AC Seat Sale

[Don Hudson]

Dagger;

Not enough time to engage this fully, but would you think that wages, low as they are in the countries you cite, are nevertheless commensurate with the cost of living?

I'm not arguing in a circle necessarily, (high COL requires high wages) but the two are not completely independant either.

We can discuss off-shore outsourcing of most airline work for cheaper costs but where eventually does that leave airlines which must base themselves and do business in, North America?

Must go...

Don

[Mitch Cronin]

Thank you Manwest. Nice of you to say so.

I'm not about to change based on what I'm hearing here... Dagger's not alone in his impatience with unhappy employees. I'm sure that's a common ailment nowadays. When the fixes to that seem so evident, yet aren't being reached for, it gets very frustrating.

AC has a lot of good people who just need some serious change in management style to allow them to make a difference. I want to be here when that happens.

Cheers,

Mitch

[UpperDeck]

Economies of scale? How many people were flying in the '60's? How many people were employed in the airline industry? How many pilots were employed flying the heaviest metal? As you compare fares, compare these numbers which offer some answer to your question.

[Guest WA777]

Quote "In case you missed something, AC took out all the competition..."

BS.....!

[Guest Tired]

Dagger:

What A.C. is not paying for now is a small matter of their employees pensions, to the tune of (as Austin Powers would say) "1.5 billion dollars". Beyond that, they are whining to the authorities about their ability to pay what was promised and is legally owed and still are able to exit bankruptcy. They can only compete on the backs of broken promises to their employees (once again, the race to the bottom.) The pendulum is swinging as mssr. Hudson says. If Pilot compensation continues to be eroded by market forces, Eventually, we'll be flown to visit our grandchildren by people whom we wouldn't let bag groceries, much less allow into a cockpit today. We as pilots are being manipulated by the so called "Market Forces" driving the cost of our services down to the point where none of us could honestly recommend the job to anyone close to us! The only, but highly unlikely solution is a National Pilots Association that sets pay and working conditions for all pilots and thereby allows a level playing field for all employers who would then have to compete without pitting Pilot against Pilot. Shed not a tear for Air Canada or sing the praises of Westjet. There never has been or ever will be a company that has ever had the best interests of its pilots at heart. Companies exist to make money for their shareholders or their owners. Full stop. Pilots, or any employees are but a means to that end. Ultimately, you only get what you negotiate, and it's hard to negotiate when we are as splintered and divided as Pilots in Canada are today.

[dagger]

They weren't paying that before CCAA, and if they emerge from CCAA they still won't be paying it, except that portion which they agree to pay. I don't know what the deficit is today but it has to be less since the Dow is near 10,000 again, the TSX is nearing 8,000. I think this issue will be settled, amicably, before long. Notice that the federal regulator said he didn't object to the proposed extension.

[Guest kevbert]

This is what a lot of people get mixed up:

(1) price - the amount the market is willing to pay for a product/service.

(2) cost - the cost of the provider giving the product/service.

Profit = when the price is greater than the cost.

Loss = the other way around.

When you are not the only one in the market you cannot be assured that your price will result in profit. Unfortunately AC is competing with someone who is able to make a profit at that lower price.

To expect AC to be able to survive on $400 on way fares is ridiculous. Others will provide it at a lower price, make a profit, and scoop the customers. Seat sales exist to try to reduce the loss per seat offered. If you want AC to provide service on YYZ-YYC then costs have to come down to make a profit. No other way.

[dagger]

Tango fares are offered on most domestic routes from what I can see. What you don't know, and what I don't know, is the seat allocations to each fare type. The standard discount philosophy is to allow each price category to fill up so that the later one books, the more they have to pay. Looking at this week's Rapidair flights, you see a lot of flights which have sold their Tango allocation, sold their Fun allocation, and are into their more flexible and expensive full economy fares.

What is also interesting about not only Tango but the Fun category as well is that fares vary by time of day, so that if you get a chronically underused offpeak flight - but have to ferry that aircraft anyway - you put a cheaper Tango farer and probably more Tango capacity - on that flight. For the most price-sensitive customer, that is an opportunity that didn't exist before to switch to the less desirable flight to save a little extra. That, in turn, can open up more higher priced capacity on more popular flights. I went to Ottawa a few weeks ago on a day trip - one of the last pure Tango flights - and it was sold out in both directions. It was actually so convenient: an early morning depature, a supper time return. Now, it's a little more complicated because the capacity allocated for three Tango flights is spread across the full day, meaning I might have to choose a later flight outbound or a different one inbound to get the Tango rate.

