This is Robert

[Lazionic]

message from Milton

Hello, it’s Friday, November 5th and this is Robert.

If I were asked to choose just one word to describe the past six weeks, it would be easy: momentum. Since exiting from CCAA, we’ve been moving forward with the energy and drive of a company focused on success.

Two weeks ago, we communicated to the world that we were a newly revitalized company. Celine Dion, the voice of our new ad campaign, joined us at events across the country as we launched new products and services and modernized branding – changes that represent strategic investments in our future.

This week, the winter schedule started, including significant international growth: non-stop service between Toronto and Hong Kong, Tokyo, and Delhi and double daily service between Vancouver and Sydney including new non-stop service. We inaugurated new Toronto-Lima and Toronto-Buenos Aires services this week and will expand our Toronto-Sao Paulo service to daily in December.

With temperatures dropping, we’ve moved capacity to sun destinations in anticipation of a record winter leisure travel season, especially given the stronger Canadian dollar. And we’ve added more capacity on key transborder markets like New York’s LaGuardia and Boston to capitalize on the popularity of our new one-way web fares.

Companies within the ACE family are aggressively implementing their strategic business plans. Air Canada Cargo strengthened its position in the growing and competitive cargo market with the launch of dedicated all-freight services on key routes in Canada and over the North Atlantic using an MD-11 freighter. Since early October, Air Canada Jazz has taken delivery of the new Bombardier CRJ200s that will operate greater frequencies on an expanded Canada and U.S. network. And Aeroplan announced new partnerships including tie-ups with Bell and Esso, giving members even more opportunities to accumulate Miles through mass market retail purchases.

And with momentum on our side, the numbers continue to prove that we’re on the right track. October was our seventh straight month of record load factors – 78 per cent system-wide and 80 per cent domestically – including a 15 per cent year-over-year increase at Air Canada Jazz. Compare these figures to the numbers at our low cost competitors and it’s clear that we’re offering the right capacity, fares and schedules, and our customers are voting with their wallets for this winning combination.

October and November brought Dreams Take Flight trips from cities across the country, all organized through the unbridled energy and enthusiasm of employee volunteers. I joined the Montreal team’s tenth anniversary flight and my day at Disney World was full of smiles and tremendous pride in the happiness our employees bring to the lives of thousands of children through this program. Employees company-wide join me in saluting our colleagues at Dreams Take Flight for their tireless efforts and commitment.

Let’s keep up the momentum by setting constantly higher goals: greater simplicity, more efficiency and higher productivity. And every day we all have the shared goal of serving our customers better and exceeding our own high standards for safety and security.

Thanks for calling and I’ll talk to you again soon.

[Flightlevels]

Certainly trying to keep upbeat, that's good. Has WJ ever beat AC' s load factors...I can't ever remember seeing that ever. Still apples and oranges in costs. Tough winter coming. WJ putting faith in TV and AC in RJ's. who wins?

[Stickle]

I know that there is alot of weight being placed on TV by Westjet. Maybe I'm thick but I don't see this being the big draw for the seasoned traveller. I think it will be something in the order of price, schedule and then amenities like TV. With the RJ's AC will be able to offer frequency, which is something that a great many knowledgeable travellers like especially if they are buying at a fare level that allows them to change without penalty. Without a doubt the families travelling with children will be drawn by TV. But then again they tend to be lower yielding passengers.

Like you said the winter is going to be interesting. I hope that we both win

[Croc Dundee]

Stickle, I think you are quite accurate in your thoughts.

Flightlevels - it has been rare that WS has higher loads than AC. I've often thought that was weird. On a similar note, Southwest usually has lower loads than its competitors too. Maybe it's all the international connecting traffic?

[conehead]

On a similar note, Southwest usually has lower loads than its competitors too.

Yield. It's all about yield.

