Jean Leloup
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What Will Happen If AC Shuts Down

Sat May 31, 2003 2:03 am

Ok guys, this thread is not for discussing whether Air Canada SHOULD be shut down, which has been well coevered in some other threads!

My question is, what will happen in the immediate-meantime if AC shuts down tonight?

Obviously there will be some chaos, but how quickly will the void be filled?

No doubt Westjet would accelerate hiring and 73G deliveries, right? Same with Air Transat, Skyservice, Jetsgo, and Canjet? It seems like they could probably cope with *most* of the domestic flying if they could quickly get themselves some new planes and pilots (likely straight from AC at good prices, right?)

However, what about international flights? Would everyone have to connect in US cities? Hey, it could probably be done because I'm sure the US majors have a fair bit of overcapacity at the moment. Would the foreign airlines that fly to Canada (especially such as BA and AF) immediately increase frequencies to deal with the extra demand? (I'm sure they have planes available, yes?)

Most difficult, though, would probably be the regional flying. How could anyone step up to connect the small communities that Jazz flies to? And would they even bother? Would it be possible that just Jazz kept flying, or something like that? Insights please!

[Edited 2003-05-30 19:27:42]
Next flight.... who knows.
 
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yyz717
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 2:12 am

Probably a group of creditors will provide addl funding to allow a much smaller AC to restart operations within days or weeks. Perhaps with just the 320 fleet along with 767's. Similar situation to Swissair/Swiss.

Even if AC shuts downs for just a few days, all intl airlines will add capacity to Canada immediately and the other Cdn airlines will lease addl aircraft & expand further. The huge ex-AC vacuum will quickly fill.

IMHO

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
as739x
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 2:15 am

Funny my coworker and I were just talking about this same thing here. Our (ALASKA) 3 soon to be 4 flight to YVR a day may not be enough, unless United picks it all up. Specially with cruise season starting right now. Maybe we could even start a SEA-YYZ service once SARS is over? More YYC service to LAX and start SFO. Who knows, I don't want it to happen. I worked at AC 6 years ago and still have some friends with them. I wish them the best.
ASSFO
"Some pilots avoid storm cells and some play connect the dots!"
 
luv2fly
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 2:20 am

I myself do not see the Canadian Government allowing this to happen the view from the states. I do see if the Government steps in a much smaller AC, who knows if it will be better run.
You can cut the irony with a knife
 
bobrayner
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 2:25 am

For certain values of "shut down"...
It's worth more as a going concern than it is as a sum of (assets - debts).

Any competitors who have spare cash (or can borrow easily) will be looking for juicy pieces of meat that they could tear off the carcass.

In all likelihood, you'd have something like Sabena - after a bit of a reshuffle, one or two "new" carriers would appear operating many of the same routes, with many of the same staff, and many of the same planes &c.

I doubt you'd see much disruption to the profitable routes, but some of the thinner Jazz routes are much less attractive to successor airlines.

It would be silly of putative successors to try coping with extra demand by sourcing aircraft and staff (&c) elsewhere when the remains of AC presents a rich source of staff, aircraft, and other assets that are generally well-suited to the job, and already in place.
Cunning linguist
 
captaingomes
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 2:49 am

Just like what happened after Canada 3000 shut down, and new companies came in to fill in the void, as well as existing companies. Skyservice expanded drastically after C3 went down, and since then Jetsgo started operations, as well as HMY, Canjet #2 and Zoom. International airlines will increase capacity through bigger aircraft or more frequencies. I wonder how Star Alliance customers will be dealt with? Will United and Lufthansa honour Air Canada tickets without any penalties? Will they have to sue AC BOD or is there an agreement so that they receive money for their services to the Air Canada passengers?

How separate is Jazz to Air Canada? If Air Canada shuts down, what will happen to Jazz? Can they remain in operation still?

One or two upstarts will rise from the ashes of Air Canada, with employees being hired from scratch and being paid wages comparable to Westjet and Jetsgo. It will take a long time, if ever for wages to reach the wages in real dollars that today's Air Canada employees recieve.
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
Tom in NO
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 2:55 am

Colleen Barrett and the good folks at Southwest ought to be licking their chops along about now! If anyone could make a go of picking up some trans-border flights, it'd be them.

Tom in NO (at MSY)
"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
 
spyderz
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 4:50 am

As mentioned, all the airlines would pick up the slack. Westjet would take most of the domestic flying along with JetsGo and Canjet in the East. The American carriers, would help out with the transborder traffic. As for overseas flights, I wouldn't be suprised to see HMY Airways pick-up the Asian traffic since they have always planned on serving Asia, and Air Transat and Skyservice would be very strong to Europe. IF Air Canada does cease operations, I would expect the Canadian government to lift foreign ownership laws to 49% to help with investment for new start-up airlines. I personally would like to see that restriction withdrawn completely, but we just follow the American laws.
 
srbmod
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 7:17 am

Two Words.............Virgin Canadian.
 
Mark_D.
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 7:40 am

Jean Leloup Insights please!

