CanadaEH
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Gtaa Rejects Air Canada Complaint

Tue Feb 17, 2004 2:19 pm

GTAA rejects Air Canada complaint

Dispute centres on Pearson gates; authority head rumoured to be leaving


The Greater Toronto Airports Authority is dismissing as baseless allegations that it reneged on an agreement with Air Canada over how many gates the insolvent carrier will have at a new terminal at Pearson International Airport.

In court documents filed in connection with a legal challenge on the issue launched by Air Canada on Feb. 5, the GTAA alleges that the airline did not make an issue of the gate allocation until rumours surfaced in early January that its competitor WestJet Airlines Ltd. of Calgary was about to shift many of its flights to the new terminal from another terminal there and from the airport in Hamilton, which has until now served as its main hub in Eastern Canada. WestJet unveiled the plan publicly on Jan. 14.

The legal battle between the airports authority and Air Canada comes as the talk in aviation circles is that the GTAA's outspoken chief executive officer Louis Turpen, architect of Pearson's contentious $4.4-billion renovation, may be planning to leave not long after the new terminal opens early in April, after nine years in the job.

"All of the information I'm receiving points in the direction of him leaving in the fairly near future," one aviation official said yesterday.

"We hear rumours that he won't be there come June," an airline executive concurred yesterday.

Mr. Turpen has been in open warfare with Air Canada, many other major carriers and the International Air Transport Association over double-digit fee increases he has imposed in recent years to finance the new terminal and the rest of the renovation.

Air Canada, which is in the process of trying to emerge from bankruptcy protection, alleged in documents filed on Feb. 5 with the Ontario Superior Court that it was informed by the GTAA on Jan. 28 -- without prior consultation -- that instead of being allocated 14 "fixed preferential" gates for domestic flights at the new Terminal 1, it will get only six. It will have to share the other eight with WestJet.

In asking the court to overrule the GTAA, it alleged that the airport authority's action would force it to split its domestic flights between two or three terminals, which would be inefficient and inconvenient, and that the costs of having to do this would "undermine" its restructuring plan.

However, in an affidavit filed with the court on Friday, GTAA chief operating officer John Kaldeway dismissed as "unfounded" Air Canada's allegation that it was promised exclusive use of all 14 gates that will be available in the new terminal's first phase. He also contended that Air Canada will suffer only minimal inconvenience.

He also alleged that it was not until Jan. 12 that Air Canada indicated in a letter to the GTAA that it planned to run its entire domestic operation out of the new terminal, rather than just part of it.

That was the same day, Mr. Kaldeway alleged, that Air Canada chief restructuring officer Calin Rovinescu telephoned Mr. Turpen at the GTAA and asked him to confirm rumours that WestJet, too, was planning to move into the new terminal. Mr. Kaldeway also said Mr. Turpen confirmed to Mr. Rovinescu that the GTAA and WestJet were in discussions but did not reveal what they were about, citing confidentiality.

Mr. Turpen could not be reached for comment yesterday about his future at the GTAA.

Peter Gregg, spokesman for the non-profit organization, would say only that "at the moment, there are certainly no plans for Mr. Turpen to be leaving . . . in the near future."

Mr. Turpen, an American, has for the past 18 months or so -- with the permission of the GTAA board of directors -- also been serving as a consultant to Los Angeles International Airport, which is engaged in a massive rebuilding program, and there is talk that he may be interested in the top job there.

However, one source said Mr. Turpen, 59, has stated privately that the last thing he wants to do is run another airport. "But I think he does want to consult, from what I hear about him," the source added.

The airline executive, meanwhile, said that with the first phase of the Pearson redevelopment set to open in April, it would make sense for Mr. Turpen to be moving on. "He's a builder, he's not an operator."


http://www.globeandmail.com/servlet/ArticleNews/TPStory/LAC/20040216/RGTAA16//?query=air+canada
EH.
 
Mark_D.
Posts: 1360
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RE: Gtaa Rejects Air Canada Complaint

Tue Feb 17, 2004 2:44 pm

Yeah I saw that article earlier this evening, looking over acpa.ca "industry news" headlines. I guess they'll sort things out one way or another -- and even if he does go it seems T1-New is far enough along that they can probably make do quite easily enough without him, especially at this point.


As for the gate allocation -- I guess on "Concourse E" or something --I personally think it's only fitting that WestJet seems to be getting pretty much equal first dibs on the use of the place, alongside AC. They are big enough for such billing nowadays.
 
flyyul
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RE: Gtaa Rejects Air Canada Complaint

Tue Feb 17, 2004 2:53 pm

Almost feel bad by saying that I hope WestJet and the GTAA win this appeal.

Mark
 
CanadaEH
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RE: Gtaa Rejects Air Canada Complaint

Tue Feb 17, 2004 4:47 pm

According to this article, Air Canada thought that they were "promised" exclusive use of all 14 gates at TNew, which they weren't. It also claims that Air Canada didn't contact the GTAA until Jan. 12 indicating that it planned to run its entire domestic operation out of the new terminal. WestJet unveiled their plan publicly on Jan. 14, which probably means a contract was signed days or even weeks prior. I don't see any wrongdoing here.

