RP TPA
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Air Canada/United Transborder JV Update

Wed Oct 24, 2012 2:11 pm

Just saw this on ACs website. Not a lot of details yet, but I'm sure more info will come out soon.

From AirCanada.ca:
http://aircanada.mediaroom.com/index.php?s=43&item=592m AirCanada.ca:
 
drgmobile
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 3:10 pm

The 14 routes are

Route Post Joint Venture Market Share
Calgary/Chicago 87%
Calgary/Houston 100%
Calgary/San Francisco 87%
Montreal/Chicago 70%
Montreal/Houston 100%
Montreal/Washington 100%
Ottawa/Washington 100%
Ottawa/New York 100%
Toronto/Cleveland 100%
Toronto/Denver 100%
Toronto/Houston 100%
Toronto/San Francisco 100%
Toronto/Washington 100%
Vancouver/San Francisco 99%
 
yegbey01
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 5:25 pm

Quoting drgmobile (Reply 1):
Montreal/Washington 100%
Ottawa/Washington 100%]


US Airways started flights between DCA and YUL and YOW.

[quote=drgmobile,reply=1]Toronto/Washington 100%

US Airways and Porter are flying this route now.
 
LAXintl
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 5:45 pm

Plans for the JV had been stalled since mid 2011 as the Canadian government objected as there was virtually no competition on 19 routes of which 10 would become AC-UA monopolies.

While I don't have details about this agreement today, I believe what was being worked out was a carve out of such specific markets from the JV.

But on the whole the idea is to treat both AC and UA as a single carrier allowing them to coordinate pricing, capacity and schedules while pooling revenues and cost.
From the desert to the sea, to all of Southern California
 
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kordcj
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 5:52 pm

Quoting drgmobile (Reply 1):
Montreal/Washington 100%
Ottawa/Washington 100%
Ottawa/New York 100%

Does this include all the NYC and Washington area airports or only IAD and EWR? I'm certain UA doesn't fly JFK/DCA/LGA-Canada.
The most obvious proof for intelligent life in the universe is that they haven't tried to contact us.
 
9252fly
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 6:20 pm

This has very interesting implications for AC primary CPA partner Jazz. If one excludes the 14 routes from the JV and look at what AC operates trans-border today,it appears that current Jazz routes could potentially be bid on and operated by USA based CPA operators;alternatively,UA could take over the those routes itself or through CPA carriers. With it being a JV and the costs being shared,it certainly opens up a lot of possibilities.
 
flyb
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 7:50 pm

Will routes operated by airlines dba United Express be effected in the long run? IE will AC and UA attempt to funnel more through Canadian hubs? Reducing routes from YEG to say ORD/DEN and hubbing them through YYC/YYZ?
 
yegbey01
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 7:55 pm

Quoting flyb (Reply 6):
Will routes operated by airlines dba United Express be effected in the long run? IE will AC and UA attempt to funnel more through Canadian hubs? Reducing routes from YEG to say ORD/DEN and hubbing them through YYC/YYZ?

I think by looking at the UAL schedule from YYC, they have already added more frequencies to IAH and ORD.
 
flyb
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 8:45 pm

They have from YEG as well. I am asking more about routes operated by Express.
 
ElPistolero
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 9:46 pm

The way I'm reading it, AC will be allowed to operate 5 routes as JV, but on 14 others it can't?

I'm no expert in all of this, but how does a partial joint venture work? AC and UA are allowed to set prices in some markets, but not others? What will stop them from doing it on all 19 routes? Is there a monitoring mechanism, or is this something that we expect AC and UA to do on good faith, with both of them knowing full well that there once any sort of JV goes through, the 'conditions' will become unenforceable. Is the Competition Bureau going to be sitting in on all AC/UA meetings to ensure that they don't discuss anything ...err...anti-competitive?

Also, did DL operate a YOW-LGA flight for a little while earlier this year? I could have sworn I saw DL YOW-LGA for $320 a couple of months ago. Now its back to the usual $500 tickets on UA and AC (no price collusion going on there apparently).  
 
