Crazy how YYT “becomes” the 2nd FLL destination for WS in 2018-19.
Why they pulled YHZ/YUL/YOW-FLL is a total head scratcher.
So I guess YYZ-BCN will be on the 763? That accounts for 3/7 pulled YYC-Europe 763 rotations to LGW that will be replaced by the 789. WS could theoretically add another 763 Europe route out of YYZ for summer 2019...they could also add a couple more MAX routes to Europe from Eastern Canada but I’m not holding my breath waiting for that to happen.
They pulled all those FLL flights because even with their lower fully allocated operating costs and loads in the 90% range, the yields were garbage and didn’t contribute anything to the bottom line.
If others want to chase market share and lose money doing so, WS is letting them fill their boots. Their goal is raise fares when WS is gone. When they return to compensatory levels, WS will likely return.
If loads were north of 90%, sounds like they weren't charging a high enough fare. BTW, where'd you get the 'yields were garbage' evidence from? The US DOT publications?
The thing is, WS is now aspiring to be a global carrier, yet they still can't figure out/don't seem motivated how to be a national carrier first. Save for YHZ, they're a token player east of YYZ, where even PD sometimes outranks them.
Airlines don't cancel profitable routes.
WS pulled all those FLL flights because even with their lower fully allocated operating costs of 14.15 cents generated over an asl of 897 miles, (and YUL-FLL is 1,384 miles, so you can imagine what WS's casm is over that longer stage length - it isn't anywhere close to 14.15 cents), and YUL-FLL loads in Q1 2018 of 92.9%, and a system break even load factor in the quarter of 81.65%, the yields were garbage and didn’t contribute anything to the bottom line.
Let's put it another way: WS's system BELF in the quarter was 81.65% and they cancelled a route that, according to US DoT Form 41 data, had loads of 92.9%. I think you can do the math here.
Alaska Air ditched YVR-LAX for basically the same reason. Who cares about loads if you lose money on every flight? Only market share driven airlines or airlines trying to figure out what to do with tons of excess capacity do this sort of thing.
Meanwhile, AC Rouge operated that route with an 81.7% l/f in the same period. AC operated with a system BELF of 84.7% in the quarter, with a fully allocated system cost of 16.43 cents generated over a 1,665 mile asl, (meaning the costs were even higher for the 1,384 mile YUL-FLL sector).
If others want to chase market share and lose money doing so, WS and others are letting them fill their boots.
In pure leisure markets, (Quebec to FLL), and especially in a high density Rouge 767, an airplane seat is a commodity. The lowest cost operator sets the fares and once set, that's the bar that exists. That's unless there are people who gleefully pay 15-20% more to fly to the same place in the same seat at the same time. I don't know too many people, especially leisure travelers who are prepared to do that. Do you?
There's a reason why AC lost close to $100m including interest expense in Q1 2018, with an industry bottom margin, (with interest expense moved above the line), of -2.4%.
I'd venture to guess part of that reason is chasing market share on hyper low yield routes operating aircraft designed for 6-10 hour sectors on 3 hr wide body flights filled with aeroplan redemptions. And that was with 73.3 cent a liter fuel. It'll be closer to 86 cents this winter.
No US carrier operates wide bodies from the NYC area to the sixth borough. Enough said.
Their goal is likely to raise fares now that WS is gone. When they return to compensatory levels, WS will likely return. Airplanes are very portable.