs is focused on providing Canadians with COVID-19 testing solutions that keeps them safe – whether it’s in their own communities or when travelling abroad,” said Charles Brown, President and CEO of LifeLabs. “We are proud to partner with WestJet to provide their guests with access to testing and high-quality, reliable results.”

Those wishing to book a pre-departure test from British Columbia can do so by locating a LifeLab partner clinic listed on westjet.com/covidtesting page. The cost of the test is $250 plus tax, payable by the guest. WestJet and LifeLabs will have more information on additional BC testing locations shortly.

Guests travelling to Hawaii are responsible for ensuring they receive a test within 72-hours of their flight departing to Hawaii in order to avoid quarantine and will be required to display their negative test result prior to boarding. If test results are not available before boarding the final leg of the trip, the traveller must quarantine for 14 days or the length of the stay, whichever is shorter.

All visitors intending to visit Hawaii must register prior to travel: Hawaii entrance requirements are found at https://hawaiicovid19.com/travel/.

Last month, WestJet announced its December schedule including twice-weekly, non-stop service between Vancouver and Honolulu and Vancouver and Maui. The airline will also be flying non-stop Dreamliner service between Calgary and Honolulu and Calgary and Maui in partnership with DynaLife.

Route Frequency Departing Arriving Effective
Vancouver – Maui 3x weekly 10:30 a.m. 3:02 p.m. December 18, 2020
Maui – Vancouver 3x weekly 10:30 a.m. 6:08 p.m. December 19, 2020
Vancouver – Honolulu 3x weekly 1 p.m. 5:34 p.m. December 18, 2020
Honolulu – Vancouver 3x weekly 10 a.m. 5:45 p.m. December 19, 2020
Calgary – Maui 2x weekly 10:30 a.m. 2:12 p.m. December 19, 2020
Maui – Calgary 2x weekly 10 a.m. 6:53 p.m. December 20, 2020
Calgary – Honolulu 1x weekly 11 a.m. 2:25 p.m. December 20, 2020
Honolulu – Calgary 1x weekly 11 a.m. 7:56 p.m. December 21, 2020

Since the beginning of the pandemic, WestJet has implemented more than 20 additional health and safety measures during the travel journey and continues to evolve its cleaning protocols to meet the needs of guests and WestJetters through its Safety Above All program.

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2 hours ago, conehead said:

Weird... why doesn’t WJ offer Hawaii from YYZ using the 787?

No carrier since Wardair has made enough to sustain Hawaii out of YYZ. The yield isn't strong enough.

Edited by J.O.
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1 hour ago, J.O. said:

No carrier since Wardair has made enough to sustain Hawaii out of YYZ. The yield isn't strong enough.

Partially true J.O.....One of the problems of today is that passengers no longer want to sit in an aluminum sardine tube for 10 hours where the service amounts to close to nil. You, and everyone who flew on WD, got service beyond what any other airline could offer. The pax were spoiled......but it sure was fun..😁

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12 minutes ago, seeker said:

...and so were the pilots (from what I've heard).  😉

I guess I will agree...to a point. Every time we flew to the UK and then left the next day there was a complete plate of freshly cut sandwiches on the centre console for the two pilots.....On every flight I was on, we shared the sandwiches with the cabin crew. On domestic flights the front end had "J" class meals...you can imagine my surprise when I was offered "surf and turf" for dinner when I was used to the Military box lunch ......

CP bought WD and all that ended. My first flight back to the UK after the sale and then returned the next day saw us looking at two wrinkled apples and an orange on the centre console😂

During an interview MAX was asked about the meals onboard WD and he stated that feeding the crew and passengers was the lowest cost of the entire operation.There is no doubt that WD was the premier CHARTER airline around but the desire to compete on the domestic front was the beginning of the death knell.

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  • 3 weeks later...

Status quo for WestJet at Kelowna International Airport despite airline’s cutbacks

From Kelowna Capital News – link to source story

23772762_web1_170524-KCN-airport-planes- WestJet planes at YLW. (Capital News file photo)

Airport roles will be contracted out but WestJet didn’t say how many Kelowna employees will be let go

TWILA AMATO | Dec. 29, 2020

Changes are coming to WestJet but the airline’s services at Kelowna International Airport (YLW) will remain unchanged, according to senior manager of airport operations Philip Elchitz.

In June, the airline announced “organizational changes” to help it offer streamlined services and keep it moving forward following the COVID-19 pandemic.

“Throughout the course of the biggest crisis in the history of aviation, WestJet has made many difficult, but essential, decisions to future-proof our business,” WestJet’s president and CEO Ed Sims said in the June announcement.

The airline said 3,333 of its employees across the country will be affected by the changes.

Elchitz said the changes don’t mean fewer flights into and out of the Okanagan region from YLW, and terminal services at WestJet kiosks won’t be changing either.

“We’re not expecting any cutbacks to WestJet’s current service as a result of the transition to the Airport Terminal Services contract,” he said.

“We’re expecting to see the same level of air service for the balance of the winter and into the spring.”

Elchitz didn’t specify what that would mean for WestJet employees who work at the airline’s kiosks at YLW, but he did say the role will be filled by airport terminal services staff.

WestJet did not comment on how many of their employees based at YLW will be let go as a result of the changes.

“The COVID-19 crisis hit WestJet and the global aviation industry with devastating force,” the airline’s communications staff said.

“Since the beginning of March, guest traffic has dropped significantly. We are operating at approximately 75% reduction year over year.”

WestJet said it will seek out preferential employment opportunities for as many of its airport roles as possible.

 

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Amazon buys four planes from WestJet for cargo fleet

Tue Jan 05, 2021 - Bloomberg/BNN

As demand for air travel has declined due to the COVID-19 pandemic, one Canadian airline has offloaded a few of its planes to help Amazon.com Inc. move cargo.

Amazon announced Tuesday that the e-commerce giant purchased 11 Boeing 767-300 planes to add to its growing cargo fleet, including four from WestJet Airlines Ltd.

The online retailer said in a statement the four planes from WestJet are currently being converted from passenger to cargo functionality and will join Amazon Air’s fleet later this year.

“Having a mix of both leased and owned aircraft in our growing fleet allows us to better manage our operations, which in turn helps us to keep pace in meeting our customer promises,” Sarah Rhoads, vice-president of Amazon Global Air said in a news release.

A representative from Amazon confirmed via email that the WestJet planes were purchased in March.

The other seven planes in the deal were acquired from Delta Air Lines Inc., Amazon said.
 

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