[dagger]

Certainly trying to keep upbeat, that's good. Has WJ ever beat AC' s load factors...I can't ever remember seeing that ever. Still apples and oranges in costs. Tough winter coming. WJ putting faith in TV and AC in RJ's. who wins?

Actually, WJ had a LF advantage over AC domestically in ... May, July, August, October and December 2003 and January 2004.

AC also has a healthy RASM advantage over WJ, and that would factor in connecting traffic.

As for LiveTV, it isn't saving JetBlue from warning it will be reporting a loss in the fourth quarter of this year. High fuel is high fuel. Yield pressure is yield pressure.

[Fido]

Yield pressure.

As a passenger I:

Will pay more for a good Frequent Flyer program

Will pay more for the right departure times

Will pay more for having lots of frequency

Will pay more for a chance of an upgrade to bigger, more comfortable seats.

Will pay more for a lounge with free internet access

Not for TV, not for food, nor for drinks, certainly not for happy faces and stand up comedy.

But not a lot more and given the choice of equal fares, guess which one I choose?

[Croc Dundee]

As a passenger I:

Will pay more for a good Frequent Flyer program

Will pay more for the right departure times

Will pay more for having lots of frequency

Will pay more for a chance of an upgrade to bigger, more comfortable seats.

Will pay more for a lounge with free internet access

Not for TV, not for food, nor for drinks, certainly not for happy faces and stand up comedy.

But not a lot more and given the choice of equal fares, guess which one I choose?

All the people willing to pay more for the extra services don't seem to be making the legacy carriers profitable. I wonder why AC went into CCAA if they were attracting all of the high yield traffic? Here's some free advise to AC - people are willing to pay for great customer service. Who cares about all the amenities if you are not treated well?

[dagger]

All the people willing to pay more for the extra services don't seem to be making the legacy carriers profitable. I wonder why AC went into CCAA if they were attracting all of the high yield traffic? Here's some free advise to AC - people are willing to pay for great customer service. Who cares about all the amenities if you are not treated well?

Sorry, I have to disagree with you. AC went into CCAA for a lot of reasons. Costs were out of whack. Debt was high. Staff levels were way too high, a legacy of the merger and government restrictions against post-merger layoffs. Your implication that people are treated less than ideally on AC is out of line. Yes, AC has its bad moments, but it has millions of good moments. And the idea that people will pay more for the kind of service you suggest doesn't wash. Good customer service is many things. Convenience is a function of good customer service. Is it hard so hard to understand why a business exec would opt for the airline with an hourly flight and pay more for that convenience instead of waiting around the airport for three hours "for good customer service"? The ultimate customer service is convenience. When I fly I don't want a lot of interaction with friendly staff. I limit human contact. I get into my work or my reading or the movie. Get me off the ground on time, get me there on time, and I am a happy camper even if I have a surly crew. I don't fly to be entertained. I fly to get from A to B as expeditiously, as safely and as cost-effectively as possible.

On the other hand, Westjet has proven this year - even admitted it - that it has run into stiff consumer opposition when it tried its little yield raising (price-raising) exercises. The public draws a line about paying more for what you describe as good customer service. Good customer service is much, much more than good employee attitude. It's the sum of the product, including price, which is why AC has had seven months of record load factors.

So much for free advice.

[moeman]

I've got news for you Croc. People aren't willing to pay any more than the cheapest option available anymore unless it's a royal PITA. It doesn't matter if one carrier is perceived to have better customer service. If another carrier is cheaper, they will use them. Period. There's no such thing as brand loyalty anymore, and good or bad that can be blamed on the low cost carriers.

So the fact that most of the carriers charge the same price but some offer more amenities for that same price will cause people to choose one over the other. Our friend Dagger has pointed this out beautifully with his bologna sandwich analogy. The fact of the matter is WJ is stuck. They are perceived to be the friendliest and lowest cost carrier when in fact they may be "friendly" but can't match Jetsgo's prices in many markets nor AC's amenities at all. They don't even match AC's prices in many instances and they are barely making any money to speak of. The trick is to get people to do a little research and realize this for themselves, and that's happening more and more.

