AC Seat Sale

[Guest Sanders]

Can someone please tell me how AC can justify charging $79 one way to YYZ from YYC? I find it amazing that you can have a seat sale and knowingly take a loss. CCAA shouldn't allow this BS, but it seems AC's policies never change. I guess healthy business plans don't matter when your not paying bills!

ANNOYED

[Mitch Cronin]

I share your annoyance!

We give 'em 100 bucks, and they piddle away 200, just like that.

This kind of cr@p has to stop! It sure makes it hard to take the layoffs. A whole lot of families are suffering just so these fiddlers can give away seats cheaper than bus fare. Pretty rotten way to attempt a recovery.

[Guest Patrick Bergen]

I would have to ask how many of say 192 seats on a 767 would be at that price? Do you think the flight on the whole is making a profit? I am not saying I disagree with you as I have shared the same fate as some of your friends did in the last week. I just question if AC tries to sell them at say $400 how many would just go on WJ at $200.

[Mitch Cronin]

"WJ at $200"

also ridiculous! ...and a disservice to all of us in the industry.

[Arctic Ace]

WestJet is making money and paying their bills. Being protected by the courts while not paying the bills is unfair to the creditors and other responsible airlines. Air Canada's practices are causing hardships to many other airlines and related providers of goods and services. This is a disservice to the industry.

WestJet has stimulated the industry and created growth. People who a few short years ago would never have been able to fly to visit family or friends can do so now. How can a company that provides a product at an affordable price while making money without taxpayer assistance be a disservice to the industry?

[Guest Sanders]

My thoughts exactly!!!

[Don Hudson]

Mitch, Patrick;

If we hearken back to 1960 and we take a look at the price of a loaf of bread, a dozen eggs, a car or truck, a family vacation, a year in university or a house, we find that prices have changed by a factor of 10 or more. It will be noted that I have not mentioned wages...which have not followed this trend to nearly the same degree.

Yet numerically, it costs about the same to buy an economy ticket say, from Vancouver to London, England.

That means that while a whole range of prices have gone up, airline travel has gone down.

Now the complexities of demand, of labour agreements, of market interference, of currencies etc will have some effect on some or all of these areas. Less living space in desireable areas will drive up prices, and so on.

But the fact remains that through technological efficiencies, administrative strategies, marketing tools and equipment reliabilities, airline fares are about a tenth, perhaps more, of what they could/should be given the rise in prices in these other areas.

Even though an airline's seat inventory evaporates forever once the aircraft door is closed, (while retaining all the costs incurred to place that inventory into the market), airlines have always sold their product for less than it truly costs them.

Why is this? Most folks today lay out tens of thousands of dollars for vehicles, for children's education, for cruises even!, and yet balk when an airline begins to charge what a seat really costs.

Is it a matter of (mis-)education? To win passengers, have the airlines created the illusion that it actually costs $79 to fly an airliner safely with a highly trained crew from Toronto to Calgary?, (because if anyone believes that, they're wrong! What's happening as everyone knows, is that 79 bucks is better than nothing).

Cost management demands that the volatile inventory be managed as efficiently possible and that's what yield management (in effect, "the Seat Sale phenomena, and Patrick's right on this) is all about, (courtesy Bob Crandall).

Just wondering...

Don

[Mitch Cronin]

I don't want to badmouth anyone, but I'm having a hell of a hard time swallowing the notion of any profit with "YVR-YHZ $189.00"

It's gotten routine now, it seems, to dump seats on the market it silly prices that make people think they can continue to expect that fare. I do believe that's a disservice to all of us.

[dagger]

Oh boo hoo. Every airline has non-compensatory fares. What they do is average the yield through the aircraft so thatthey make money. Seat sales are loss leaders and WJ does it as much as everyone else.

As for your CCAA issue, please outline what AC is not paying today. Having struck deals with most lessors and most airports and NavCda, it's not clear to me that they are continuing to survive on the basis of using assets for free. There were deficiencies from April 1 into the summer, but settlements have been arrived at with most. And then there are real estate and aircraft being returned to their owners. That's an early termination issue, not a forced rent holiday, and not something that impacts AC on an ongoing basis.

[Mitch Cronin]

Fair question. ...I have a suspicion that even if people understand it costs more than that, they're also beginning to believe that it is common enough to pay peanuts, so they're expecting to be able to pay peanuts. And it seems there's a rush of airline decision makers eager to show them they're right. ....while we pay the difference.

[dagger]

Mitch, i think intuitively Clive Beddoe and Robert Milton would both love to raise fares. But they also think that their success shouldn't come with additional sacrifice on their part. WJ has order dozens of aircraft. AC has cut as much as I suspect Milton wants to or can cut. Then the new entrants think they can undercut not only AC but WJ. That's the way the marketplace usually works. And I don't think anyone can do anything about it. If we have hard times, airlines will disappear, but others will appear. And if we have good times, the current carriers will ALL expand. They will add capacity more than the market can bear, and fact is, they will all blame the other.

