Air Canada to launch cut-rate carrier

Discussion in 'Air Canada | Aeroplan' started by ACMM, Apr 12, 2011.  |  Print Topic

  1. ACMM
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    Globe & Mail link

    Air Canada to launch cut-rate carrier

    Air Canada (AC.B-T2.280.083.64%) plans to create a discount leisure airline to compete on routes to Europe, Mexico, the Caribbean and other popular vacation spots, a move that will ratchet up the competitive pressure on tour operators such as Transat A.T. Inc.
    The country’s largest airline is actively drawing up a business plan to launch a low-cost carrier (LCC) with four Boeing 767s and six Airbus A319s, with the potential to increase that fleet to 50 planes, according to a letter of understanding attached to the tentative labour pact between the company and the Air Canada Pilots Association.
    ... more text at the link above ...
     
  2. milchap
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    milchap Gold Member

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    From the above link:
    "Air Canada envisages having 30 Airbus planes and 20 Boeings in the new division. Those planes can carry between 120 and 213 passengers in their current configurations, but business class would be removed for the discount airline and replaced with “premium economy” seating. "

    Where is AC going to get these aircraft?
     
  3. igloocoder
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    igloocoder Silver Member

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    I guess they're planning on priming the carrier with the 3 Amigos and the ex Mexicana planes..but that is only 3 of four 767s and 3(?) of six 319s. Not sure where the rest of the starting planes are going to come from let alone the remaining ones to total 50.
     
  4. milchap
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    milchap Gold Member

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    Perhaps the start date of the is further downstream to coincide with the introduction of the 787 into the fleet thus freeing up some 767s.
     
  5. milchap
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    milchap Gold Member

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    Another question: where does Air Canada Vacations fit in with this planned LCC?
     
  6. ACMM
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    Are those deliveries not well over 1 year away? Seems odd to me to announce this now then.
     
  7. milchap
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    milchap Gold Member

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    Putting this into the pilot's contract is how we learned about this AC initiatiave...there has not been an annoucement. While it is fun to speculate, no hard details are coming and let the MP/AC musings on the issue begin.....:D
     
  8. milestoburn
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    milestoburn Gold Member

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    funny...the three amigos are below charter quality IMO. so what is AC's low cost three amigos going to look like? i fear flying on those.
     
  9. New President new painted planes just like ZIP and Tango, a waste of money. Oh well at least some AC people will get to paint some new planes and an Advertising agency will get some new fees.
     
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  10. Another idiotic wasted effort by the oxygen thieves known as Air Canada management.
    Creating a product that costs LESS is not a way to make MORE money.
    They've trained the Canadian consumer to expect to fly for nothing and are taking them to summer school now.

    Air Canada SHOULD cost more. They SHOULD offer more.
    BA, CX, LH, EK, QF.. (I could go on..) have all made record profits at a time when AC is cutting routes (and I'd say cutting service, but frankly there is none) People will pay for a good product. The above carriers FILL their premium cabins. Air Canada is trying once again win Gold in race to the bottom of the industry.

    Bloody embarrassing.
     
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  11. global_happy_traveller
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    global_happy_traveller Silver Member

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    tango international?
     
  12. Flip Flop Airways.
     
  13. Canadi>n
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    Canadi>n Gold Member

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    AC made a profit this year/quarter. When it raises fares (in the guise of fuel surcharges) there's nothing but complaints from Canadians who are too cheap to pay the real cost of anything. However, it should also be noted that unlike CX, SQ, EK, QF and a few other carriers of that ilk, AC must operate a network of routes across Canada and into the US, the most cut-throat market for aviation. Domestic and transborder margins are thin, operating costs high, thus reducing the profit potential for AC. Remove this network of flights and AC would have made profits in the same range (pro rated) as these other carriers. (Both BA and LH benefit from an almost captive home market as flag carriers of countries with twice to three times the population of Canada!)

    Actually, the move makes sense. AC has reduced its fleet but is now reaching load factors that sell out its flights on certain routes (such as those being considered for this new service). Having a secondary fleet means AC can off-load low-yield customers and vacation travellers onto this carrier, opening up more higher yield seats to customers on the mainline fleet. TANGO was not a flop. It served its purpose during an interim restructuring period and if it was a flop, why did several major US and foreign carriers adopt the same model when the market dictated it?

    This could also suggest that AC is considering a Premium Economy cabin on its long haul flights. By moving low yield economy customers onto this new budget carrier -- including customers who have bought AC Vacations packages -- it permits a reduction of the economy cabin with this intermediate class of service.
     