The same pretty much applies to longer haul. When you have several flights a day from Toronto to Winnipeg, Calgary, Vancouver, the peak time flights will have less Tango while the offpeak will have a bit more.

I see this as permanent, not necessarily driven as a response to a short-term pricing initiative by somebody else. If AC can slash $2 billion a year from its costs, it can definitely offer this overall fare structure - including the cheaper J fares - and make money most months of hte year, assuming that other parts of the system are not losing badly.

[dagger]

I'm glad you mentionned that. I let him off the hook. I followed C3s last year as I did Michel Leblanc's Royal chicanery and the way Canjet bungled its first launch. In all of these cases, AC may have turned off the air hose at the very end - as I might add - did Westjet (Clives hand was as much on the tap as Milton's), but the patient was already near death and being administered the last rites. Much of the problems of these startups and fast expanders were self-inflicted.

Remember a year before he merged Royal with C3 Leblanc had shareholders - he was the majority shareholder - vote themselves a large cash dividend (more than a dollar share). Have you ever heard of a $1 a share dividend from an airline, anywhere in the world? This was done to drain cash - and give ML a handsome windfall - before he flipped the company to C3, which says ML doctored the books to make Royal look more attractive. In fact, Royal was a basket case by then, and C3 didn't do its due diligence but then proceeded on a major expansion domestically with heavily discounted fares only to find they didn't have the systems or expertise to sell domestic scheduled traveller. A network of wholesalers is no match for an airline like AC with well-entrenched corporate contracts. C3 expanded during the onset of a recession, had on the Royal side at least an often poor, unreliable business product which business travellers I knew tried once and vowed never to fly again. Oh, did I mention Sept 11 and its impact on C3?

Mitch if you want to be bitter and blame your current employer for everything, including the onset of winter, you are certainly ready for a change of venue. It will do you good. You will find great joy somewhere else. You want to blame AC for the morale in your workplace or for the very existence of the IAM, fine, that's your business, but if you are going to dabble in recent aviation history, trust me, this is an area I know as well as you know your maintenance manuals on the A320.

All the world loves a scapegoat because they love simple answers - and conspiracy theories.

However, the reason most airlines fail - indeed, almost all new entrants - is that they have one or more of the following: a bad business plan, insufficient cash, awful timing or bad management.

Westjet came along with a good business plan, sufficient cash, exceptional timing and good management. It lives to this day. Canjet may be doing better this time around because its plan is less ambitious and its timing is somewhat better. That also means that management has learned some good lessons.

[Guest Tired]

The key phrase there is "IF they emerge from CCAA". To emerge from CCAA, a deal has to be struck on pensions with the unions, otherwise who will invest their money to watch it disappear into underfunded pensions. If A.C. folds its tent anytime during any extension, the employees pension remains underfunded, it cannot meet its legal obligations. This is not some hoop to be jumped through. This is thousands of peoples retirement. It is, of course in everyones interest to settle this, and it is only your opinion that they will not have to address the shortfall coming out of CCAA but either way they will have either added costs adressing the pension issue or extremely disgruntled employees with a shadow of their former pension. Both liabilities their competitors are not saddled with. The federal regulator is of course being brought to heel by his Liberal masters and why would he object?, its not his pension!

[Guest Tired]

The key phrase there is "IF they emerge from CCAA". To emerge from CCAA, a deal has to be struck on pensions with the unions, otherwise who will invest their money to watch it disappear into under funded pensions. If A.C. folds its tent anytime during any extension, the employee’s pension remains under funded; it cannot meet its legal obligations. This is not some hoop to be jumped through. This is thousands of people’s retirement. It is, of course in everyone’s interest to settle this, and it is only your opinion that they will not have to address the shortfall coming out of CCAA but either way they will have either added costs addressing the pension issue or extremely disgruntled employees with a shadow of their former pension. Both liabilities their competitors are not saddled with. The federal regulator is of course being brought to heel by his Liberal masters and why would he object?, its not his pension!