You can pine for the good old days, but some things do get cheaper. A lot of consumer durables are a lot cheaper in real dollar terms today than they were 20 or 30 years ago. The people who used to make them have died off, retired or found other employment. Those durables now are made in China or Thailand.

Do you seriously think the public will pay double for the same TV to get it manufactured in Canada?

That's the problem with customer expectations. They are usually right.

[Mitch Cronin]

"please outline what AC is not paying today"

-Any attention to the morale of it's employees

-The wages of several laid off employees.

-A shift premium for the employees with bootprints on their asses on night shift.

-Overtime pay for maintenance employees.

-A decent wage to it's junior FO's

.... just off the top of my head.

IMHO, more than enough to warrant AVOIDING piddling away money with silly "loss leaders" that very likely wind up accomplishing nothing more than throwing money away.

[Guest Patrick Bergen]

Good comments Don.

I do have to wonder though if this is a temporary phenomenon or if the industry will rationalize itself back to more reasonable fares. If we look at AC we see a more complex and "heavier" infrastructure. AC is pushing to pare down and come close to Westjets cost per seat mile.

On the other hand, Westjet has not experienced the same union involvement that exists at Southwest. This airline, excellent and smart as it is, has not had to live through a downturn which may cause a rethink of the rank and file.

The question is, are these low fares here to stay or will the marketplace correct in the coming months and years.

[Mitch Cronin]

"some things do get cheaper. A lot of consumer durables are a lot cheaper in real dollar terms today than they were 20 or 30 years ago. The people who used to make them have died off, retired or found other employment. Those durables now are made in China or Thailand.

Do you seriously think the public will pay double for the same TV to get it manufactured in Canada?"

Aircraft, the operation of, and the maintenance of the airworthiness of said beasts, are not in that class.

People expect it, airline execs offer it, but that doesn't change the fact that it ain't so.... So who wins and who loses, and what has that so far accomplished in the bigger picture? Is there some way to see long term benefit in this madness that's been the rule since deregulation?

[GRANT]

I agree

[dagger]

The problem is that you're not the only people who can do a heavy check on aircraft. Some airlines have been farming them out overseas for many years. And whether you like it or not, there are a lot of people in Asia who will do a heavy check with a high degree of competence for less than you have to be paid.

Is Singapore Airlines not safe? Malaysian? Thai?

In many so-called lower wage countries, the most likely cause of an airline catastrophe still seems to be air traffic control, terrorism, etc. Large Airbus and Boeing planes aren't falling out of the sky because of poor maintenance.

[dagger]

For God sake, Mitch stop your f-ng whining. Let's just wind everything back to the way it was at Air Canada, with the highest wages, the biggest pensions, the most bloated work force, and costs so much higher than the competition that it didn't have a prayer of making money except at the very top of the cycle.

Really, I think some of the people who have been laid off would be much happier working at Air Canada than you are. I sense most of them would have fewer burdens- including much less of that massive of entitlement you seem to be carrying around on your shoulder.

[Mitch Cronin]

With all due respect... If I'm entitled to anything at all, it's the ability to f-ng whine if I f-ng well like.

Please don't tell me I have to work for the worst employer I've ever had, AND I can't f-ng whine about it!

[dagger]

If you are working for the worst employer you have ever had, why not quit/resign? AC can make you do a lot of things you don't like, but one thing they cannot do: Make you stay.

[Mitch Cronin]

In case you missed something, AC took out all the competition... I do want to work with airplanes... I chose this career, I didn't choose the employer. WD wasn't the best company I've ever worked for, but it was what I chose... along came CDN... not great, but not bad either... now AC.

If I leave, I leave any chance for the potential benefit of 18 years experience... I leave a career... and lose a lot.

Maybe it's time, but like others, I won't go down without a decent fight at trying to make things right where I am.

You're starting to sound like Turpen and the GTAA... Which attitude is right Dagger? Your's here that seems to echo his there? Or your response to his apparent arrogance, and my response to this foolishness?

[dagger]

Three times in my various careers I have reached a point where I couldn't stand where I was working. Both times, I moved on, leaving the accumulated seniority behind. My last switch 12 years ago entailed the loss of all benefits, seniority and security in search of something more entrepreneurial where I could be my own boss.

That's just my preference.

As for places to work, if you are so transportable as you claim, try WJ in Hamilton. So what if they don't have a major overhaul base. They have line operations. Maybe one of the foreign carriers needs a line guy, or Jetsgo or Canjet.

What you are really saying is that you are not going to displace yourself to get a better job, that you don't want a longer commute, or change of cities, or change of industrial sectors. You just want the job you have but you want the conditions you had. I say, some of those conditions can never be had again. Others may be restored with changes of senior personnel.

You also make it sound as if only Air Canada is going through tough times so somehow what is being inflicted on you is particularly cruel, inhuman and targeted at Mitch Cronin.

I say you are living through a difficult period of institutional adjustment, and that you either adjust with it, at least recognize what is happening, or else you would do well for your own sanity and the happiness of your family to consider whether the grass is indeed greener somewhere else.

