One can quibble incessantly with any city pair chosen and poo poo the concept that a merger doesn’t change the current competitive outlook. Even the most obtuse casual observer isn't going to buy into that concept. People on this board are anything but casual observers.
Reducing competition over the non-stop pairings previously noted, not to mention a similar roster of cities from YYZ is going to impact both pricing and service levels, and fortify an already fortress type situation in 2 of the 3 largest Canadian markets in Canada.
That alone, is going to further reduce the likelihood of meaningful competition down the road. That’s going to be of concern to the Bureau.
Those hungering for the deal have good financial reason to do so, (a reduction of competitive service will drive prices higher, hopefully leading to higher corporate profits at the expense of consumer choice), and those reasons will attract the attention of the Bureau.
They will need to assess how the merger impacts travel options and choices, both price and QSI service levels, from not just Montreal, Quebec City and Toronto, but ALL airports in Canada.
If the merger impacts viable and preferable routings, in terms of both price, convenience and total trip time for someone in Moncton, Sault, Thunder Bay, Winnipeg, Regina, Edmonton, Kelowna or Victoria, it’s going to be an issue.
Suggesting a current one stop, domestic routing to NCE, from YWG is easily replaced by a two stop, dramatically more complex YWG-MSP-CDG-NCE routing won’t garner much sympathy from the Bureau.
The Bureau’s mandate is to protect all Canadians from anti competitive activity, not just those in Toronto and Montreal..
WS isn’t in YUl-FLL for the same reason that Alaska Airlines left the YVR-LAX market. Even with lower stage length adjusted unit costs and 90%+ loads, there was no point trying to “compete” with an airline that was prepared to dump its chronic seasonal excess capacity in the market and price it on a variable cost basis to chase marketshare.
Both AS and WS still don’t have enough capacity to be in all places at all times, and certainly don’t have the excess seasonal capacity AC wallows in for 6-7 months a year. They, and others, put their capacity where the returns are the greatest.
Compared to the ROC, Quebecers have a dramatically lower propensity to fly domestically. They take far fewer domestic trips per capita and when YYZ is removed from the equation, the numbers plummet even further. Compounding this is the lack of “internal” flights within Quebec. For a land mass the size of Quebec, they are minuscule. New entrants, especially those whose strategies are coordinated from outside Canada, don’t understand this.
Those touting the merger are already arguing that the various new entrants, (of which precisely one is now operating), none of which are based within 1,750 miles of Quebec, will able to break into the fortress that is the Quebec market, more meaningfully than WS who operate about 15 departures a day from Montreal after close to 20 years with the lowest stage length adjusted unit costs in Canada are out of their gourds. They’ll have to dream up better arguments than that in their submissions to the Bureau.
If you’re an AC or Transat employee or shareholder, or you are employed by any of the mostly bank owned investment houses in Canada, you’re obviously going to be a strong supporter of this deal.
Alas, in the grand scheme of things, that group represents a very, very small percentage of Canadians.
With an election coming up that will most likely result in a minority gov’t that won’t want anything to do with an anti consumer file that could upset a precariously balanced future political coalition, and in a world where even the most trivial airline customer abuse story from “big, bad airlines” regularly makes front page news, approving any competition reducing deal such as this is going to problematic at higher echelons.
It’s a fairly safe bet this won’t get done prior to the election for basically the same reasons as above. If YOU were trying to get elected / re-elected, would YOU want to touch this file, directly or indirectly,with a 10 foot barge pole?
Last edited by jimbo737
on Tue May 21, 2019 2:22 pm, edited 2 times in total.