Well it's pretty much just another regular near-summer Friday evening, by the looks of it!

But okay. In a highly hypothetical apocalypse scenario, I suspect Parliament Hill would be a madhouse of protestors, for whole weeks onwards as there'd be way too many employees (and families) affected, for them to just sit there and be docile about it. What few flights would still be in place (~30% of regular domestic traffic, about?) would get some mighty heated bidding competitions (scuffling at check-in included) and that sure wouldn't be a pretty sight either. I don't know how many 732s and A320s are currently sitting things out at Mojave but I'm sure a number of serviceable ones would be dusted off by somebody, and sent in to meet the need. For regional needs that one would I think be quite scary, as there's a whole dynamic at those smaller airports, airline and community brass, which would be real hard to step as newcomers and, just like that, try to make a go of it right from day one.

So in short, quite a lot of probs :-(
 
Dash8King
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 4:46 pm

I really don't think that YOW will let Air Canada die, I believe they already tated that they will not let AC die so the worst that can happen is they form as a smaller carrier.
 
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yyz717
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 5:01 pm

I really don't think that YOW will let Air Canada die, I believe they already tated that they will not let AC die so the worst that can happen is they form as a smaller carrier.

Ottawa had better damned well not offer federal aid to bail out AC. AC is a private sector company. Let it die.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Dash8King
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 5:03 pm

"Ottawa had better damned well not offer federal aid to bail out AC. AC is a private sector company. Let it die. "

I completely agree, but those assholes will step in.
 
VonRichtofen
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RE: What Will Happen If AC Shuts Down

Sat May 31, 2003 6:20 pm

If AC did shut down completely chaos would ensue for a short while.

Though, I think WJ and Jetsgo would immediatly lease more aircraft to take up some of the slack. Perhaps some US airlines would take up some transborder slack, and maybe airlines like LH or BA could take over some of the profitable trans atlantic routes. Cathay and JAL could maybe pick up some of the asian traffic, though this is iffy with the whole SARS thing.

I'm honestly not to sure how I feel about AC possibly shutting down. I don't agree with government help, but I'd hate to see our national airline go down know what I mean? Hard to explain.

I would not be against American carriers increasing their presence up here. What is happening with AC is embarrassing. I hate to say this but lately many things have made me embarrassed to be Canadian. If things are like this in Canada when I'm experienced enough to apply for a major airline, I'll probably go overseas.

Kris
YYC
 
doug_or
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 1:48 am

If AC shut down, would anyone besides Airtransat have long hual A/C? would they be in a position to take over some of the important flagship routes?
When in doubt, one B pump off
 
flyyul
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 1:57 am

Let ottawa bail out Air Canada... they are sitting on a pile of budget surpluses anyway.

Much of that money is the ridiculous taxes that Air Canada, and consumers pay to fly. Much of that money is the $14 security tax thats hasnt improved security, even a bit.

Anything to shut up WestJet lovers.

Mark
 
donder10
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 2:26 am

If AC is bailed out,will Westjet also receive a cash payment out from the government?
If no,then why not?
 
Samurai 777
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 4:18 am

What's gonna happen to customers' Aeroplan points if AC did finally get shut down? Will they go down the toilet like that situation with Ansett Australia customer when that Australian carrier went under?

I understand that AC's been trying to sell a chunk of Aeroplan for some time, and that CIBC did sign a new agreement with Aeroplan a month ago.
 
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yyz717
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 5:31 am

What's gonna happen to customers' Aeroplan points if AC did finally get shut down? Will they go down the toilet like that situation with Ansett Australia customer when that Australian carrier went under?

Yes. All Aeroplan points become null and void when AC is liquidated. AC might start grounding aircraft early Sunday. This is very exciting. The growth prospects for Westjet, Jetsgo, Air Transat, Skyservice will be fantastic!

Let ottawa bail out Air Canada... they are sitting on a pile of budget surpluses anyway.

Why should surpluses paid by Ontario & Alberta taxpayers bail out a poorly run bureaucracy that MUST be based in Quebec? Let AC die.




I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
dutchjet
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 6:03 am

One world......CHAOS! The entire Canadian air transportation system is reliant on the Air Canada network.....the other remaining Canadian carriers are niche players and do not have the finances or ability to cover the Air Canada system; it will take months for air travel in Canada to get back to normal if AC closes down. The smaller airlines will jump into key routes, like Toronto-Calgary and Montreal-Halifax, but what about all of the smaller Canadian Cities, what air service will they attract? Although it would be very unfair, I do not think that the Canadian government has a choice, if AC fails, in order to maintain a reasonable level of air service within and to and from Canada, the government will in some way, shape or form, refinance AC.

This is very, very different from one US carrier going out of business, in that case, the pax simply found another carrier, maybe not as convenient, but one could still get from one US city to another.......if AC goes out of business, how is a pax going to get from one Canadian city to another. Allowing AC and CP to merge was a big mistake, and now the Canadian people may be punished for the government's mistake.
 
VonRichtofen
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 6:34 am

"but what about all of the smaller Canadian Cities, what air service will they attract?"