Viscount724
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 10:26 pm

Quoting ElPistolero (Reply 9):
The way I'm reading it, AC will be allowed to operate 5 routes as JV, but on 14 others it can't?

I read it that they can operate all transborder routes as a JV except the 14 that are carved out.

Quoting ElPistolero (Reply 9):
I'm no expert in all of this, but how does a partial joint venture work? AC and UA are allowed to set prices in some markets, but not others? What will stop them from doing it on all 19 routes?

What will stop them is the risk of a prison sentence. The U.S. government in particular takes a dim view of antitrust violations and at least a couple of U.S.-based employees of foreign carrierrs (QF was one) have already spent time in prison over the cargo price-fixing case.

It's not that unusual for routes to be carved out in such cases. There have been a few examples where the U.S. government carved out certain routes when granting antitrust immunity. In some cases the carve outs only involved certain fare types. For example, when UA and NZ were granted antitrust immunity, F and J class and unrestricted Y fares on nonstop flights LAX-AKL and LAX-SYD were excluded.
 
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STT757
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 10:50 pm

Quoting drgmobile (Reply 1):
The 14 routes are

Route Post Joint Venture Market Share
Calgary/Chicago 87%
Calgary/Houston 100%
Calgary/San Francisco 87%
Montreal/Chicago 70%
Montreal/Houston 100%
Montreal/Washington 100%
Ottawa/Washington 100%
Ottawa/New York 100%
Toronto/Cleveland 100%
Toronto/Denver 100%
Toronto/Houston 100%
Toronto/San Francisco 100%
Toronto/Washington 100%
Vancouver/San Francisco 99%

So everything but these 14? What about

EWR-YQB
EWR-YUL
EWR-YYZ
EWR-YHZ
EWR-YVR
EWR-YQM
etc..
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
Viscount724
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RE: Air Canada/United Transborder JV Update

Wed Oct 24, 2012 11:04 pm

Quoting STT757 (Reply 11):
So everything but these 14? What about

EWR-YQB
EWR-YUL
EWR-YYZ
EWR-YHZ
EWR-YVR
EWR-YQM
etc..

Only the 14 listed routes are excluded. It was originally 19 but now reduced to 14.

These are the related Canadian Competition Bureau announcements. They say the full agreement will be published later.
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03506.html
This one lists the excluded routes.
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03507.html

In many of the routes where AC/UA are shown as having 100% or close to it market shares, other carriers must carry quite a few passengers on connecting services. There are certainly more options than AC/UA in all those markets if you're willing to make a connection.
 
9252fly
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RE: Air Canada/United Transborder JV Update

Thu Oct 25, 2012 7:12 am

Quoting Viscount724 (Reply 12):
There are certainly more options than AC/UA in all those markets if you're willing to make a connection.

Does the carve-out only apply to non-stop flights between the noted 14 city pairs,or would it also include cooperation with a connection YYC - DEN - IAH?
 
drgmobile
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RE: Air Canada/United Transborder JV Update

Thu Oct 25, 2012 2:51 pm

Quoting STT757 (Reply 11):
So everything but these 14? What about

EWR-YQB
EWR-YUL
EWR-YYZ
EWR-YHZ
EWR-YVR
EWR-YQM

The text I posted was lifted fully from the press release.
 
LAXintl
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RE: Air Canada/United Transborder JV Update

Thu Oct 25, 2012 2:59 pm

Quoting ElPistolero (Reply 9):
I'm no expert in all of this, but how does a partial joint venture work?

Sure it can work.

Most of the Atlantic JV's by airlines have had carve out markets, while the Pacific JVs have entire carve out countries.

