Competition Bureau opposes AC-UA Joint venture

Discussion in 'Air Canada | Aeroplan' started by canucklehead, Jun 27, 2011.  |  Print Topic

  1. canucklehead
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    canucklehead Gold Member

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    Canada’s competition commissioner wants to block Air Canada’s joint venture with United Continental Holdings Inc. on transborder routes between Canada and the United States.....

    Read on....
     
  2. milestoburn
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    milestoburn Gold Member

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    Will be interesting to see how this plays out.
     
  3. Canadi>n
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    Canadi>n Gold Member

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    On those 100% routes where AC and UA or CO fly, couldn't the American carriers or AC just pull out leaving the other to fly? Or just rearrange their schedules so flights complement one another. At the moment, both UA and AC have flights around 4/5p from DEN and IAH to YYZ on RJs. Later flights by one or the other would seem practical (flights depart a bit early to capture end of day workers city centre, so a 6:30/7p departure seems more logical than the two currently scheduled out of each airport). Or a single A320/321 at 6p. Suppose this would be seen as collusion, but then what's the point of Alliances if this can't be done?

    I actually have little time to competition watchdogs these days. They really can't tackle the real issues of marketplace pricing...just look at the oligopoly of gasoline pricing!
     
  4. milchap
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    milchap Gold Member

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  5. AC will be wasting millions of $$$ getting its lobbyist busy this summer. One way for AC to make money is to join the competition and restrict competition.
     
  6. Canadi>n
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    Canadi>n Gold Member

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    I still agree with AC on this one, though there are still some arguments in response to the Bureau's decision they've not made in yesterday's filings. The case will be heard some time next year by the Competition Tribunal. Details at:

    http://www.ct-tc.gc.ca/CasesAffaires/Ca ... CaseID=348

    But PDF copies of the responses from AC and UA/CO can be downloaded from this page.
     
  7. Canadi>n
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    Canadi>n Gold Member

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    It's not lobbyists as in the US. It's going through a process that is open and transparent and provided for under competitions legislation. That said, AC is not limiting competition through this deal. It is rationalizing a situation that sees itself competing with its own STAR partners on several routes where coordinated marketing and scheduling could benefit its bottom line. There is competition with either AA or DL on almost all the major routes under discussion, including YYZ-NYC, YYZ-MSP, YYZ-ORD, YYZ-LAX, YYZ-MIA, YYZ-SFO...
     
  8. milestoburn
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    milestoburn Gold Member

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    i have no idea how you can make this statement "AC is not limiting competition through this deal"

    even in AC's brief they raise the effeciency defence ALL OVER the place that requires they admit the whole thing does reduce competition....
     
  9. Canadi>n
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    Canadi>n Gold Member

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    If rationalizing services and routes duplications to increase efficiency reduces competition, then fine. But if combining AC and UA flights that depart to the same destination within a half hour of each other onto a single larger plane, it ensures the flight makes money rather than two flights being operated at a loss or marginal profit. Also frees a plane and crew to increase service on another route, or add another route. Competition can often be a wasteful process and market efficiency a great myth. Just look at all the waste in the food chain generated by so many competitors. Or overstocked women's stores that duplicate one another's wares. In fact, excess capacity is what's kept this recession fuelled. New orders are not forthcoming from merchants because they have warehouses of surplus stock to unload.
     
  10. milestoburn
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    milestoburn Gold Member

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    seems like a long winded way of saying you were wrong and have no idea what you are talking about...
     
  11. Scottrick
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    Scottrick Gold Member

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    I think if they sit down and negotiate who takes which routes and time slots, that would be interpreted as collusion.
     
    milestoburn likes this.

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