  14. TRAVELSIG
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    This is confusing.
     
  15. bakedpatato
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    bakedpatato Gold Member

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    Here's 2 767s
    TL,DR; HA returned 2 Signature Interior equipped 763ERs to lessor, currently one of them is in AC colors and is undergoing a heavy check in China.These birds were delivered new to HA in '03:eek:
    I'm betting especially due to rumors that AC is not XMing these birds that these 2 are going to be part of the LCC fleet.
    /side On Topic rant
    Seriously AC? Haven't learned from DL(Song) and UA(Ted)? I don't think LCCs within an airline work.
    /rant
    /side Off Topic rant
    Why I hate flying HA: horrible FF program and now this...there are plenty of non Signature Interior equipped 767s in HA's fleet:rolleyes::rolleyes::rolleyes:(a PITA to fit my rollaboard into the overhead bins)...
    /rant
     
  16. canucklehead
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    canucklehead Gold Member

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    Up to 50 planes is a lot for the new division. As milchap asked - is it going to compete against AC Vacations (which caters to middle/higher class charters -- whatever that means) or will those two be merged.

    Whatever they do, hopefully there will be no 30" seat pitches.

    Finally, to add to the mix, what happens with JazzAir/Chorus, did they not get a Thomson vacation subcontract last year?
     
  17. tomh009
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    tomh009 Gold Member

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    Based on the press release, this is not like Song or Ted -- it's for sun travel only, not for "normal" routes like those two.

    AC Vacations can buy capacity from the LCVC (Low Cost Vacation Carrier) when appropriate. I don't think this new subsidiary would be selling complete packages anyway.
     
  18. bakedpatato
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    bakedpatato Gold Member

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    :oops:
    So more like Thomas Cook and the other European charters in terms of destinations? Hm...now that's interesting.
     
  19. No it means AC wants to compete with West Jet for the sun belt and Transat for Europe. The few planes of Thomas Cook cant hurt AC that much?
     
  20. We're getting off the point.

    Tango, Fail,
    Zip, Fail,
    Ted, Fail
    Song, Fail.

    Why is this going to work now? Its not. It's a colossal waste of resources. It's NEVER worked, and there isn't a single major international airline that operates a 'low cost'.
    WHY? Because it doesn't work. Simple. It just doesn't work.

    Milchap, your argument is flayed in 2 respects.
    Firstly, all the profitable carriers operate regional routes. Whether they operate a 1 hr sector to Paris from London or Toronto to Montreal, and airplane doesn't care. BA, LH, ect all has to compete with Ryanair and Easyjet, but still operate successfully. The domestic and transborder argument is just an excuse that ignores the fact that operating into secondary cities ALLOWS them to mount international flights with thru pax.

    Teaching the consumer to only buy the cheapest fares is Air Canada's failing

    Secondly, you reverse yourself by suggesting that 'reducing' Y seating they can add Y+ seating, which presumably will cost more. Why would Canadians who've been taught to pay less, pay more for Y+? They won't.

    Meanwhile, they are chipping away at employee benefits/wages, while Calin increases his renumeration to 5 Million annually. Sure, the CEO of Cathay just made 10 X that.. but staff took home over 1.5 months bonus per staff and a 6% pay raise.
    Everybody wins.

    Operating small planes with few seats over long distances is a way to lose money. Air Canada has demonstrated that year on year. Operating large planes with less frequency is the way 'REAL' airlines make money.
     
  21. Exactly.. be everything to everybody and be nothing.. thats whats gonna happen. Leave the charter market to charter carriers.. buffoons.
     
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  22. Wandering Aramean
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    Wandering Aramean Gold Member

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    Not often, particularly not when there is something cheaper available.
     
  23. Not at all true. Canadians have been taught not to, everywhere else people do.
    Canadian's require 'reeducation'. Paying low fares is not a sustainable model.
    A balance of value for dollar and fair fares is needed.

    Again... Cathay, Emirates, Qantas.. and just about every other airline that is profitable is so because they
    have people buying their first and business class cabins.

    Check out my post in the Who Flies First thread (with photos). I can travel very cheaply on some airlines, but I often forgo that and pay for business or first out of my own pocket for something I want.

    and I'm not the only one in those cabins

    http://milepoint.com/forums/threads/is-first-class-really-worth-it-anymore.8213/page-3
     
  24. tomh009
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    None? How about LH and Germanwings? Or AF and Transavia? QF and JetStar? IB and Vueling?
     
  25. Germanwings BOUGHT by LH in 2009.. Not started by.

    Transavia BOUGHT by KLM in 2003.. Not started by.

    Vueling. NOT owned or operated by IB.

    Jetstar is the only case where are airline created a low cost and is still operating it.
    Jetstar undercuts QF, skims all the fat, and has allowed QF to lower staff costs by threating
    QF employees that the flying will go to Jetstar instead of QF.

    Sounds very much like what Air Canada is trying to do isn't it.

    More to the point we now have Jetstar Asia and Vietnam.. more jobs moved out of Australia to lower paying third world countries. Is that what we want? Less jobs in Canada?

    If AC was to buy a charter company and operate it, or indeed Westjet that is one thing.
    It has established routes, clients, and passengers familiar with the product.
    All they are doing now is starting a third failed low cost themselves, pulling pax from their own planes,
    lower the overall revenue, lowering the working conditions of the the staff, and making it a weaker airline.

    I applaud the move. Maybe next March my profit share will be 8 or 10 weeks instead due to increased business to/from Canada. Thanks muppets.
     

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