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MIflyer12
Posts: 10429
Joined: Mon Feb 18, 2013 11:58 pm

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 2:09 am

IADCA wrote:
MIflyer12 wrote:
JannEejit wrote:

The thought crossed my mind, and if Air Transat now closes, the cynic in me wonders if this is a new and novel way of taking out the competition ?


Is there any evidence the break-up fee here is less than what was negotiated (and renegotiated)?


No, the break-up fee was paid in full, per media.

Thanks. That just makes the speculation that AC manipulated the EU anti-trust review look pretty silly. With AC willing to pay the full break up fee they could have terminated the deal earlier and been no worse off.
 
INFINITI329
Posts: 2672
Joined: Mon Jul 02, 2012 12:53 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 2:17 am

What EU slots does Air Transat currently have?
 
runway23
Posts: 2439
Joined: Sat Jan 15, 2005 2:12 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 6:18 am

INFINITI329 wrote:
What EU slots does Air Transat currently have?


Slots aren't really the big deal here, most of what TS has is to secondary airports and most of what was flown to main airports had other competition too.

My guess is that the EC threatened to remove or partially remove AC from the transatlantic JV or limit their pricing and scope.
TWA302 wrote:

777luver wrote:

Sad that this will more than likely spell the demise of TS. Saved AC a ton of money.


I wouldn't be so sure about that. We already have Quebecor's owner coming back with an offer, even though it probably isn't worth the paper its (possibly) written on and is another 5 minute claim of fame to bash Air Canada and pretend TS is a viable business.

I'd also add that it would look pretty bad for Trudeau to have TS go bust a few months out of a pretty widely rumoured general election. I expect some sort of bailout package in the next days or weeks. Quebec PM Legault might be tempted to give a loan, although seeing he founded TS some might say he's throwing money at a company he's biased to and one living on a pacemaker (not the first time in aviation Quebec would do something like that though).

I'm also a little bit curious to see if WS does anything. They could very well come buy TS for pennies and build a good position in YUL. That said, I'm not really sure WS has any appetite in growing YUL long-term and would be bothered going through the mess of buying TS when they could potentially build their own operation up, especially if/when TS fails.
 
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spinotter
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Joined: Wed May 27, 2015 1:37 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 6:47 am

So many are predicting that Air Transat will fail by itself. Is that because of Covid only? Was AT a going concern before the pandemic? Is Canada or Québec giving financial assistance to the airline?
 
Dominion301
Posts: 3096
Joined: Wed Jul 20, 2016 1:48 pm

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 4:30 pm

spinotter wrote:
So many are predicting that Air Transat will fail by itself. Is that because of Covid only? Was AT a going concern before the pandemic? Is Canada or Québec giving financial assistance to the airline?


Transat was at best breaking even pre-COVID for many years. TS have shrunk their transatlantic footprint. They used to fly overseas out of YHZ, YOW, YEG and YYC, but they stopped all of them. In other words, TS were already useless to a lot of Canadians to Europe. Down south Sunwing and Rouge were kicking the crap out of TS. Again TS has pulled out of a lot of smaller Canadian cities on sun routes.
 
777luver
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 5:09 pm

runway23 wrote:
INFINITI329 wrote:
What EU slots does Air Transat currently have?


Slots aren't really the big deal here, most of what TS has is to secondary airports and most of what was flown to main airports had other competition too.

My guess is that the EC threatened to remove or partially remove AC from the transatlantic JV or limit their pricing and scope.
TWA302 wrote:

777luver wrote:

Sad that this will more than likely spell the demise of TS. Saved AC a ton of money.


I wouldn't be so sure about that. We already have Quebecor's owner coming back with an offer, even though it probably isn't worth the paper its (possibly) written on and is another 5 minute claim of fame to bash Air Canada and pretend TS is a viable business.

I'd also add that it would look pretty bad for Trudeau to have TS go bust a few months out of a pretty widely rumoured general election. I expect some sort of bailout package in the next days or weeks. Quebec PM Legault might be tempted to give a loan, although seeing he founded TS some might say he's throwing money at a company he's biased to and one living on a pacemaker (not the first time in aviation Quebec would do something like that though).

I'm also a little bit curious to see if WS does anything. They could very well come buy TS for pennies and build a good position in YUL. That said, I'm not really sure WS has any appetite in growing YUL long-term and would be bothered going through the mess of buying TS when they could potentially build their own operation up, especially if/when TS fails.


The offer by Peladeau has a 24 hour clock from when the deal was cancelled but offered no timeline or nothing
 
Captaincurious
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Joined: Sat Jan 23, 2021 4:31 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 5:24 pm

so Air Canada is better off not buying Air Transat. How about Peladeau?
 
Cardude100000
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Joined: Sat Oct 17, 2020 3:46 pm

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 7:15 pm

Does anyone think bailout or no that because ACA can achieve economies of scale from the size of their operation that they can kill off Transat by competitively pricing in their markets? If we can't have them we kill them?
 
IADCA
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 7:22 pm

MIflyer12 wrote:
IADCA wrote:
MIflyer12 wrote:

Is there any evidence the break-up fee here is less than what was negotiated (and renegotiated)?


No, the break-up fee was paid in full, per media.

Thanks. That just makes the speculation that AC manipulated the EU anti-trust review look pretty silly. With AC willing to pay the full break up fee they could have terminated the deal earlier and been no worse off.


