Canadian airlines withholding flights this summer to boost demand and profits

[Airband]

Canadian airlines withholding flights this summer to boost demand and profits

Air Canada has published a schedule with 16 per cent fewer domestic flights than in 2019 but the same number of total seats, using larger aircraft to move six million people on 51,000 flights in the key travel season

Fri Dec 30, 2022 - The Globe and Mail
by Eric Atkins - Transportation Reporter

Canada’s largest airlines are signalling the full recovery in air travel is elusive, plotting summer schedules with fewer flights than in pre-COVID-19 times.

Carriers are withholding seats and flights to restrain capacity and ensure airfares are profitable as the airlines try to emerge from the pandemic, said John Grant, an analyst with OAG Aviation Worldwide Inc.

“Demand is going to be strong partly driven by the fact there’s going to be fewer seats around,” Mr. Grant said from London. “Airlines have been really disciplined about putting excessive capacity in the market … because that means the average fares go down. It becomes harder to make a profit.”

WestJet Airlines will fly 24 per cent fewer domestic flights in July and August compared with 2019, reducing available seats by 20 per cent, according to Cirium, the aviation data company. The Calgary-based airline’s international flight schedule is down by 20 per cent, with 16 per cent fewer seats.

Air Canada has published a schedule with 16 per cent fewer domestic flights than in 2019 but the same number of total seats, using larger aircraft to move six million people on 51,000 flights in the key travel season. The country’s dominant carrier, with roughly twice the flights of its western rival, plans to offer more than 21,000 international flights, just 1 per cent fewer than in July and August of 2019.

Airlines plan and publish schedules several months in advance, making flights available to gauge demand. They invariably make adjustments closer to departure dates, adding or scrubbing flights to match sales and manage costs.

Mr. Grant said the schedules published at this point are placeholders that will be finalized in the new year. He said they can be viewed with 90 per cent confidence.

Discount carrier Flair Airlines has boosted its planned summer seat offerings and flights by more than 40 per cent over 2022. The Edmonton-based airline’s fleets consists of 19 Boeing 737s, capacity that falls short of the planned schedule, but will add leased planes in the months to come, said Stephen Jones, chief executive officer of Flair.

“Flair Airlines is regularly taking delivery of aircraft, and anticipate we’ll have 27 aircraft by the summer of 2023, at different bases across Canada,” he said.

Flair’s U.S. investor, 777 Partners of Miami, recently sold five new 737 Max 8 aircraft painted in Flair colours to Babcock & Brown Aircraft Management, a company partly held by WestJet owner Onex Corp. WestJet declined to lease or buy the planes from Babcock & Brown because of the cost of refitting the planes to WestJet’s specifications, which include first-class seating sections, according to two people familiar with the matter. The Globe is not naming them because they are not authorized to speak publicly on the matter.

WestJet declined to comment. Babcock & Brown, which is marketing the jets, did not respond to a request for comment.

Babcock & Brown also purchased from 777 Partners two 737s built for Bonza Aviation, an Australian airline startup owned by the Miami investor.

Another three Flair 737s owned by 777 Partners were offered for sale but found no buyers, and the planes are parked in Arizona. Flair referred questions on the sale to 777 Partners, which did not respond to e-mails.

Montreal-based Air Transat plans to offer 90 per cent of its 2019 seat capacity, and is ordering and receiving more Airbus A321s.

The late spring and summer of 2022 saw a return of about 90 per cent of prepandemic passenger volumes as the easing of COVID-19 released pent-up demand for travel. The surge came amid a staffing shortage at airlines, airports and the government agencies that provide customs and security services, leading to congested terminals and long delays for passengers.

Transport Minister Omar Alghabra held a closed-door meeting with government and aviation industry representatives in November to discuss ways to prevent a repeat of the snarls at airports. “The air industry was devastated by the COVID-19 pandemic, and as passenger volumes increased by over 280 per cent last summer, the industry faced a new crisis of congestion and delays,” Mr. Alghabra said in a statement.

“Transport Canada will continue to collaborate with partners to improve air transport system performance with a particular focus on the upcoming holiday season, and ensuring further improvements in advance of summer 2023 volumes,” the government said in a statement.

To ease pressure on the country’s airports, Monette Pasher, president of the Canadian Airports Council, is calling for changes that include redirecting the rent paid to the government into airport improvements, and speeding up the adoption of such digital solutions as facial recognition and trusted traveller programs.

“Canada’s airports have made significant progress since the worst days of the pandemic; they still have a long way to go,” Ms. Pasher said. “As an industry, we must continue working with the government and all partners in the ecosystem on mutually beneficial solutions. We hope that by having more dialogue in the coming months, we can make travel the best possible experience for all Canadians and visitors to our country.”

[Vsplat]

Nice that the article shows AC metal as the main pic on an article about capacity reduction and suggestion of restricting supply to prop up prices when in fact AC is offering the same number of seats, but a competitor is not.

Not exactly journalistic excellence....

Vs

 

[Seeker]

Air Canada came to their pilots asking for contract concessions to have the ability to train the huge number of pilots they projected they would need for summer 2023.  This was rejected (no gain for the pilots).  I would say that the schedule for summer 2023 is not designed to "withhold flights and boost demand" but rather a realistic schedule based on the crews they project they will actually have to fly the aircraft..