EH.
 
flyyul
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RE: Gtaa Rejects Air Canada Complaint

Tue Feb 17, 2004 4:53 pm

When AC says "promised", its because there is some kind of legal binding contract.

Although I hope the GTAA allows WS its gates, the GTAA side of the story like sketchy.

Mark
 
CanadaEH
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RE: Gtaa Rejects Air Canada Complaint

Tue Feb 17, 2004 5:01 pm

I think I asked these questions before in another topic, but is better suited to this one:

When was the AC contract (if there is one) signed - before entering CCAA or during CCAA? When was the WJ contract signed, before or after AC's? Does the court have the power to void/nullify another contract (WJ's)?

How will WJ react if the courts side with AC and against the GTAA? How will AC react if the courts side with WJ and for the GTAA?

Any idea when this goes before the courts and a decision is to be made?
EH.
 
flyyul
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RE: Gtaa Rejects Air Canada Complaint

Tue Feb 17, 2004 5:08 pm

It must have been before CCAA....

Mark
 
robsawatsky
Posts: 477
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RE: Gtaa Rejects Air Canada Complaint

Wed Feb 18, 2004 3:58 pm

You can read about the whole ugly mess at:

http://www.stikeman.com/ac/

Open up: Motion Materials - Air Canada Motion re: gtaa - Air Canada - Motion Record

There you will find reference to an MOU between AC and GTAA that references a Terminal Facility Allocation Protocol (TFAP). Read it at your leisure.

While I'm not a lawyer, I've been involved in many business contracts, the MOU includes an agreement for consideration ($10), which implies a certain binding quality upon the MOU.

The issue now is on interpretation of the MOU by the court in a motion hearing scheduled for Feb 19.
 
CanadaEH
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RE: Gtaa Rejects Air Canada Complaint

Wed Feb 18, 2004 11:43 pm

Thank you for the link, when I get a few hours I'll give it a read.  Smile
EH.
 
CanadaEH
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RE: Gtaa Rejects Air Canada Complaint

Thu Feb 19, 2004 7:29 am

From what I gather..

Air Canada and the GTAA had an MOU dating back to January, 2001. An MOU is not a legally binding contract. Air Canada's domestic traffic had fallen from 70% in 2001 to 60% in 2003, so the drop in traffic opened room for another carrier in TNew. Air Canada was NEVER promised exclusive rights to TNew. Only when it was heard that Westjet and the GTAA were in discusions did AC act and present a plan to the GTAA, but an agreement was already in place between WJ and the GTAA at that time.

Westjet had nowhere else to move - T3 couldn't handle the raise in capacity, T2 would have to be completely rewired and the belt system would have to be torn down and rebuilt, and T1 is Air Canada's.

Air Canada is fighting a losing battle.
EH.
 
flyyul
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RE: Gtaa Rejects Air Canada Complaint

Thu Feb 19, 2004 10:25 am

if AC loses this battle,

its gonna have a hard time in YYZ until TNew is complete.

Mark
 
ETStar
Posts: 1850
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RE: Gtaa Rejects Air Canada Complaint

Thu Feb 19, 2004 5:53 pm

I certainly hope GTAA wins... AC seems to go to the courts and cry whenever something works against it. Also, if WJ ends up setting up shop in another terminal and AC eventually goes belly up, then the GTAA will get screwed, and I am sure there will be costs associated with a move for WJ... If AC does not like it, then it should stay right where it's at now.
 
captaingomes
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RE: Gtaa Rejects Air Canada Complaint

Thu Feb 19, 2004 11:16 pm

Let's face it. AC is downsizing, yes. AC is in bankruptcy protection, yes. Other airlines are making inroads into the market, correct. But AC is still by far the largest airline in Canada, and they still have the bulk of the business, eventhough that is decreasing. Whatever happens, I really hope it is done fairly and with respect to any contracts that have been signed. None of us know for sure what agreements have been made between all parties involved, so we can only speculate.

The problem is that when TNew opens up in April, it will be only a fraction of the size of the final project. Air Canada will be forced to operate domestic flights out of too many buildings, and there is no way it will be efficient. What stands to happen is flights may be shifted elsewhere in Air Canada's network. I can definitely see more concentration of point to point flights with the new aircraft coming online as the YYZ hub becomes less efficient. Then again, will AC instead employ protectionist tactics instead and try to make things difficult for Westjet?
"it's kind of like an Airbus, it's an engineering marvel, but there's no sense of passion" -- J. Clarkson re: Coxster
 
FLYACYYZ
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RE: Gtaa Rejects Air Canada Complaint

Thu Feb 19, 2004 11:26 pm

CaptainG
Says it all. The largest tenant at the airport will be forced to operate out of several facilities. To the average customer, not only will the airline (AC)experience be negative and unmemorable, but so will the experience of flying through this so called state-of-the-art facility.