Not necessarily. Transaction documents for deals like this require you to try to get approval before walking away. The language varies, but typically in deals where there will be antitrust scrutiny the negotiation lands on something along the lines of "commercially reasonable efforts" or "reasonable best efforts." Once you put in the work, you can walk away for only the break fee. But if you try to walk away before that, you can be sued for breach of contract.

I'd be willing to bet AC was pretty much obligated under the deal docs to offer a remedies package before walking away; that's typically how far you'd need to go absent specific language in the doc disclaiming the need to do so. Now, I see no evidence at all that AC manipulated the process in any way, but that doesn't mean they could have walked away earlier.
 
alan3
Posts: 484
Joined: Sat Apr 12, 2014 6:13 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 7:34 pm

spinotter wrote:
So many are predicting that Air Transat will fail by itself. Is that because of Covid only? Was AT a going concern before the pandemic? Is Canada or Québec giving financial assistance to the airline?


FlyingElvii wrote:
Goodbye, Transat


I wouldn't necessarily bet yet on the imminent demise of TS. I'm not sure the Quebec government would allow that, for the sake of "national" pride as much as anything else. Sun travel will return in winter 2021, and transatlantic holiday travel will return in 2022. They just have to survive until then.

That being said, the graveyard of failed Canadian airlines is large, so I could be wrong.

It would indeed be ironic if those European destinations (Athens, Prague, Barcelona, Lyon, etc) that currently enjoy AC-TS competition were to end up with an AC monopoly anyway.

Would also be interesting to see the US get MORE transatlantic competition in the years to come (Jetblue, EI adding UK-US flights, Norsk Atlantic, etc) while Canada gets less.
 
Captaincurious
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 7:38 pm

Cardude100000 wrote:
Does anyone think bailout or no that because ACA can achieve economies of scale from the size of their operation that they can kill off Transat by competitively pricing in their markets? If we can't have them we kill them?

If I were AC, I would keep the high prices. The competition is low and Air Transat is not a major concern for AC. There is no room for such a cut throat competition in this difficult environment for AC.
 
Captaincurious
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 7:39 pm

IADCA wrote:
MIflyer12 wrote:
IADCA wrote:

No, the break-up fee was paid in full, per media.

Thanks. That just makes the speculation that AC manipulated the EU anti-trust review look pretty silly. With AC willing to pay the full break up fee they could have terminated the deal earlier and been no worse off.


Not necessarily. Transaction documents for deals like this require you to try to get approval before walking away. The language varies, but typically in deals where there will be antitrust scrutiny the negotiation lands on something along the lines of "commercially reasonable efforts" or "reasonable best efforts." Once you put in the work, you can walk away for only the break fee. But if you try to walk away before that, you can be sued for breach of contract.

I'd be willing to bet AC was pretty much obligated under the deal docs to offer a remedies package before walking away; that's typically how far you'd need to go absent specific language in the doc disclaiming the need to do so. Now, I see no evidence at all that AC manipulated the process in any way, but that doesn't mean they could have walked away earlier.


Maybe Peladeau is on the rescue?
 
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DLHAM
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Sat Apr 03, 2021 11:29 pm

Thats good for transatlantic flying from secondary airports to Canada in the future which works best without dependencies with Star Alliance and Joint Ventures -- of course as long as TS survives COVID, what I really hope for them!
 
Thenoflyzone
Posts: 3190
Joined: Sun Jan 07, 2001 4:42 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 2:18 am

spinotter wrote:
So many are predicting that Air Transat will fail by itself. Is that because of Covid only? Was AT a going concern before the pandemic? Is Canada or Québec giving financial assistance to the airline?


In the competition bureau's report on the matter (issued back in March 2020), a financial expert was consulted and Transat's financial statements were carefully scrutinized. The expert concluded that Transat was solvent and unlikely to exit the relevant markets in the near term.

Section 3.1.3

https://www.competitionbureau.gc.ca/eic ... 04522.html

Of course, all of this was before the pandemic. This being said, I don't think Transat is going anywhere. Trudeau and/or Legault wont let that happen. I think a bailout for all Canadian airlines is on the way.

Dominion301 wrote:
spinotter wrote:
So many are predicting that Air Transat will fail by itself. Is that because of Covid only? Was AT a going concern before the pandemic? Is Canada or Québec giving financial assistance to the airline?


Transat was at best breaking even pre-COVID for many years. TS have shrunk their transatlantic footprint. They used to fly overseas out of YHZ, YOW, YEG and YYC, but they stopped all of them. In other words, TS were already useless to a lot of Canadians to Europe. Down south Sunwing and Rouge were kicking the crap out of TS. Again TS has pulled out of a lot of smaller Canadian cities on sun routes.


I wouldn't say their TATL footprint shrunk. They simply refocused mainly on YUL and YYZ. Their TATL ops out YHZ, YEG, YYC and YOW were always minuscule compared to their operations at YUL and YYZ.

With the advent of Rouge, they had to refocus their operations and play to their strengths. Look at WS. Same thing happened with them. When they initially got the B767s, they flew them from YEG and YWG to LGW. Not anymore.
 
Blerg
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Joined: Tue Jan 09, 2018 11:42 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 5:27 am

Did the EU introduce some restrictions when various JVs were being formed? If Transat does fail then it would make sense for the EU to encourage certain third party carriers to enter the market, maybe something similar to EK flying from Italy and Greece to the US.
 
