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Joined: Tue May 25, 1999 7:40 am

Roots WAS IN Talks With Air France!

Fri May 11, 2001 10:10 am

According to YYZnews, and from the Globe and Mail:

Ottawa warned airline deal may hit rivals
The Globe and Mail
(B1 - Business - Thur 10 May 2001) Keith McArthur

Air France is warning Ottawa to beware of Air Canada's proposed
partnership with Skyservice Airlines Inc., saying the deal could
"seriously undermine the survival of some airlines."

The proposed deal will hurt Air France because it has already led to
the demise of Roots Air, a Skyservice subsidiary. The French national
carrier was about to announce a deal with Roots Air to shuttle its
passengers on to their final destinations.

"Air Canada's latest move does nothing but raise more obstacles in the
way of our attempts to increase our presence and enhance competition
in the Canadian market," said Pascal Briodin, executive vice-president
for Air France Canada.

Last Thursday, the Montreal-based carrier announced that it was taking
an 85-per-cent stake in Skyservice. It will spin off a 35-per-cent
block to its investors, and retain a 50-per-cent voting share.

Roots Air was grounded over the weekend and will be transformed into a
no-frills carrier.

This isn't the first time Air France has taken Air Canada to task over
its dominance in the market.

A year ago, Air France, British Airways PLC and Cathay Pacific Airways
Ltd. accused Air Canada of abusing its dominance by gouging them on
the prices it charges to connect passengers to secondary markets. At
the time, they indicated they may abandon the Canadian market.

Without Roots Air, Air France has little choice but to deal with Air
Canada when it needs to shuttle passengers on to secondary

Air France said that in addition to its corporate concerns, it is also
worried about the effects the deal will have on domestic carriers and
on consumers.

"Allowing Air Canada to acquire such a significant stake in Skyservice
Airlines . . . may seriously undermine the economic survival of some

"We are raising a very real issue that . . . requires the Competition
Bureau to exercise vigilance where Air Canada is concerned."

The deal has led to renewed calls on Ottawa to allow foreign airlines
to compete in Canada.

Konrad von Finkenstein, the federal Competition Commissioner, said the
government should allow 100-per-cent foreign-owned airlines in the
domestic market, so long as they use Canadian staff and do their
maintenance work here.

But that model has failed in Australia and would fail in Canada too,
according to Fred Lazar, a York University business professor.

"Open up the market tomorrow -- it's not going to make any difference.
You're not going to start seeing any U.S. carriers operating across
Canada . . . It's purely wishful thinking."

That's because foreign carriers will see that Canada isn't big enough
to support any new airlines, Mr. Lazar said.

Foreign investment in Canadian carriers is currently limited to a
25-per-cent voting stake.

Australia recently changed its rules to allow foreigners to set up
domestic airlines in that country. British billionaire Sir Richard
Branson took up the offer and set up Virgin Blue, a discount airline.

The ownership changes resulted in a price war that benefited consumers
on some routes.

But it is being blamed for the demise of Impulse Airlines, a small
domestic carrier. Mr. Lazar predicted that Virgin Blue will soon be
taken over by Qantas Airways -- bringing an end to the Australian

Mr. Lazar, who has done research for Air Canada in the past, said
Ottawa should raise foreign ownership limits to 49 per cent.

Very Interesting, although I personally do not agree with more then 15% Foreign ownership....

"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
Posts: 873
Joined: Sat Aug 21, 1999 4:15 am

RE: Roots WAS IN Talks With Air France!

Fri May 11, 2001 12:17 pm

It is too bad that Roots was pulled out this soon. And with talks of Air france? What the hell was on the go then!?!?!? I don't understand, what Air Canada offered to us but I really don't feel all that well with this so called purchase of us by Air Canada. I hope that everything turns out well, and if things go sour with Air Canada I would love to see Roots Fly again, but that I highly doubt will happen again.  Sad OH well.

Safety is Everyones Responsibility.
Posts: 1761
Joined: Sat Dec 23, 2000 12:33 pm

A Prime Example Of The Evils Of Monopoly Power

Fri May 11, 2001 1:41 pm

No sooner had Air Canada acquired Skyservice then they announced that they are dropping all of their discount fares. Even the Canadian ministry office that oversees competition could see that one coming from a mile away...
User avatar
Posts: 21324
Joined: Wed May 24, 2000 12:12 pm

RE: Roots WAS IN Talks With Air France!

Fri May 11, 2001 1:44 pm

Actually Roots was also in talks with Qantas, Lan Chile, and Cathay Pacific also.
Plans were to connect to these carriers at LAX.
From the desert to the sea, to all of Southern California
Samurai 777
Posts: 2000
Joined: Thu Jan 27, 2000 2:56 pm

Fasten Your Seatbelts: Even More Turbulence Ahead

Fri May 11, 2001 1:50 pm I can see why Air France was opposed to AC buying up a chunk of Skyservice! I read about in the National Post.

Get ready, folks - the Canadian airline industry is not so close to stability as the media would have you believe!
Posts: 1761
Joined: Sat Dec 23, 2000 12:33 pm

The Canadian Industry Is....

Fri May 11, 2001 1:55 pm

Air Canada, Air Canada and Air Canada...

and possibly Air Canada.

Pray for the Canadian traveling public. They're gonna get gouged...

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