Business History Books » Business Plans » Bad news for skyservice; AC will not proceed with partnership
Bad news for skyservice; AC will not proceed with partnership
Question:
> Seems to be the operation Milton promised in Calgary last year. > Based ‘out west’ and aimed at WestJet. The ex-CP 737s are probably a good > bet, and might allow the parent AC to add a comparable number of new > Airbusses to the main fleet.
Yep. I recall that originally, AC had said it would use the Pesky F28s for the low cost airline. But since then, AC made a commitment to the union to ditch the Pesky F28s. So that leaves the DC-9s and 737-200s.. Personally, I think that AC will hurt itself more than it will hurt Westjet and C3000. But offloading 20 planes from its mainline operation, its mainline operation’s schedule will suffer. And its low cost will still be too small an operation to make its schedule competitive with AC’s own or even with C3000. I think that AC is spreading itself too thin.
Response:
Of course the other problem on having a "discount" *transborder* route is that while the cost of the actual flight might be low, all the other ridiculous surcharges will still add up to mean that the total price of the flight isn’t particularly low. It’s irritating. As for the "cash cow" concept, that may be true, but why is it that it’s reasonably cheap to fly from London-Paris, which is sort of the same thing, isn’t it? – Hide quoted text — Show quoted text ->AC wouldn’t allow their own discounter to cannibalize business on such a >cash cow route but that doesn’t preclude someone else from deciding to >have a go. As I mentioned before City Express used to run a discount >service to EWR and occassionally someone offers cheap fares YYZ-JFK >to fill empty seats that will be sold from JFK on to somewhere else, last >time I saw this it was VASP and I think it was $89.
Response:
> I suppose AC’s new discount airline going to fly the same boring routes as the > other "discount" airlines, e.g. Toronto-Calgary, Halifax, etc. I want some > low-cost flights from YYZ-NYC! > YYZ/YUL-NYC is what’s known as a ‘cow of cash.’ There will NEVER be low-fare > competition on that route. > Matthew 
> [who *loves* paying $230 for my 58 minute Dorval-Newark flights]
AC wouldn’t allow their own discounter to cannibalize business on such a cash cow route but that doesn’t preclude someone else from deciding to have a go. As I mentioned before City Express used to run a discount service to EWR and occassionally someone offers cheap fares YYZ-JFK to fill empty seats that will be sold from JFK on to somewhere else, last time I saw this it was VASP and I think it was $89.
Response:
– Hide quoted text — Show quoted text -> There’s always EWR, last time there was a cheap option > to NYC it was City Express (YTZ-EWR). Sucks now but > once they get the rapid transit situation at EWR improved > (supposedly the monorail it to be extended to someplace > with a direct connection to the PATH trains) it becomes a > pretty good option. > Not PATH! The monorail is being extended to the new Newark Airport rail > station which is on the New Jersey Transit Northeast Corridor rail line (it’s > Amtrak’s line, too; but I don’t think Amtrak is going to stop there). To get > from the airport to PATH, you’ll have to take the monorail to the Airport rail > station, and then NJTransit to Newark Penn Station, and then the PATH. By > then, it may just be easier to take NJTransit all the way to New York Penn > Station, and the IRT (1/9) to the World Trade Center (assuming you’re headed > downtown.. for Midtown, NJT is your best option anyway)
Thanks for the correction, I just knew that it was going to be one connection away from the NY Penn Station, I assumed that was a PATH train. I also didn’t realize it was as close to done as September.
Response:
> > I suppose AC’s new discount airline going to fly the same boring routes as > the > other "discount" airlines, e.g. Toronto-Calgary, Halifax, etc. I want > some > low-cost flights from YYZ-NYC! > In order to do that AC would have to give up some of it’s > landing slots at LGA, because LGA is oversubscribed > as it is.
There’s always EWR, last time there was a cheap option to NYC it was City Express (YTZ-EWR). Sucks now but once they get the rapid transit situation at EWR improved (supposedly the monorail it to be extended to someplace with a direct connection to the PATH trains) it becomes a pretty good option.
Response:
> I suppose AC’s new discount airline going to fly the same boring routes as the > other "discount" airlines, e.g. Toronto-Calgary, Halifax, etc. I want some > low-cost flights from YYZ-NYC!
YYZ/YUL-NYC is what’s known as a ‘cow of cash.’ There will NEVER be low-fare competition on that route. Matthew [who *loves* paying $230 for my 58 minute Dorval-Newark flights]
Response:
> There’s always EWR, last time there was a cheap option > to NYC it was City Express (YTZ-EWR). Sucks now but > once they get the rapid transit situation at EWR improved > (supposedly the monorail it to be extended to someplace > with a direct connection to the PATH trains) it becomes a > pretty good option.
Not PATH! The monorail is being extended to the new Newark Airport rail station which is on the New Jersey Transit Northeast Corridor rail line (it’s Amtrak’s line, too; but I don’t think Amtrak is going to stop there). To get from the airport to PATH, you’ll have to take the monorail to the Airport rail station, and then NJTransit to Newark Penn Station, and then the PATH. By then, it may just be easier to take NJTransit all the way to New York Penn Station, and the IRT (1/9) to the World Trade Center (assuming you’re headed downtown.. for Midtown, NJT is your best option anyway) Matthew [September is still the projected opening; I'll ask someone the next time I'm at EWR]
Response:
>Has AC hinted on what kind of operation this ‘Lite’ division would be… >I bet they would use the baby boeings they have a la Metrojet… >–
Seems to be the operation Milton promised in Calgary last year. Based ‘out west’ and aimed at WestJet. The ex-CP 737s are probably a good bet, and might allow the parent AC to add a comparable number of new Airbusses to the main fleet. Might be part of the new agreement with the pilots. Brian
Response:
I suppose AC’s new discount airline going to fly the same boring routes as the other "discount" airlines, e.g. Toronto-Calgary, Halifax, etc. I want some low-cost flights from YYZ-NYC! – Hide quoted text — Show quoted text ->Air Canada and Skyservice Announce Strategic Partnership will not >Proceed; Air Canada Reaches Agreement with ACPA on Lowfare Carrier >Start-Up
Response:
> I suppose AC’s new discount airline going to fly the same boring routes as the > other "discount" airlines, e.g. Toronto-Calgary, Halifax, etc. I want some > low-cost flights from YYZ-NYC!