Thenoflyzone
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Joined: Sun Jan 07, 2001 4:42 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 12:52 pm

Blerg wrote:
Did the EU introduce some restrictions when various JVs were being formed?


Yes.

Ex. When the EU and DOT approved the AA/BA/IB JV back in 2010, the authorities developed a harmonized remedies package, to which the airlines in question had to comply before the JV was accepted. They had to give up some slots from LHR to MIA, BOS and DFW, if memory serves. DL and VS took advantage of this and started some flights from those cities to LHR.
 
ryan78
Posts: 388
Joined: Tue Mar 02, 2010 1:29 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 3:23 pm

Thenoflyzone wrote:
Dominion301 wrote:
spinotter wrote:
So many are predicting that Air Transat will fail by itself. Is that because of Covid only? Was AT a going concern before the pandemic? Is Canada or Québec giving financial assistance to the airline?


Transat was at best breaking even pre-COVID for many years. TS have shrunk their transatlantic footprint. They used to fly overseas out of YHZ, YOW, YEG and YYC, but they stopped all of them. In other words, TS were already useless to a lot of Canadians to Europe. Down south Sunwing and Rouge were kicking the crap out of TS. Again TS has pulled out of a lot of smaller Canadian cities on sun routes.


I wouldn't say their TATL footprint shrunk. They simply refocused mainly on YUL and YYZ. Their TATL ops out YHZ, YEG, YYC and YOW were always minuscule compared to their operations at YUL and YYZ.


The A310 was too much aircraft for TATL from smaller markets like YOW, YHZ etc. Instead they introduced domestic flights from YVR, YYC, YEG, and YQB and offered connections through YYZ and YUL to Europe, which in turn allowed them to enter new TATL markets and increase frequencies. It also gives them a small prescence in the domestic market as well. If they do stray from this hub and spoke model, the A321neo is a great aircraft to operate TATL from the likes of YOW and YHZ in the future.
 
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aemoreira1981
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 3:27 pm

I have to wonder what complaints WestJet raised. Across the Atlantic, they're the only entity on the Canadian end who could provide competition.
 
chonetsao
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Joined: Sun Nov 06, 2005 3:55 pm

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 4:15 pm

Two wild proposals that would never came to realisation:

1, Could CX buy out Air Transat and use it as a shell to transfer some asset out from HKG to hedge their future?
or 2, Could BA+QR or BA+AA come to buy out Air Transat in order to increase competition in Canada market?

Yes, I know the answer is no. But still I can't get it out of my head if one of these happens what Canadian market would look like.
 
ElPistolero
Posts: 2450
Joined: Thu Feb 23, 2012 12:44 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 5:55 pm

aemoreira1981 wrote:
I have to wonder what complaints WestJet raised. Across the Atlantic, they're the only entity on the Canadian end who could provide competition.


Seek, and ye shall find:

“As a result of this decision, Air Canada will hold:

- A combined 94 per cent share of Canadian carrier capacity to Europe.

- An almost 70 per cent market share on routes from Toronto to London, Paris and Rome.

- A more than 90 per cent share in key leisure markets like Toronto to Athens or Glasgow, while from Montreal to Barcelona or Venice, Air Canada will be the only Canadian airline on those routes.

- For sun markets in winter, Air Canada will have half of the market share from Toronto to Cancun and 56 per cent to Punta Cana.

- Overall, Air Canada’s share of sun destinations from Toronto will rise to 54 per cent while WestJet would hold 19 per cent.

To be 100 per cent clear, here is what we asked the government for:

- Air Canada must be prohibited from using its Aeroplan loyalty program on Air Transat routes, or from using of exclusivity agreements or similar incentives with travel agencies, as these tactics will limit the ability of consumers to exercise competitive choice. Loyalty programs lock customers in by creating significant costs to switching carriers, while they similarly drastically increase competing airlines’ costs for acquiring such passengers.

- Critical slots and infrastructure must be made available to Canadian airlines at London Heathrow (LHR) and Amsterdam Schiphol (AMS) to help offset the international travel market dominance of a merged Air Canada/Air Transat.

- The merged firm must be prohibited from operating at Terminal 3 of Toronto’s Lester B Pearson Airport (YYZ). Terminal 1 boasts 3.7 million square feet with only 14 airlines operating whereas Terminal 3, built 30 years ago has 28 airlines operating in 1.9 million square feet.”

https://blog.westjet.com/flyer-beware-c ... mpetition/

In essence, a rehash of the Competition Bureau’s findings, with a WS spin that’s so absurd, it’s borderline farcical. Some observations:

- Even on competition, WS can’t help but use the language of petty mercantilism (seems to be a trend with Canadian airlines). To wit: “94% of combined Canadian carrier capacity”... fairly meaningless nonsense. If multiple independent carriers (none of the antitrust/JV nonsense) are competing on a route, doesn’t really matter if AC has 100% Canadian carrier capacity on it. Unless one is a rent-seeker at heart, and thinks their airline is entitled to a share of Canadian capacity regardless of its merits. Which, ironically, is the antithesis of the ‘competition’.

- There’s Open Skies with the EU. WS should put its money where its mouth is. It won’t because it can’t. Everybody from the EU to the biggest critics of AC here recognize one simple fact: WS is an irrelevant non-entity on this issue - by its own choice.