[Guest Tired]

The key phrase there is "IF they emerge from CCAA". To emerge from CCAA, a deal has to be struck on pensions with the unions, otherwise who will invest their money to watch it disappear into under funded pensions. If A.C. folds its tent anytime during any extension, the employee’s pension remains under funded; it cannot meet its legal obligations. This is not some hoop to be jumped through. This is thousands of people’s retirement. It is, of course in everyone’s interest to settle this, and it is only your opinion that they will not have to address the shortfall coming out of CCAA but either way they will have either added costs addressing the pension issue or extremely disgruntled employees with a shadow of their former pension. Both liabilities their competitors are not saddled with. The federal regulator is of course being brought to heel by his Liberal masters and why would he object?, its not his pension!

[Guest Tired]

The key phrase there is "IF they emerge from CCAA". To emerge from CCAA, a deal has to be struck on pensions with the unions, otherwise who will invest their money to watch it disappear into under funded pensions. If A.C. folds its tent anytime during any extension, the employee’s pension remains under funded; it cannot meet its legal obligations. This is not some hoop to be jumped through. This is thousands of people’s retirement. It is, of course in everyone’s interest to settle this, and it is only your opinion that they will not have to address the shortfall coming out of CCAA but either way they will have either added costs addressing the pension issue or extremely disgruntled employees with a shadow of their former pension. Both liabilities their competitors are not saddled with. The federal regulator is of course being brought to heel by his Liberal masters and why would he object?, its not his pension!

[Guest WA777]

My favourite is Wardair...how AC made Max buy all those new airplanes and then forced him to sell out to PWA....The reality is people/media only see what they want to see.....all the while ignoring the facts or the truth...!

[Guest neo]

Whine all you like of course, stay and fight if you will, but dr1 has invited you to WestJet more than once. The competition is alive and thriving. Claiming there's no where to go is not a valid excuse.

neo

[Guest WA777]

My favourite is Wardair...how AC made Max buy all those new airplanes and then forced him to sell out to PWA....The reality is people/media only see what they want to see.....all the while ignoring the facts or the truth...

[Mitch Cronin]

I'll give you the history. I was wrong to say that. There are competitors, though not as many, ...but then there aren't as many airplanes flying as there once was either, and that is of course, not AC's fault.

"if you want to be bitter and blame your current employer for everything

I do not want that at all. If I did, I would have stopped caring some time ago and would have moved on. Precisely because I do give a damn, I'm frustrated at the glaring errors in front of me that cost money and greatly reduce quality of life for a number of my fellow employees.

What you hear from me here on occasion is that frustration... is this the wrong place to express it?

There's a fix on the horizon that would save the company money, and make a bunch of us a lot less miserable... Watching that fix avoided is one of the most frustrating experiences I've ever had at work.

[Guest ABC]

Is that fix Jazz?

Or is it time to move on?

Best wishes

[Mitch Cronin]

Comon guys... give me some credit.. Of course there are competitors still around, and of course the demise of all the others was not AC's fault... Nor does assigning blame for the demise of any of them accomplish anything useful at the moment.

And Neo, you're right, partially at least... but I need to say that whining is not my goal, nor is fighting. When you see something coming that's wrong, and you're so sure it's wrong that you can't believe others wouldn't see it too if you explained it, wouldn't you try? If you gave a damn, that is... and wouldn't you, on occasion let your frustration be known, if the wrong kept coming?

BTW... if I'd thought dr1 could get me that job, I might have jumped. WJ doesn't need anyone in YYZ at the moment and it already costs me $25 a day to get to work and back, Hamilton wouldn't be workable.... and we stay where we are for my wife and my kids.

And still, like I've said, I'd rather stay and make this work, because I'm sure it can! If only.....

[Arctic Ace]

Dagger

You have sounded to me for quite some time like someone in the know. The more I read your posts the more I realize how little you really understand. Your knowledge seems focused on the business and number crunching end of things and very limited on the operational side. Contrary to my better judgement, I will give away some secrets, although I doubt you have any real influence on the industry. If you do however, perhaps you should be doin a little more listenin and a lot less talkin.

1./ Management gets the union it deserves.

2./ No matter how cheap you make things, if you piss people off they are not interested.

3./ Low cost and cheap are not one and the same.

4./ Beating people over the head a little harder will not motivate them. People are motivated by things that make them happy. Refer to item 2 for the results of this practise.

5./ Cutting costs, efficiency, better contracts and leases, cheaper labour all are meaningless if the following formula is not considered first. 0 X any amount = 0. Refer again to item 2.