People will fly Jetsgo for the price and AC for their amenities leaving WJ in the middle wondering WTF is going on around them. No wonder their loads are down. They are the least attractive option in many markets and for many reasons such as price, convenience, the old "east versus west" mentality, frequent flyer programs, schedule, route structure, etc. And now there's also the black eye from the espionage case.

I don't envy you one bit. Bologna only works for so long before people tire of it. Eventually they want a better cut of meat for their money, especially if they can get it for the same price as bologna and can get it anywhere and anytime instead of having to tailor their schedule around when the bologna is available. They'll especially buy something else if it's basically the same but cheaper and just as convenient to purchase, or someone tosses in free points with it and you don't have to listen to stupid jokes and constant interruptions of your favourite TV show that you can't pause while you pretend to be amused as a consequence of buying your bologna from one vendor over another.

But you are a friendly bunch (Unless someone says otherwise. Then you get a little gnarly ). At least you have that.

[flybye]

It's the sum of the product, including price, which is why AC has had seven months of record load factors.

I'm curious though Dagger, wouldn't AC parking alot of planes also have played a big part in ACs rise in L/F. The entire Zip fleet is gone, plus a few 747s, (etc?). Jazz decreased capacity by 17% giving a L/F rise of 15%. I also see some mainline capacity is down (domestic) giving a rise in L/F. I think(?) this would also have an affect, no?

I remember someone on the forum trying to say WJ pulling 4 seats outta the -700s at WJA was making a HUGE impact on L/F (though I didn't buy it).

Just a thought?

[dagger]

I'm curious though Dagger, wouldn't AC parking alot of planes also have played a big part in ACs rise in L/F. The entire Zip fleet is gone, plus a few 747s, (etc?). Jazz decreased capacity by 17% giving a L/F rise of 15%. I also see some mainline capacity is down (domestic) giving a rise in L/F. I think(?) this would also have an affect, no?

I remember someone on the forum trying to say WJ pulling 4 seats outta the -700s at WJA was making a HUGE impact on L/F (though I didn't buy it).

Just a thought?

Notwithstanding that certain fleet types have been retired - the 737s were certainly reflected in October, the 747s not - system capacity was up, and traffic even more. Even with the domestic capacity decrease, RPMs still increased. You might have expected RPMs to decrease proportionately with capacity but they did not.

[Guest curtiss jenny]

Moeman. Thats quite a black picture you paint, AC just coming out of bankruptcy and all. Jab the knife and twist.

Reminds me of a quote from Winston Churchill, said shortly after WW2.

"The Germans are either on their knees or at your throat."

[moeman]

What are you saying? In your opinion, am I right and just revelling in it, or am I wrong and will be proven so? Trust me when I say that I'm not revelling in it. Either way, please elaborate.

And I don't think I paint a black picture. I simply don't like the corner WJ has painted themselves into, black or otherwise, and it would appear as if the financial community agrees. If you think otherwise, again I'd appreciate some enlightenment.

In my opinion, WJ has made some serious errors of late, both strategically and morally. I hope they survive them but I think their only hope is that Jetsgo disappears. There is a lot of speculation that Jetsgo is on it's last legs, but the question is does Clive have deeper pockets than Michel, and if so, does WJ have the ability to survive that war even if it wins? AC eventually died from the wounds it suffered in the AC-CAIL war. Remember that.

Will WJ suffer the same fate? I hope not. But I see them falling into the same trap AC did with CAIL. They need to kill the only real competition they have, and that's Jetsgo. Sound familiar? Let's hope the outcome isn't the same for you as it was for us. I don't think WJ would survive CCAA as their balance books look a lot different than ours did. Less to lose long-term for the creditors. And is there as much upside to keep WJ going? If I were Clive, I'd consider packing it in right now.