- There’s a certain irony in WS invoking the Telecom industry (even though his analogy is wrong - this is more like “Rogers merged with Freedom” than “Bell merges with Rogers”). Like Bell and Rogers, WS’ success is based on profiting from an overpriced ULCC product (that wouldn’t command anything but ULCC fares in most other countries) in the relatively non-competitive Canadian domestic market. Self-awareness doesn’t seem to be a strong point here.

- The loyalty program complaint is absurd. It’s coming from an airline that’s been linked to global FF programs for the better part of two decades but has been too risk-averse to take the plunge. They’ve now come up with a very limited FF plan that’s basically useless for anyone who wants to travel abroad (like to the EU). “The other guy has figured out how to retain loyalty and should be penalized for it” is simply not a valid condition.
 
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spinotter
Posts: 923
Joined: Wed May 27, 2015 1:37 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 7:10 pm

ElPistolero wrote:
aemoreira1981 wrote:
I have to wonder what complaints WestJet raised. Across the Atlantic, they're the only entity on the Canadian end who could provide competition.


Seek, and ye shall find:

“As a result of this decision, Air Canada will hold:

- A combined 94 per cent share of Canadian carrier capacity to Europe.

- An almost 70 per cent market share on routes from Toronto to London, Paris and Rome.

- A more than 90 per cent share in key leisure markets like Toronto to Athens or Glasgow, while from Montreal to Barcelona or Venice, Air Canada will be the only Canadian airline on those routes.

- For sun markets in winter, Air Canada will have half of the market share from Toronto to Cancun and 56 per cent to Punta Cana.

- Overall, Air Canada’s share of sun destinations from Toronto will rise to 54 per cent while WestJet would hold 19 per cent.

To be 100 per cent clear, here is what we asked the government for:

- Air Canada must be prohibited from using its Aeroplan loyalty program on Air Transat routes, or from using of exclusivity agreements or similar incentives with travel agencies, as these tactics will limit the ability of consumers to exercise competitive choice. Loyalty programs lock customers in by creating significant costs to switching carriers, while they similarly drastically increase competing airlines’ costs for acquiring such passengers.

- Critical slots and infrastructure must be made available to Canadian airlines at London Heathrow (LHR) and Amsterdam Schiphol (AMS) to help offset the international travel market dominance of a merged Air Canada/Air Transat.

- The merged firm must be prohibited from operating at Terminal 3 of Toronto’s Lester B Pearson Airport (YYZ). Terminal 1 boasts 3.7 million square feet with only 14 airlines operating whereas Terminal 3, built 30 years ago has 28 airlines operating in 1.9 million square feet.”

https://blog.westjet.com/flyer-beware-c ... mpetition/

In essence, a rehash of the Competition Bureau’s findings, with a WS spin that’s so absurd, it’s borderline farcical. Some observations:

- Even on competition, WS can’t help but use the language of petty mercantilism (seems to be a trend with Canadian airlines). To wit: “94% of combined Canadian carrier capacity”... fairly meaningless nonsense. If multiple independent carriers (none of the antitrust/JV nonsense) are competing on a route, doesn’t really matter if AC has 100% Canadian carrier capacity on it. Unless one is a rent-seeker at heart, and thinks their airline is entitled to a share of Canadian capacity regardless of its merits. Which, ironically, is the antithesis of the ‘competition’.

- There’s Open Skies with the EU. WS should put its money where its mouth is. It won’t because it can’t. Everybody from the EU to the biggest critics of AC here recognize one simple fact: WS is an irrelevant non-entity on this issue - by its own choice.

- There’s a certain irony in WS invoking the Telecom industry (even though his analogy is wrong - this is more like “Rogers merged with Freedom” than “Bell merges with Rogers”). Like Bell and Rogers, WS’ success is based on profiting from an overpriced ULCC product (that wouldn’t command anything but ULCC fares in most other countries) in the relatively non-competitive Canadian domestic market. Self-awareness doesn’t seem to be a strong point here.

- The loyalty program complaint is absurd. It’s coming from an airline that’s been linked to global FF programs for the better part of two decades but has been too risk-averse to take the plunge. They’ve now come up with a very limited FF plan that’s basically useless for anyone who wants to travel abroad (like to the EU). “The other guy has figured out how to retain loyalty and should be penalized for it” is simply not a valid condition.


From here in the USA, and without any insider knowledge, it seems to me almost incredible that WestJet even exists. Since the demise of CP, AC is such an overweight presence that competition seems doomed to failure. And going by the population of Canada, maybe there should be only one airline - look at France, Germany, Italy, Australia with poor VA. What does the Canadian government want in this respect - how many airlines during/after the pandemic?
 
ElPistolero
Posts: 2450
Joined: Thu Feb 23, 2012 12:44 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 9:11 pm

spinotter wrote:
ElPistolero wrote:
aemoreira1981 wrote:
I have to wonder what complaints WestJet raised. Across the Atlantic, they're the only entity on the Canadian end who could provide competition.


Seek, and ye shall find:

“As a result of this decision, Air Canada will hold:

- A combined 94 per cent share of Canadian carrier capacity to Europe.

- An almost 70 per cent market share on routes from Toronto to London, Paris and Rome.

- A more than 90 per cent share in key leisure markets like Toronto to Athens or Glasgow, while from Montreal to Barcelona or Venice, Air Canada will be the only Canadian airline on those routes.

- For sun markets in winter, Air Canada will have half of the market share from Toronto to Cancun and 56 per cent to Punta Cana.