[Airband]

WestJet in the west, Air Canada in the east: Why Canada's airlines are becoming more regional

The country's national airlines are becoming more regional after dozens of route cuts

Tue Jan 24, 2023 - CBC News
by Kyle Bakx

Quote

'The moves by WestJet and Air Canada to focus on different parts of the country is raising concerns about possible collusion.'

Air Canada and WestJet are still recovering financially after the pandemic began and have not returned to offering the same level of flights. (Darryl Dyck/The Canadian Press)

The two dominant national airlines are increasingly focusing less on offering nationwide service and more on their regional strengths as they try to improve their financial performance — and also fend off soaring competition.

Those pressures are why experts say WestJet is focusing heavily on Alberta, while Air Canada is prioritizing markets in the east, such as Toronto, Montreal and Ottawa. 

Those strategies are resulting in many service cuts in different parts of the country. 

WestJet has slashed service in Atlantic Canada, Ontario and Quebec, including about an 80 per cent cut in flights between Toronto and Montreal compared to pre-pandemic levels, according to aviation analytics firm Cirium.

Conversely, Air Canada no longer flies out of several smaller airports in Western Canada, in addition to cutting service to larger cities on the prairies. Out of Calgary, the airline does not offer direct flights to Nanaimo, Cranbrook, Kamloops, Castlegar and Victoria in British Columbia, Regina and Saskatoon in Saskatchewan, or Lethbridge and Medicine Hat in Alberta. Air Canada flew those routes in 2019.

"It really is carriers trying to solidify their fiefdom," said John Gradek, faculty lecturer in the aviation management program at McGill University.

"They're trying to basically create barriers to entry for other carriers, which is normal in a competitive environment."

Routes cut by WestJet and Air Canada

Aviation was one of the hardest-hit sectors when the pandemic began. As travel slowly returns to normal volumes,  the launch of new airlines, such as Lynx and Canada Jetlines, and the growth of smaller carriers, including Flair and Porter, is also impacting the air travel industry.

The smaller airlines often focus on the most profitable routes in the country, which can take a bite out of WestJet and Air Canada's bottom line.

"There are some moves afoot by established carriers to kind of say, 'OK, we will create our own little fortresses and we'll manage those fortresses and we'll try to build our strengths around those fortresses,'" Gradek said.

In 2022, WestJet announced a new strategy, which included a restructuring of its regional fleet to focus on Western Canada and pull back on some routes in other parts of the country. The company is privately owned, so its financial performance is not publicly reported.

Pandemic recovery

In October, Air Canada posted its first operating profit since 2019, as the airline slowly recovers from the pandemic.

"We are continuing to rebuild our business in a prudent way which involved looking at every aspect of our network and deploying our resources efficiently and where they will be most productive," the airline said in an e-mailed statement.

Air Canada continues to fly out of every province and provide access to the main hubs in Vancouver, Toronto and Montreal, the airline said.

The regional moves of the two dominant carriers is not ideal for passengers in many parts of the country. They face fewer options and longer travel times, as they often have more connecting flights, experts say. The reduced level of competition at some airports will likely result in higher ticket prices.

"For the big airlines, there's more money in international flights than there is in these small local ones," said Barry Prentice, a University of Manitoba professor specializing in transportation.

"They racked up huge amounts of debts, as did the airports. So the whole aviation industry has got a huge amount of debt it's carrying and it has to pay that off," he said. "One of those ways is to make sure that you're only running profitable [routes]."

Cutting routes across the country was necessary during the pandemic as the airlines had to manage expenses, said Prentice. As air travel activity picked up over the last 12 months, those same airlines have had to overcome labour challenges and problems at airports with processing the increased number of aircraft and passengers.

The moves by WestJet and Air Canada to focus on different parts of the country is raising concerns about possible collusion.

The Saskatoon Chamber of Commerce wants a federal regulator to look into recent moves by the country's two largest airlines, after Air Canada's decided to eliminate direct flights to Calgary.

"Air Canada has not adequately explained its 'business decision' to disregard strong and growing demand and eliminate a route that has been consistently profitable for over 30 years," said chamber CEO Jason Aebig in a statement.

"Route changes through 2022 suggest that Air Canada and WestJet took steps to soften competition in the oligopolistic Canadian airline industry. Air Canada withdrew competition from the traditional home-turf regional routes of WestJet, and WestJet did the same in the traditional home-turf regional routes of Air Canada.:

Air Canada has previously said it complies with all regulatory obligations and strongly rejects any allegations of anti-competitive conduct.

Any of the decisions by airlines to cut routes or reduce service could be temporary, experts say, when some some of the competitive and financial pressures could subside.

 

[Vsplat]

The author of this article needs to dig a bit further and understand why the assumption of collusion between these two is coffee-spewing laughable.

The back room animosity between WestJet and Air Canada has resulted in a lot of (lost) baggage.  The commercial data poaching by Westjet has never been forgotten.  I'm sure there are red flag stories told in Calgary about AC as well.   Clive Beddoe made attacking Air Canada a mainstay of his raison d'etre and it hasn't really improved since he left.

Just an opinion from the park bench.  Amazing how much smarter one gets when they don't have to cash the cheque on their viewpoints!

Vs

[J.O.]

It's interesting that no similar claims were made when WestJet pulled the 787s out of YYZ. It was just a business doing business - cutting their losses.