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Unneeded Subsidiaries?  
User currently offlineSunnyb From Canada, joined Jul 2004, 247 posts, RR: 0
Posted (9 years 2 months 6 days 11 hours ago) and read 1225 times:

This might sound stupid to you or I might be wrong...

As you all know Air Canada has a subsidiary -- Jazz. What exactly is the point of having a subsidiary if both the mainline and Jazz are serving many same routes? Doesn't the subsidiary affect the business of the mainline carrier? Why doesn't just Air Canada serve the routes on it's own with new Embraer aircraft?

There are also many US carriers that do this.

6 replies: All unread, jump to last
 
User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 1, posted (9 years 2 months 6 days 11 hours ago) and read 1206 times:

Ready for a one word answer??

Unions!


User currently offlineStarlionblue From Greenland, joined Feb 2004, 17044 posts, RR: 67
Reply 2, posted (9 years 2 months 6 days 11 hours ago) and read 1199 times:

Isolation of profit/loss and decision making.

I worked at a company that would create a new subsidiary as soon as a subsidiary became larger than around 60 employees. This allowed them to push decision making way down in the organization. It's pretty simple, if the CEO of the boss is closer to the business, he or she will feel more responsible and have more control.

The principle is applicable on a larger scale to an airline. If you isolate, say, the US Northeast regional operation from everything else, it's easier to make decisions within the unit that aplly to that specific business. One size does not fit all.

Same with Ted and Song, and so forth.

Whether all this is actually beneficial in the long run is another story Big grin



"There are no stupid questions, but there are a lot of inquisitive idiots."
User currently offlineSunnyb From Canada, joined Jul 2004, 247 posts, RR: 0
Reply 3, posted (9 years 2 months 6 days 11 hours ago) and read 1191 times:

Quoting Starlionblue (Reply 2):
If you isolate, say, the US Northeast regional operation from everything else

I agree, but what exactly is the point of both the parent company and the subsidiary serving the same routes? This is what mostly happens.


User currently offlineStarlionblue From Greenland, joined Feb 2004, 17044 posts, RR: 67
Reply 4, posted (9 years 2 months 6 days 10 hours ago) and read 1155 times:

Quoting Sunnyb (Reply 3):
Quoting Starlionblue (Reply 2):
If you isolate, say, the US Northeast regional operation from everything else

I agree, but what exactly is the point of both the parent company and the subsidiary serving the same routes? This is what mostly happens.

The stated reason tends to be market segmentation. So you take a certain set of fares on one carrier, and another on the other. But the model isn't perfect and may seem messy to the outside observer.

I'm sure someone elose can explain this better.



"There are no stupid questions, but there are a lot of inquisitive idiots."
User currently offlineMariner From New Zealand, joined Nov 2001, 25292 posts, RR: 85
Reply 5, posted (9 years 2 months 6 days 10 hours ago) and read 1141 times:
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Quoting Tornado82 (Reply 1):
Ready for a one word answer??

Unions!

Hmmm? Unions have absolutely nothing to do with the creation of Ted and Song.

cheers

mariner



aeternum nauta
User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 6, posted (9 years 2 months 6 days 9 hours ago) and read 1115 times:

Quoting Mariner (Reply 5):
Hmmm? Unions have absolutely nothing to do with the creation of Ted and Song.

cheers

mariner

I misread the whole question as a matter of fact and I stand corrected. I was thinking Comair to Delta, Mid-Atlantic to US, etc. My apologies to all.


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