- Overall, Air Canada’s share of sun destinations from Toronto will rise to 54 per cent while WestJet would hold 19 per cent.

To be 100 per cent clear, here is what we asked the government for:

- Air Canada must be prohibited from using its Aeroplan loyalty program on Air Transat routes, or from using of exclusivity agreements or similar incentives with travel agencies, as these tactics will limit the ability of consumers to exercise competitive choice. Loyalty programs lock customers in by creating significant costs to switching carriers, while they similarly drastically increase competing airlines’ costs for acquiring such passengers.

- Critical slots and infrastructure must be made available to Canadian airlines at London Heathrow (LHR) and Amsterdam Schiphol (AMS) to help offset the international travel market dominance of a merged Air Canada/Air Transat.

- The merged firm must be prohibited from operating at Terminal 3 of Toronto’s Lester B Pearson Airport (YYZ). Terminal 1 boasts 3.7 million square feet with only 14 airlines operating whereas Terminal 3, built 30 years ago has 28 airlines operating in 1.9 million square feet.”

https://blog.westjet.com/flyer-beware-c ... mpetition/

In essence, a rehash of the Competition Bureau’s findings, with a WS spin that’s so absurd, it’s borderline farcical. Some observations:

- Even on competition, WS can’t help but use the language of petty mercantilism (seems to be a trend with Canadian airlines). To wit: “94% of combined Canadian carrier capacity”... fairly meaningless nonsense. If multiple independent carriers (none of the antitrust/JV nonsense) are competing on a route, doesn’t really matter if AC has 100% Canadian carrier capacity on it. Unless one is a rent-seeker at heart, and thinks their airline is entitled to a share of Canadian capacity regardless of its merits. Which, ironically, is the antithesis of the ‘competition’.

- There’s Open Skies with the EU. WS should put its money where its mouth is. It won’t because it can’t. Everybody from the EU to the biggest critics of AC here recognize one simple fact: WS is an irrelevant non-entity on this issue - by its own choice.

- There’s a certain irony in WS invoking the Telecom industry (even though his analogy is wrong - this is more like “Rogers merged with Freedom” than “Bell merges with Rogers”). Like Bell and Rogers, WS’ success is based on profiting from an overpriced ULCC product (that wouldn’t command anything but ULCC fares in most other countries) in the relatively non-competitive Canadian domestic market. Self-awareness doesn’t seem to be a strong point here.

- The loyalty program complaint is absurd. It’s coming from an airline that’s been linked to global FF programs for the better part of two decades but has been too risk-averse to take the plunge. They’ve now come up with a very limited FF plan that’s basically useless for anyone who wants to travel abroad (like to the EU). “The other guy has figured out how to retain loyalty and should be penalized for it” is simply not a valid condition.


From here in the USA, and without any insider knowledge, it seems to me almost incredible that WestJet even exists. Since the demise of CP, AC is such an overweight presence that competition seems doomed to failure. And going by the population of Canada, maybe there should be only one airline - look at France, Germany, Italy, Australia with poor VA. What does the Canadian government want in this respect - how many airlines during/after the pandemic?


Comparing Canada with European countries doesn’t make sense. Those countries are geographically tiny, and have excellent rail transport. TGV, ICE, Thalys... the Canadian equivalent runs outdated 1970s tech and doesn’t even own the tracks it operates on, making it a pretty dodgy mode of travel. Not many folk can afford to take 10 days off to do Toronto - Vancouver return by train.

There’s therefore enough pax to sustain two airlines. One airline = monopoly = high prices, which leaves room for another airline to come in and charge $10 less and capture traffic (the same probably applies in Australia). And that’s not going to change for any of these bigger geographical countries.

That said, despite the fact that Canada is a fairly spread out country, domestic travel levels remain significantly lower on a per capita basis than in the US, so there’s still a relatively underserved/unserved component that hasn’t been tapped. That’s usually a function of deliberately constrained supply (which our resident WS posters are huge fans of). As long as demand outstrips supply, 2 airlines will remain viable.

Some of the more risk-taking folk see an opportunity even there - like PD or even Flair, for example. They’ll probably be driven out by aggressive pricing by ‘competition’ proponents WS (who themselves went complaining to the government when AC targeted them in the early 2000s).

I suspect the Canadian government wants and needs two airlines in the absence of a Deutsche Bahn type set up. One privately owned airline monopoly + corresponding pricing etc will inevitably increase public pressure for government intervention (see the mess that is Canada’s telecom industry), which could go down paths that are uncomfortable for everyone.
 
Thenoflyzone
Posts: 3190
Joined: Sun Jan 07, 2001 4:42 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Sun Apr 04, 2021 11:33 pm

chonetsao wrote:
Two wild proposals that would never came to realisation:

1, Could CX buy out Air Transat and use it as a shell to transfer some asset out from HKG to hedge their future?
or 2, Could BA+QR or BA+AA come to buy out Air Transat in order to increase competition in Canada market?

Yes, I know the answer is no. But still I can't get it out of my head if one of these happens what Canadian market would look like.


It's impossible.

Canada limits foreign individuals and/or foreign airlines from owning more than 25% of a Canadian air carrier. Overall foreign ownership is limited to 49%. (It used to be 25% until 2018. See link below)

So CX could never own more than 25% of Transat.
AA/BA/QR, collectively, could never own more than 25% of Transat.