Basically airlines will be able to jointly market on many hundreds of city combinations except for the dozen with are being excluded.
From the desert to the sea, to all of Southern California
 
flyb
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RE: Air Canada/United Transborder JV Update

Thu Oct 25, 2012 3:55 pm

I'm struggling this morning, ha. Is the JV on the following routes only? OR are they not permitted to JV on the Following routes?
Calgary/Chicago 87%
Calgary/Houston 100%
Calgary/San Francisco 87%
Montreal/Chicago 70%
Montreal/Houston 100%
Montreal/Washington 100%
Ottawa/Washington 100%
Ottawa/New York 100%
Toronto/Cleveland 100%
Toronto/Denver 100%
Toronto/Houston 100%
Toronto/San Francisco 100%
Toronto/Washington 100%
Vancouver/San Francisco 99%
 
RP TPA
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RE: Air Canada/United Transborder JV Update

Thu Oct 25, 2012 4:06 pm

Quoting flyb (Reply 16):
I'm struggling this morning, ha. Is the JV on the following routes only? OR are they not permitted to JV on the Following routes?
Calgary/Chicago 87%
Calgary/Houston 100%
Calgary/San Francisco 87%
Montreal/Chicago 70%
Montreal/Houston 100%
Montreal/Washington 100%
Ottawa/Washington 100%
Ottawa/New York 100%
Toronto/Cleveland 100%
Toronto/Denver 100%
Toronto/Houston 100%
Toronto/San Francisco 100%
Toronto/Washington 100%
Vancouver/San Francisco 99%

Those are the "carved out" routes. In other words, those are the routes that AC/UA are prohibited from cooperating on.
 
ElPistolero
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RE: Air Canada/United Transborder JV Update

Thu Oct 25, 2012 9:20 pm

Quoting Viscount724 (Reply 10):
What will stop them is the risk of a prison sentence. The U.S. government in particular takes a dim view of antitrust violations and at least a couple of U.S.-based employees of foreign carrierrs (QF was one) have already spent time in prison over the cargo price-fixing case.

I recall AC taking a hit on the whole cargo fuel surcharge price fixing. Interesting to note that no American airlines were on that list. I guess we'll just have to hope that the fear of US regulators will keep UA honest, because I don't recall AC facing any action from Competition Bureau on that.

Quoting LAXintl (Reply 15):
Basically airlines will be able to jointly market on many hundreds of city combinations except for the dozen with are being excluded.

Will they be able to share data on the excluded routes, even if they don't market them jointly?

I just find it very hard to believe that with two companies working closely on XX% of their routes, there is a way to monitor their behavior on select routes that they shouldn't be cooperating on - in this case, 14 of them.

How, if at all, will that be monitored? All on good faith. Or the fear some US airlines have of US regulators?
 
ordbosewr
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RE: Air Canada/United Transborder JV Update

Fri Oct 26, 2012 5:37 pm

Quoting ElPistolero (Reply 18):
I just find it very hard to believe that with two companies working closely on XX% of their routes, there is a way to monitor their behavior on select routes that they shouldn't be cooperating on - in this case, 14 of them.

How, if at all, will that be monitored? All on good faith. Or the fear some US airlines have of US regulators?

Trust me it is completely possible to execute the carve-outs. In some aspects it is simple and in others it is more complex, but it is possible.
I do not work in airlines but in my business we sometimes have to deal with it. Sometimes the easiest is to isolate the people who work on the carve-outs (on both sides) from the others who are not to ensure nothing gets shared no matter what (this is sometimes referred to as a hard firewall), but sometimes you use a soft firewall which is more about the data than it is about the people. Since they are 2 businesses the soft firewall approach is probably fine as long as they keep records that can be shared with regulators.

The Competition groups order states an independent 3rd party will be assigned to monitor the carve-outs.

It is in the best interest of UA & AC to follow those as if they do not the punishment will be severe and that would not be helpful.
 
ElPistolero
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RE: Air Canada/United Transborder JV Update

Fri Oct 26, 2012 10:03 pm

Quoting ORDBOSEWR (Reply 19):
The Competition groups order states an independent 3rd party will be assigned to monitor the carve-outs.

Very interesting. Did not know any of that. Thanks.