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A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 1:24 am

I was just wondering, does anyone think that there will be any new airlines here in Canada now that C3 is gone and AC is not doing to good either? I think this is the perfect time for Canada to change its international ownership limit (which is I believe less than 15%) so that some rich investor outside of Canada or another airline could startup a successful airline in Canada. What do you think?

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I like British Airways! I'm not sure why, but I do! ;-)
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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 1:34 am

First off Air Canada should make the necessary cuts to reduce it's expenses and lower their debt..without government assistance, or minimal at best. Then once a level playing field is created let market forces do their work on the industry.. if carriers fail then so be it. There will always be others that will emerge.

It just is reality that Canada is really poised to be primarily a one airline country and it is just taking a longer time than it should for people to realise this. The USA is the exception to the rule in terms of having several overseas long haul airlines.. most countries don't have more than one and if they do the second is generally smaller or niche market oriented.. Letting US companies come in and take over will only mean they will take from Canada what suits them best and dump the rest. Their interest in Canada will only be what's profitable to them and nothing else. From a business angle that is logical. For an industry we need to help keep the country together it is a receipe for more concentration of flights from big cities, more transfers through US hubs and less service on the local Canadian level.

RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 1:36 am

I agree, though the current foreign ownership limit is 25% if I'm not mistaken.

There won't be much new investment in this climate, but in a few years, liberalising the foreign ownership laws could pay dividends in making it easier to finance a new carrier, or saving Air Canada from a grim future as a weak stand-alone or government-subsidised basket case.

See the thread about U.S. carriers in Canada for more discussion related to this topic.

Cpt Underpants
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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 1:40 am

Actually, Angus Kinnear was a reasonably wealthy investor from a foreign land who came to start up an airline (C3), and look what happened to him!! IMHO, he also did it at a much different time in terms of the strength of the economy (i.e. it wasn't in the toilet), and the hoops one had to jump through to get an AOC at that time were much easier than what TC and the NTA require today.

What I do envision is that WestJet will finally make the leap into YYZ and expand their service into eastern Canada (Air Canada's worst nightmare, coming true). On the charter side, Air Transat will try to swallow up the remaining capacity in Quebec that had been served by Royal and C3. Skyservice now has the chance to become a major charter player in YYZ and the west, if they can muster up the people and aircraft fast enough.

Just my opinion, of course.

Captain Underpants
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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 2:01 am

Captain Underpants,

I like the idea of Skyservice stepping up to the plate here. When you think about it, all they need is the money to make a run at it. If C3 does not come back to life, SSV could quickly arrange leases on some of C3's a/c, and snap up type rated crews that are current on the equipment (C3's pilots, F/A's, Maintenance, etc.) They would just have to get the word out fairly quickly to start filling their planes, which wouldn't be hard as they would have a captive audience. SSV could also snap up some extra CSA's from C3, gates, you name it. Plus, they would likely get a little help from the gov't expediting the whole idea.

I'm trying to think of the downside, but if they can get the tour operators onside, it would work.
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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 2:40 am

I agree to a certain extent with Caribb that the Candian industry should shake down into a one-airline industry. He says that many countries have just one big airline and maybe a smaller one. The only problem is that there is only one other country in the world that is larger in size than Canada. Because of this, Canadians rely on air travel to get around. The population base is the restricting factor. However, South Korea, with a population slightly larger than Canada has two major carriers, as does Taiwan.

I think Canada can have two major international carriers if they both pursue a sound business plan.

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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 2:48 am

The airline industry in Canada is crap. All of the airlines are concentrated in large citys while smaller comunities have to put up with extremly high fares and inferior aircraft.Two thumbs down in my always.
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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 2:54 am

Hey there,
SkyService is actually in the process of growing. They have called back all former RootsAir employees that wanted to come back, Me being one of them, But I agree just hope fully that Russell Payson does some smart things and takes full advantage of this. I would love to see us grow out in the west. We have a great product to offer and Toronto only is not giving us justice. A couple of more Cities and some more Advertising would be great.
I can see Air Transat getting HUGE now since this has happened. WestJet is going to grow in the east and cannot wait to see it happen, Newfoundland needs some cheap flights.
Well just my two cents worth Smile

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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 3:09 am

I agree with Captain UP. However, the tour companies seem to like having numerous charter carriers to choose from. So while Skyservice and TS will benefit from the C3 demise, chances are that another charter carrier will start in due course.
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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 6:00 am

When you look at the Canadian aviation landscape one big problem for the national flag carrier is Westjet. Westjet is the only carrier that's got the right combination of costs, routes, flights and fares.. plus they are successfully drawing in large numbers of Western Canadians which amounts to a sizable chunk of the flying Canadian market. With no other airline able to compete effectively against Westjet and draw back some of those passengers then I seriously doubt if a single large flag carrier needing western Canadians as part of their overall domestic feed will ever be in a strong financial position...let alone a second carrier like C3 drawing from the same pool of people.

It would seem to me that what Canada needs is more specialized niche airlines (like Air Transat and Westjet) who know their limits and market territory and don't try to expand beyond them too much until the someone is bale to break Westjet's grip on Western Canada. However, that begs the question of why should they if Westjet is successful and providing the type of airline service most Canadians in their region obviously want.. so, how long will it be before Westjet gradually becomes our one major carrier.....???
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RE: A Thought About The Aviation Industry In Canada

Mon Nov 12, 2001 11:21 am

Milton was desperately trying to sell Air Canada Regional, but for some reason...nobody would buy it. I wonder why? Why would somebody want to own an airline which has a main goal of feeding Air Canada?

In the Canadian airline industry I see room for more than just two carriers. Air Canada should save it's money and work on itself before going after smaller markets, like the discount and sports areas. Then there is one of two niche areas. The first one is the discount carrier, Westjet. Westjet knows not too expand too quickly and most important where it's niche truly is. Then there is the charter carrier. Canada 3000 made the mistake of jumping out of the charter area to go scheduled. Air Transat and SkyService are both going for similar markets. Is there enough room? Yes, im my opinion there is. What's missing now? There isn't a truly strong charter carrier based in Western Canada, there is a opertunity to make some money in someone recognises it.
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RE: A Thought About The Aviation Industry In Canad

Mon Nov 12, 2001 2:25 pm

C3's mistake(s), IMHO, was to repeat the mistakes of most of the failed airlines before it: buying competitors, hubbing like crazy through YYZ while eroding their strength in local markets (and remember there's two ends to every route pair), unrealistic pricing and resultant high break-even load factors, excessively fast expansion, poor fleet planning, and excessive reliance on leasing instead of adaquete up-front capital investment.

Slow easing of regulation will happen over time, but at this point I'd say that it's not going to be a good idea to rush things. Part of the reason why things are a mess is because there's been too much meddling in it, and things have to be let to come to an equilibrium for a while before messing around too much, otherwise there'll be even more of a mess.

I think there's a good chance C3's 320 & 330 aircraft may be picked up by TS or SSV. IMO if there's any sector of the Canadian industry that looks appealing right now, it would be charters (both domestic and international), although this is largely because of the hole C3 has left. I wouldn't be too surprised if there was to be a new entrant in the field, but if not then SSV, TS, and maybe even 7F will be accomodating demand in that area. The scheduled carrier aspects don't appear to be within reach of anyone else but WJ. I think a well-disciplined new entrant with a good business plan could succeed in the scheduled market, but until things start looking up, I have a hard time seeing anyone launching such a carrier (with or without foreign investment).

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