In both cases, even if said airlines would partner with another non-Canadian investor, collectively, they could never own more than 49% of a Canadian carrier.

https://www.blakes.com/insights/bulleti ... nadian-air
 
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cirrusdragoon
Posts: 480
Joined: Thu Feb 22, 2018 6:42 pm

Re: Air Canada Drops Transat Takeover After Battle With Europe

Mon Apr 05, 2021 4:22 am

ElPistolero wrote:
spinotter wrote:
ElPistolero wrote:

Seek, and ye shall find:

“As a result of this decision, Air Canada will hold:

- A combined 94 per cent share of Canadian carrier capacity to Europe.

- An almost 70 per cent market share on routes from Toronto to London, Paris and Rome.

- A more than 90 per cent share in key leisure markets like Toronto to Athens or Glasgow, while from Montreal to Barcelona or Venice, Air Canada will be the only Canadian airline on those routes.

- For sun markets in winter, Air Canada will have half of the market share from Toronto to Cancun and 56 per cent to Punta Cana.

- Overall, Air Canada’s share of sun destinations from Toronto will rise to 54 per cent while WestJet would hold 19 per cent.

To be 100 per cent clear, here is what we asked the government for:

- Air Canada must be prohibited from using its Aeroplan loyalty program on Air Transat routes, or from using of exclusivity agreements or similar incentives with travel agencies, as these tactics will limit the ability of consumers to exercise competitive choice. Loyalty programs lock customers in by creating significant costs to switching carriers, while they similarly drastically increase competing airlines’ costs for acquiring such passengers.

- Critical slots and infrastructure must be made available to Canadian airlines at London Heathrow (LHR) and Amsterdam Schiphol (AMS) to help offset the international travel market dominance of a merged Air Canada/Air Transat.

- The merged firm must be prohibited from operating at Terminal 3 of Toronto’s Lester B Pearson Airport (YYZ). Terminal 1 boasts 3.7 million square feet with only 14 airlines operating whereas Terminal 3, built 30 years ago has 28 airlines operating in 1.9 million square feet.”

https://blog.westjet.com/flyer-beware-c ... mpetition/

In essence, a rehash of the Competition Bureau’s findings, with a WS spin that’s so absurd, it’s borderline farcical. Some observations:

- Even on competition, WS can’t help but use the language of petty mercantilism (seems to be a trend with Canadian airlines). To wit: “94% of combined Canadian carrier capacity”... fairly meaningless nonsense. If multiple independent carriers (none of the antitrust/JV nonsense) are competing on a route, doesn’t really matter if AC has 100% Canadian carrier capacity on it. Unless one is a rent-seeker at heart, and thinks their airline is entitled to a share of Canadian capacity regardless of its merits. Which, ironically, is the antithesis of the ‘competition’.

- There’s Open Skies with the EU. WS should put its money where its mouth is. It won’t because it can’t. Everybody from the EU to the biggest critics of AC here recognize one simple fact: WS is an irrelevant non-entity on this issue - by its own choice.

- There’s a certain irony in WS invoking the Telecom industry (even though his analogy is wrong - this is more like “Rogers merged with Freedom” than “Bell merges with Rogers”). Like Bell and Rogers, WS’ success is based on profiting from an overpriced ULCC product (that wouldn’t command anything but ULCC fares in most other countries) in the relatively non-competitive Canadian domestic market. Self-awareness doesn’t seem to be a strong point here.

- The loyalty program complaint is absurd. It’s coming from an airline that’s been linked to global FF programs for the better part of two decades but has been too risk-averse to take the plunge. They’ve now come up with a very limited FF plan that’s basically useless for anyone who wants to travel abroad (like to the EU). “The other guy has figured out how to retain loyalty and should be penalized for it” is simply not a valid condition.


From here in the USA, and without any insider knowledge, it seems to me almost incredible that WestJet even exists. Since the demise of CP, AC is such an overweight presence that competition seems doomed to failure. And going by the population of Canada, maybe there should be only one airline - look at France, Germany, Italy, Australia with poor VA. What does the Canadian government want in this respect - how many airlines during/after the pandemic?


Comparing Canada with European countries doesn’t make sense. Those countries are geographically tiny, and have excellent rail transport. TGV, ICE, Thalys... the Canadian equivalent runs outdated 1970s tech and doesn’t even own the tracks it operates on, making it a pretty dodgy mode of travel. Not many folk can afford to take 10 days off to do Toronto - Vancouver return by train.

There’s therefore enough pax to sustain two airlines. One airline = monopoly = high prices, which leaves room for another airline to come in and charge $10 less and capture traffic (the same probably applies in Australia). And that’s not going to change for any of these bigger geographical countries.

That said, despite the fact that Canada is a fairly spread out country, domestic travel levels remain significantly lower on a per capita basis than in the US, so there’s still a relatively underserved/unserved component that hasn’t been tapped. That’s usually a function of deliberately constrained supply (which our resident WS posters are huge fans of). As long as demand outstrips supply, 2 airlines will remain viable.

Some of the more risk-taking folk see an opportunity even there - like PD or even Flair, for example. They’ll probably be driven out by aggressive pricing by ‘competition’ proponents WS (who themselves went complaining to the government when AC targeted them in the early 2000s).

I suspect the Canadian government wants and needs two airlines in the absence of a Deutsche Bahn type set up. One privately owned airline monopoly + corresponding pricing etc will inevitably increase public pressure for government intervention (see the mess that is Canada’s telecom industry), which could go down paths that are uncomfortable for everyone.