Maybe some of the smaller operators could cover this. For example Peace Air in Alberta operates in small towns and flies into larger cities like YEG and YYC. They fly PC-12's and Jetstream 31's, maybe they could pick up a couple Dash 8's? If Jazz loads are really bad then obviously an extensive regional carrier with a large Dash 8 and CRJ fleet isn't really needed. IMHO this scenario is more realistic vs. a completely new start up regional airline.

This is just my opinion, though I'm definatley no expert.

Kris
YYC
 
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RayChuang
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 6:36 am

Dutchjet,

If AC does shut down, I really hope that UA has a plan in place to jump on the USA-Canada route authorities using the Star Alliance connection at once. That means UA will fly a lot more flights from the USA to YVR, YYZ, YUL, YWG, and other major Canadian destinations. Fortunately, with the downtown in the economy UA has plentiful airplanes and capacity to pull this off within a matter of a few weeks.

The unnecessary merger of Air Canada and Canadian Airlines, plus AC's ill-advised Jazz, Tango and Zip subsidiaries, contributed to this mess, in my humble opinion.
 
caribb
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 6:54 am

Nice assessment RayChuang.. I agree.. Their mess is mostly self made. I also agree if they die they should not be bailed out. I do however hope they pull through if only for the employees sake.

As for UA filling in.. I suppose they will to the extent they can. I sure hope they do. They too of course are in bankrupcy protection. Westjet, Canjet & Jetsgo will probably scoup up a few routes within North America. Air Transat and Skyservice a few overseas and to the Caribbean/Mexico. I'll bet the foreign carriers will increase or double their frequencies on routes where the competed with Air Canada.. so YYZ-LHR, YUL-CDG, NRT-YVR etc.. ...and I wouldn't be surprised if a reborn New Air Canada emerges very quickly from it's ashes and back in Star Alliance before too much of the above can happen... another Swissair to Swiss Air Line emergence. But all in all and against my wishes as a tax payer I'm expecting the government to bail them out if they can't reach an agreement with the pilots tonight.

Doug
 
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yyz717
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 6:59 am

UA will simply add flights to Canada from their existing hubs to cover the AC collapse. Addl ORD-YYZ, SFO-YYZ, SFO-YYC etc.

All US carriers will add capacity from their existing hubs.....I dont any will add NEW routes quickly though.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
donder10
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 9:59 am

The airline's restructuring plan involves retiring all Boeing 747s and Boeing 737s and ordering 85 smaller jets with between 70 and 110 seats.

"To put this in perspective, if Jazz is successful in capturing the 110-seat aircraft, then by 2009 -- using the company's projected fleet plan -- Jazz would have 219 aircraft and Air Canada mainline would be reduced to 132 aircraft," Rainer Bauer, chairman of the Air Canada Pilots Association, wrote in a letter sent to the 3,150 mainline pilots.

"To say this is unacceptable is, to say the least, an understatement."

But ACPA president Don Johnson said the union has already met the company's demands.

"The company has said they need $257-million. We met that target in our minds and if Air Canada wants to make a decision that they need to shut it down because they can't get something different then I guess they'll make that decision," Mr. Johnson said.


The writing is on the wall!
 
captaingomes
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 10:11 am

I don't think the pilots are going to come to an agreement with the airline unless things change dramatically. From what I hear, the big issues are:

- the contract they want to sign, which sees a real reduction in salaries in the 40% range (not just the 15% shown in the media) I believe is supposed to be long-term, I've seen 6 years, or 10 years, not sure what the accurate figure is. Pilots agree to these reductions, but until things get better, and renegotiate then AND

- cut down mainline dramatically, and increase Jazz operations to 3 times the size it is now. Realistically, a union is not going to agree to this, as the Jazz pilots have their own union. The only way I see to get out of this, is either to join the pilot rosters (a task in itself), or back off the size increase of Jazz and size reduction of mainline.

Anybody else have any insight into the pilot negotiations? CRJ900, are you around?
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
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RayChuang
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RE: What Will Happen If AC Shuts Down

Sun Jun 01, 2003 11:05 am

Caribb,

The biggest issue in regards to the collapse of AC is the fact Canadians will effectively lose most of the ability to fly from various Canadian cities to the USA.

This is where UA through its Star Alliance connections could really benefit; what will happen is that instead of AC planes flying flights to the USA they'll be UA A319's, A320's, 737-300's, 737-500's and 757-200's, using former AC gates at various airports throughout Canada. It could be quite lucrative for UA in this temporary situation, since USA-Canada traffic is quite considerable.

As for international traffic, AF, BA, LH and VS could handle the traffic to Europe, while CX, JL and NH could handle the traffic to Asia.

In terms of Canadian domestic traffic, I think WestJet, JetsGo, CanJet, and a few others will take some time to get the additional capacity necessary to rebuild the traffic lost from the fall of AC; you might see UA (and possibly AA) pitch in using temporary cabotage rights to fly Canadian domestic flights until the newer Canadian domestic carriers get enough capacity on their own.

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