6./ Recheck your facts regarding the causes of Asian carrier accidents. I think you'll find unskilled labour is more prevalent than you'd like to admit or believe. Although our new generation of computerized, technical marvels are very good at assisting the pilot to do his/her job they are a very long way from replacing a highly trained and skilled pilot. As for maintenance, a good engineer on site is invaluable when an aircraft is AOG. There is a schedule to be met and I'm not sure your off shore engineer would get there fast enough to avoid - again refer to item 2.

Cheers

The Ace

[Arctic Ace]

Dagger

You have sounded to me for quite some time like someone in the know. The more I read your posts the more I realize how little you really understand. Your knowledge seems focused on the business and number crunching end of things and very limited on the operational side. Contrary to my better judgement, I will give away some secrets, although I doubt you have any real influence on the industry. If you do however, perhaps you should be doin a little more listenin and a lot less talkin.

1./ Management gets the union it deserves.

2./ No matter how cheap you make things, if you piss people off they are not interested.

3./ Low cost and cheap are not one and the same.

4./ Beating people over the head a little harder will not motivate them. People are motivated by things that make them happy. Refer to item 2 for the results of this practise.

5./ Cutting costs, efficiency, better contracts and leases, cheaper labour all are meaningless if the following formula is not considered first. 0 X any amount = 0. Refer again to item 2.

6./ Recheck your facts regarding the causes of Asian carrier accidents. I think you'll find unskilled labour is more prevalent than you'd like to admit or believe. Although our next generation of computerized, technical marvels are very good at assisting the pilot to do his/her job they are a very long way from replacing a highly trained and skilled pilot - especially when something goes wrong. In some of the offshore locations maintenance had better be good because if the **#$$#$% hits the fan the pilot may not have the background you'd hope for. As for maintenance, a good engineer on site is invaluable when an aircraft is AOG. There is a schedule to be met and I'm not sure your off shore engineer would get there fast enough to avoid - again refer to item 2.

Cheers

The Ace

[Guest neo]

"When you see something coming that's wrong, and you're so sure it's wrong that you can't believe others wouldn't see it too if you explained it, wouldn't you try?"

You can try. It helps a lot if you're not the kind that gets easily frustrated, though.

neo

[Guest neo]

test

[IFG]

Hi, Dagger - Re:"Have you ever heard of a $1 a share dividend from an airline, anywhere in the world?" - They're rare indeed. The only one I know of was ironically paid by AC; of course it was much larger, and buried in a substantial equity rearrangement that included a 35% share buyback that was priced at a 40-50% premium on the market price ($5-6 a share, of which part was dividend for tax purposes if I recall correctly). Don't recall you using words like chicanery at the time tho'.

As for the broader question about whether AC has been predatory or not, your posting obscures some points. - Re: "the reason most airlines fail ... [is] a bad business plan, insufficient cash, awful timing or bad management" - The second item, about cash, is the problem. It is quite unrealistic to expect a new or smaller entrant to have the cash reserve to go against a dominant carrier determined to erode them into insolvency thru a battle of financial attrition. That concern is the foundation of all law against unfair competition, and the most vibrant "free-enterprise" economy in the world unsurprisingly has the strongest such regulation (altho the current corporately bought-and-paid-for government down there will do their least to enforce it and their most to weaken it - but as Don might say, I digress).

I'm sure you know this full well, Dagger, but just to make it clear for some of the folks here who don't - The problem is not simply pricing below cost, whatever that is, but doing so with the intent to unfairly use a dominant position to prevent competition. Unfortunately, where this behaviour takes place, it is very difficult to prove, being so easily obscured by other realities in the marketplace such as those you refer to in your posting. This is why prevention is preferable to enforcement, i.e. no company should be allowed to attain the critical mass to behave that way in the first place. The current alignment of the Canadian airline industry would simply not be permitted under US Law (well, up to recently anyway). Unfortunately, the powers here that be have forgone that route with AC.

Since late 1999 or so, the only restraint on predatory practice by AC has been the state of their own finances, basically again that second cash element in your triad of reasons for airline failure. If that is removed after undergoing CCAA, what mechanisms do you forsee, to protect a competitive market - other than AC's corporate altruism?

:S

Cheers, IFG

[Guest]

Dagger,

you know for some one who does not work for AC and has not had to endure the nonsense we at AC are facing, you sure have a lot of gall telling someone to quit if they do not like it,you are way out of line on this one JACK.