Both AC and WS will defend marketshare.
 
acecrackshot
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Re: Air Canada Drops Transat Takeover After EU Competition regulator concerns

Mon Apr 05, 2021 5:17 am

I wonder if any of the US LCCs will start doing weird city pairs like PBG-BLI or BUF-HAV in an attempt to poach traffic when/if the border opens? As fares rise within Canada, the hour or so drive from Vancouver to Bellingham or GTA to Buffalo becomes a little more palatable.
 
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cirrusdragoon
Posts: 480
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Re: Air Canada Drops Transat Takeover After EU Competition regulator concerns

Mon Apr 05, 2021 6:32 am

acecrackshot wrote:
I wonder if any of the US LCCs will start doing weird city pairs like PBG-BLI or BUF-HAV in an attempt to poach traffic when/if the border opens? As fares rise within Canada, the hour or so drive from Vancouver to Bellingham or GTA to Buffalo becomes a little more palatable.


That would make sense when the Canadian dollar was on parity with the US dollar back on sept 20,2007.
 
ElPistolero
Posts: 2450
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Mon Apr 05, 2021 6:35 am

cirrusdragoon wrote:

Both AC and WS will defend marketshare.


Indeed. Which is why WS would do well to stop paying faux homage to competition in their AC-TS statement:

“The real losers in all of this are Canadians who believe in open and healthy competition.”

https://blog.westjet.com/flyer-beware-c ... mpetition/

Only a matter of time before WS temporarily dumps capacity and yields for just long enough to drive new competitors out. While that’s all going to (probably) mostly be above board and legal and whatnot, it almost definitely won’t make the cut for “healthy competition” compatibility.

Like the rest of the WS statement on AC-TS, it’s meaningless noise. But I guess WS needs to feel relevant in all of this, having been written off as a non-entity on the AC-TS merger by both Canada and the EU.
 
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cirrusdragoon
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Mon Apr 05, 2021 7:13 am

ElPistolero wrote:
cirrusdragoon wrote:

Both AC and WS will defend marketshare.


Indeed. Which is why WS would do well to stop paying faux homage to competition in their AC-TS statement:

“The real losers in all of this are Canadians who believe in open and healthy competition.”

https://blog.westjet.com/flyer-beware-c ... mpetition/

Only a matter of time before WS temporarily dumps capacity and yields for just long enough to drive new competitors out. While that’s all going to (probably) mostly be above board and legal and whatnot, it almost definitely won’t make the cut for “healthy competition” compatibility.

Like the rest of the WS statement on AC-TS, it’s meaningless noise. But I guess WS needs to feel relevant in all of this, having been written off as a non-entity on the AC-TS merger by both Canada and the EU.


But to be fair , they have not even had the chance yet to properly enter those markets. It takes time , money to launch new routes. Air Canada has had the convenience of being a crown corporation and benefited from the many years of network expansion by virtue of having the government support as a crown corporation in those days. in 1967 the Canadian government allowed CP Air, which was given the right to establish international air routes across the Pacific Ocean in 1948, to establish a route from Vancouver to San Francisco, California—the first trans-border route not flown by Air Canada. Despite the encroaching competition from CP Air and that airline’s dominance in international routes across the Pacific Ocean, Air Canada held, by government fiat, a monopoly on all other international routes and intercontinental domestic air travel.

The merger would have just further created more barriers for anyone trying to gain marketshare between Europe and Canada. I believe by the EU not hastily agreeing to this , it signifies that indeed they did think of possible new entrants who might want to establish themselves. Just because the EU states WS does not have much presence in EU is precisely why this was not signed off on. They were not about to allow further monopolization by Air Canada. Of course they see WS’s early presence as not enough to create competition to the merger. That is the point of not approving the deal. Do you expect an infant to find the derivative of an equation to compete with adult who knows or has all the answers to the exam questions?
 
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Aresxerexade
Posts: 94
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Mon Apr 05, 2021 7:48 am

ElPistolero wrote:

Like the rest of the WS statement on AC-TS, it’s meaningless noise. But I guess WS needs to feel relevant in all of this, having been written off as a non-entity on the AC-TS merger by both Canada and the EU.


Nothing to be ashamed of. Especially since when one entity which was never a crown corporation and has slowly built up its presence to where it is today. The other one had routes and networks handed to them by former predecessor governments.
 
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Revelation
Posts: 27352
Joined: Wed Feb 09, 2005 9:37 pm

Re: Air Canada Drops Transat Takeover After Battle With Europe

Mon Apr 05, 2021 2:05 pm

ElPistolero wrote:
Comparing Canada with European countries doesn’t make sense. Those countries are geographically tiny, and have excellent rail transport. TGV, ICE, Thalys... the Canadian equivalent runs outdated 1970s tech and doesn’t even own the tracks it operates on, making it a pretty dodgy mode of travel. Not many folk can afford to take 10 days off to do Toronto - Vancouver return by train.

There’s therefore enough pax to sustain two airlines. One airline = monopoly = high prices, which leaves room for another airline to come in and charge $10 less and capture traffic (the same probably applies in Australia). And that’s not going to change for any of these bigger geographical countries.

That said, despite the fact that Canada is a fairly spread out country, domestic travel levels remain significantly lower on a per capita basis than in the US, so there’s still a relatively underserved/unserved component that hasn’t been tapped. That’s usually a function of deliberately constrained supply (which our resident WS posters are huge fans of). As long as demand outstrips supply, 2 airlines will remain viable.