[Super 80]

The deep discounts on flights like Calgary - Toronto and Montreal seem stupid to me. Don't get me wrong, for someone like me who doesn't even like driving to safeway and would stay home before stepping foot on a train, the low fares are awsome, but I would fly no matter how expensive it was.

It would make more sense to me for Air Canada to offer deep discounts on RapidAir and Jazz flights that have been hurt by all the taxes and sircharges

I have never been on a narrow body Calgary-Toronto flight that was not nearly full. The last one I was on (Aug 21st) had two empty seats.

The last rapidair flight I was on, Ottawa to Toronto was basically empty. There were less than 30 people on the plane (A320), and atleast half were AC crew going home for the night.

The only way to get from Calgary to points east in a fast manner is flying. But in the Ottawa-Toronto-Montreal market people can drive or take the train. So shouldn't they be super agressive on those routes where there is direct surface competition?

and someone explain these Tango Fares to me, what does that mean?

Are all the Tango steerage passangers branded on the forehead or something so the FA's know not to give them their little baggie of nuts and bolts?

[Mitch Cronin]

Dagger, a good chunk of what your saying is reasonable, but then you add stuff like this: "You also make it sound as if only Air Canada is going through tough times so somehow what is being inflicted on you is particularly cruel, inhuman and targeted at Mitch Cronin."

That's silly. Of course I don't think anything of the kind.

I can understand, and take, the corrections due as a result of the changing times... It's the lunacy of wasting the money saved that drives me nuts. Throwing away the coin on so called "loss leaders" (as if anyone has never heard of Air Canada, and only need to try them once to stick!), and laying off too many people with some ill-bred, foolhardy scheme to "save money" by scheduling overtime, which will, in my somewhat educated opinion, actually cost huge money... is all nuts. ...and it stings while I'm a part of paying for it, and while I'm watching other younger folks get tossed aside for such meaningless, and fruitless causes.

[Don Hudson]

Mitch, Patrick;

Re your comment, Mitch, "....while we pay the difference."

The law of supply and demand, so often quoted as the market-force which somehow controls wages, actually works in reverse when it comes to labour. Here's why:

While ordinary commodities are market-driven by demand and dependant upon consumer incomes etc and supply is determined by the costs of producing those commodities, (is it profitable...ie, enough demand?), "Labour" is not a commodity which is "consumed", nor is labour "manufactured" for "profit" by "Labour factories". It makes no sense to talk about labour in those terms.

Instead, the demand for labour is controlled by producers and the supply is controlled by consumers. In other words, corporations create the demand for labour and labour controls supply by deciding how, where, what to work etc etc and those decisions include life outside work such as leisure time etc.

Now this view is imperfect, but that's nothing new to economics. The point is, the supply and demand curves don't describe labour's circumstances, including wages etc.

The reason I bring this up is to re-address a point made earlier by someone else on this forum, (who made the point far more bluntly than I'm going to, but the end view is the same): that the now-infamous "Race To The Bottom" among airline workers (notably in Canada, but elsewhere as well) is going to respond according to the above model, and not the traditional model of supply/demand.

That means that Labour is going to seek its rewards elsewhere, where its skills, ROI (in terms of education/training paid for by individuals), intelligence, determination, etc etc...all those attributes which people bring to their employer, will be rewarded appropriately according to the worker's investment.

In short, unless pay is somewhat commensurate with what employees bring to the employer, especially the highly skilled/trained/educated/motivated employees, they'll choose other, more rewarding, perhaps more secure (that's something, these days!) and less confrontational arenas in which to spend their working lives.

This phenomena would take some time to unfold, but already, the Canadian Air Force can't get enough pilots because the kind of person who would normally seek such work is seeking employement and a more solid future elsewhere.

Now the airlines are setting themselves up for enormous problems, in my view, and the reasons, under the above scenario, are obvious. This industry has been in constant turmoil since de-regulation and not one Minister of Transport has been able to stabilize it. The draconian labour climate which has existed for decades shows no signs of changing: employees are viewed simply as expensive liabilities which are messy to deal with, instead of a resource or asset. (Again, there are broad gray areas in this view and not all aspects of the industry reflect this all the time..but its certainly a salient characteristic).

That affects young peoples' choices for their futures. How much remains to be seen.

Don

[Guest manwest]

Mitch you seem like a guy that likes his job, you enjoy doing it although it has some drawbacks. There are parts of the job you love, some of those parts are the hardest and most complacated, but you still love it. At times it get very frustrating trying to do the best job possible, having pride in doing what you do, knowing many rely on the quality of the job your doing.

There are some on this forum who think that if you do not agree with the way a company operates, treats its suppliers, employees, and passengers, your whining.

Some people forget that this is a public forum and everyone is entitled to their opinion, but if you don't agree with them or say something negative about soneone or something their retort is your whining. They don't work for your company, they may have no idea of how it is to work under your present conditions, they probably have never dirtied their hands in their job.

Your doing a good job, you have a good head on your shoulders don't let someone crying whining get on your nerves.

Have a great week.