In order to do that AC would have to give up some of it’s landing slots at LGA, because LGA is oversubscribed as it is. Stephen Gallagher
Response:
- Hide quoted text — Show quoted text -> Could this have been Air Canada’s strategy from day one, to get Roots to > cease operations, and then drop them like they just did? I would not be > surprised if it is. > It may not be right for Roots to return to service at this time, given > teh current ‘economic climate’. > I think the AC pilots nixed this deal, although Milton *may* have > anticipated them doing so and used Roots as a bargaining tool. Anyway there > is now an agreement for the new AC Lite to operate up to 20 planes. > http://cbc.ca/cgi-bin/templates/view.cgi?/news/2001/07/20/aircanada_0… > Brian
Has AC hinted on what kind of operation this ‘Lite’ division would be… I bet they would use the baby boeings they have a la Metrojet… — Amish Vancouver BC
Response:
> Bad news for skyservice. Does this mean they’ll consider bringing back > roots? AC can not look very good to anti-trust regulators right now. > cedric
Could this have been Air Canada’s strategy from day one, to get Roots to cease operations, and then drop them like they just did? I would not be surprised if it is. It may not be right for Roots to return to service at this time, given teh current ‘economic climate’. — Amish Vancouver BC
Response:
> > Bad news for skyservice. Does this mean they’ll consider bringing back > roots? AC can not look very good to anti-trust regulators right now. > cedric > Could this have been Air Canada’s strategy from day one, to get Roots to > cease operations, and then drop them like they just did? I would not be > surprised if it is. > It may not be right for Roots to return to service at this time, given > teh current ‘economic climate’.
Roots will never fly again. Russell Payson started looking for a buyer only about 2 weeks after Roots started operations. AC was the only taker. We have a few recent hires from Skyservice so I didn’t get this from the grapevine. Remember the morning YYZ-YVR flights where the crew outnumbered the pax… – Hide quoted text — Show quoted text -> — > Amish > Vancouver BC
Response:
> Could this have been Air Canada’s strategy from day one, to get Roots to > cease operations, and then drop them like they just did? I would not be > surprised if it is. > It may not be right for Roots to return to service at this time, given > teh current ‘economic climate’.
I think the AC pilots nixed this deal, although Milton *may* have anticipated them doing so and used Roots as a bargaining tool. Anyway there is now an agreement for the new AC Lite to operate up to 20 planes. http://cbc.ca/cgi-bin/templates/view.cgi?/news/2001/07/20/aircanada_0… Brian
Response:
Air Canada and Skyservice Announce Strategic Partnership will not Proceed; Air Canada Reaches Agreement with ACPA on Lowfare Carrier Start-Up MONTREAL, July 20 /CNW/ – Air Canada and Skyservice announced that they would not proceed with plans for a strategic partnership as announced May 3. An agreement reached today between Air Canada and the Air Canada Pilots Association (ACPA) on the start up of a lowfare carrier precludes a partnership with Skyservice as proposed. "Today’s difficult economic climate with the resulting decline in our traditionally strong business travel market makes it more important than ever that we participate in the one growing and vibrant airline segment in North America," said Robert Milton, President and Chief Executive Officer. "Today’s agreement with ACPA enables Air Canada to compete in the discount market with the full involvement and cooperation of our pilots. It is because of the vital importance of our relationship with our pilots that we have elected not to proceed with the proposed strategic partnership with Skyservice. While that partnership clearly would have provided us with tremendous business opportunities, the support of our pilots is key to ensuring Air Canada’s success." The agreement between Air Canada and ACPA on the low fare carrier provides for an operation of up to 20 aircraft with more flexible terms and working conditions. "We will explore with Skyservice opportunities for the provision of third party services such as those currently undertaken for other carriers. Our respect for Russ Payson and his operation has only grown in the three months since we began discussions with them," Mr. Milton added. "While I am obviously disappointed that we are not proceeding with the strategic partnership as originally planned, I look forward to exploring the business opportunities available to us in working with Air Canada," said Russell Payson, Chairman, CEO and President of Skyservice. The lowfare carrier will be launched later this year. Further details on timing of the start-up, branding, route network, infrastructure and executive management of the carrier will be announced at a later time. -30- Bad news for skyservice. Does this mean they’ll consider bringing back roots? AC can not look very good to anti-trust regulators right now. cedric
Response:
>> Bad news for skyservice. Does this mean they’ll consider bringing back > roots? AC can not look very good to anti-trust regulators right now.
I find this to be good news. Skyservice will survive as a separate entity as it has in the past. Air Canada would have just gobbled it up. Please remember that Skyservive and Innotech are the main general aviation folks in Canada. Innotech is owned by the folks who owned Canjet (forget the name) and they are now associated with Canada 3000. So had Skyservice gone to AC, it would mean that general aviation would have been indirectly controlled by the 2 main airlines in canada. I doubt very much that Roots Air will come back. But Skyservice will continue as a charter carrier and will probably be hungrier for business than before.