Passengers orginating from Europe, Latin America, the Carribean, and the US, will definitely rethink their plans of "FLYING YYZ". What's the point of running this $4.4 billion dollar machine if we can't improve overall operating efficiency for the travelling public??
Above and Beyond
 
CanadaEH
Topic Author
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 12:41 am

Guys, Air Canada will be running from T2 and TNew come April. There was never any plans to consolodate all flights to TNew, if I read correctly. I suggest that if you haven't already, read up on the GTAA's affadavid and Air Canada's affadavid - its a long read, but quite informative AND factual.

My apologies if I have the terminals all messed up, I'm not that familiar with YYZ (T1/T2 = AC, T3 = everyone else?/T1 to be closed when TNew opens?)

A decision is to be made today, I think. Should be an interesting one.

Links:
GTAA CEO, John Kaldeway: http://www.stikeman.com/ac/uploads/GTAA%20MR%20Kaldeway%20Affidavit.pdf
GM Hub Development of Air Canada, John Segeart: http://www.stikeman.com/ac/uploads/affidavit%20of%20john%20e%20segaert.PDF
EH.
 
CanadaEH
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 12:47 am

If I could also add another thing..

Air Canada has been allocated 6 of 14 fixed preferential gates with potential access to 2 GTAA reserved contact gates with the remaining 6 being allocated on a common use basis between Air Canada and Westjet. (Dated Jan 28, 2004)

EH.
 
B747-437B
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 2:05 am

Guys, Air Canada will be running from T2 and TNew come April. There was never any plans to consolodate all flights to TNew

Transborder operations were always going to be at T2 since TNew doesnt have a US PFI facility yet. However, AC wanted to consolidate all domestic AC+Jazz ops and all international ops under one roof.

Primarily a change in that plan would affect things like Minimum Connection Time between online flights, since passengers would need to be bussed across. That would increase operating costs and require a complete revamp of schedules.

AC has admitted that their domestic operation will require approximately 65-70% utility of the 14 gate capacity (which is above the GTAA requirement of 60% utility for preferential use). In view of that spare capacity though, I see a compromise likely being reached where GTAA is awarded preferential use of 8 gates, with 4 gates being designated common use with WestJet. The 2 remaining GTAA gates would likely be designated as common use, but with AC preferential assignment - but accessible as overflow for either AC/WS as needed. That would potentially allow both sides to fit in their entire schedules, albeit with very little slack room. However, there is hard stand capacity available and using those during IROPS is still preferable to keeping T2 Domestic open for another few months.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
flyyul
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 2:52 am

Is a MOU a legal basis for which the GTAA desicion can be over-turned?

 
Whiteguy
Posts: 1060
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 4:56 am

AC seems to go the courts and cry whenever something works against it.

ETStar

Well maybe AC can save some money by jumping in the same cab as Westjet when they are running and crying to the competition bureau!!! I think WJ does a lot more crying and whinning when other airlines match their fares. Talk about a double standard!
 
CanadaEH
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 5:18 am

An MOU is not legally binding.
EH.
 
B747-437B
Posts: 8777
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 5:56 am

An MOU is not legally binding.

Ordinarilly not, but the court issued an order to all contractors, suppliers, vendors, etc... as part of the CCAA process that they could not unilaterally amend any terms of any agreement which AC was part to without the permission of the court.

If AC were not in CCAA protection right now, it would be an open-and-shut case. Because of the outstanding CCAA order, it becomes an issue of legal debate.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
robsawatsky
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 6:57 am

The MOU may not be a binding contract in the strictest traditional sense, but it certainly contains wording that implies several areas of agreement that would form the basis for an eventual contract and/or related operating agreements with GTAA including the Terminal Facilities Allocation Plan.

The wording being used by both sides seems to be very carefully chosen. GTAA frequently using the word "exclusive" and AC using wording that skates around the word "exclusive" while effectively providing the same end result.

My brief reading seems to indicate that AC has preferential access as they are claiming but not exclusive access, which they are implying and would like. The issue I think will come down to whether GTAA followed the TFAP in allocating gate access to Westjet. Is the TFAP just some loose guideline or is it firm policy - the courts will have to decide I guess, along with whether the TFAP AC presented as motion material is actually the latest, agreed version.

Once clause I read seemed to indicate that GTAA would have to look at alternatives to AC preferential gate access at T1new, including other terminals, before allowing anyone else those gates when AC didn't need them and would have to really be in a tight spot to push AC out when they needed the gates unless there was absolutely no other choice.

I'm not a booster for AC but if there is an agreement or policy in place both parties should abide by the rules of that agreement regardless of court protection or not. I would agree that splitting AC operations over 3 terminals at its main hub would be akin to throwing stones at AC while it is down.
 
martinairyyz
Posts: 1188
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RE: Gtaa Rejects Air Canada Complaint

Fri Feb 20, 2004 7:56 am

Peter Gregg, spokesman for the non-profit organization, would say only that "at the moment, there are certainly no plans for Mr. Turpen to be leaving . . . in the near future."

Dear god..... This guy takes 1 more step out of line and hi's head'll be off  Sad  Sad  Sad  Sad
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