Some of the more risk-taking folk see an opportunity even there - like PD or even Flair, for example. They’ll probably be driven out by aggressive pricing by ‘competition’ proponents WS (who themselves went complaining to the government when AC targeted them in the early 2000s).

I suspect the Canadian government wants and needs two airlines in the absence of a Deutsche Bahn type set up. One privately owned airline monopoly + corresponding pricing etc will inevitably increase public pressure for government intervention (see the mess that is Canada’s telecom industry), which could go down paths that are uncomfortable for everyone.

Some excellent observations, IMO.

My view from the northern side of Boston's suburban sprawl is that it's kind of a shame that supply is constrained. There actually is a lot of French Canadian heritage around here, starting a century or two ago when immigrants came to work in the mills of New England. Lots of people identify as French Canadian and still have family in Quebec and the Maritime Provinces. For instance I only know what Groton is ( ref: https://en.wikipedia.org/wiki/Cretons ) because it's available in the local market.

I know a few people who take an entire week off work to drive a solid two days to visit relatives and turn around and drive back, and many would fly if fares were reasonable. Personally I would not mind doing some tourism up in that general direction, but as you mentioned there isn't much supply and the AC flights in particular charge eye watering prices and often require flying to YYZ then back out to the destination.
 
MIflyer12
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Re: Air Canada Drops Transat Takeover After Battle With Europe

Mon Apr 05, 2021 2:32 pm

Revelation wrote:
I know a few people who take an entire week off work to drive a solid two days to visit relatives and turn around and drive back, and many would fly if fares were reasonable. Personally I would not mind doing some tourism up in that general direction, but as you mentioned there isn't much supply and the AC flights in particular charge eye watering prices and often require flying to YYZ then back out to the destination.


Dude, there is no unmet demand between the U.S. and Canada - only demand at fares too low to earn carriers the kind of money they want to make (which, over multiple business cycles, isn't a high return on capital or sales). There's an Open Skies agreement, fifteen+ carriers with the aircraft to fly transborder, and (generally) plenty of airport capacity. U.S.+Canada and the EU are great examples of open markets (within their respective universes, anyway).

A week ago LAXintl quoted a UA exec that talked about the folly of chasing market share, yet a.net is full of hundreds of threads and posts of the essence 'If only carriers would give away tickets they could fill planes from little poop airport A to little poop airport B.'

Canada needs a national airline (although not a nationalized airline, nor a 'flag carrier' in the way the term gets used frequently). It's a big country without a lot of people. Lots of areas are remote, for which year-round freeway access would be implausible and high speed rail a drug-addled fantasy. Ten little carriers couldn't aggregate traffic and serve the country the way AC does today. This is a basic economics of geography issue. Unless provinces are going to heavily subsidize point-to-point flights to all but the top ~15 airports, and demand utterly seamless interlining and through-fares, AC as not-quite-a-monopolist is what works. See Qantas. See Air New Zealand. See domestic Chile LATAM.

I get why the EU doesn't want to see the reduction in competition. (No other non-AC Canadian carrier compares to Transat's historical offering - WestJet is a joke.) But killing the deal doesn't preserve Air Transat and the competition it provides.

IMHO it's very telling that the arguments for government intervention have largely centered on:

- the Liberals need to worry about the next election so they can't let it fold

- Air Transat needs to keep its Quebec HQ and focus

and not about the carrier providing essential services to communities, or of the role of competition. This is a textbook example of bad governance where industry or a firm co-opts government and taxpayers. Vestager had the fortitude to call this out where Trudeau's government did not. The Liberals just wanted the employment problem to go away and ignored the competitive effects.
 
Steelhead
Posts: 286
Joined: Wed Nov 16, 2005 3:04 am

Re: Air Canada Drops Transat Takeover After EU Competition regulator concerns

Tue Apr 06, 2021 1:45 pm

Air Transat seeks CAD 500 Mill. gov.-aid to stay in business:

https://www.thestar.com/business/2021/0 ... eover.html
 
ElPistolero
Posts: 2450
Joined: Thu Feb 23, 2012 12:44 am

Re: Air Canada Drops Transat Takeover After Battle With Europe

Tue Apr 06, 2021 6:11 pm

cirrusdragoon wrote:

But to be fair , they have not even had the chance yet to properly enter those markets. It takes time , money to launch new routes. Air Canada has had the convenience of being a crown corporation and benefited from the many years of network expansion by virtue of having the government support as a crown corporation in those days. in 1967 the Canadian government allowed CP Air, which was given the right to establish international air routes across the Pacific Ocean in 1948, to establish a route from Vancouver to San Francisco, California—the first trans-border route not flown by Air Canada. Despite the encroaching competition from CP Air and that airline’s dominance in international routes across the Pacific Ocean, Air Canada held, by government fiat, a monopoly on all other international routes and intercontinental domestic air travel.


All of this is undoubtedly true, notwithstanding that the same can be said of many airlines around the world; this isn’t unique to AC or Canada.

Notably, though, WS doesn’t say any of this itself. Instead it resorts to meaningless stats - ‘AC controls 94% of Canadian carrier capacity?!? Ye gods!!!’ I don’t think the implicit notion that “Canadian carrier capacity” should be divided more equitably among Canadian carriers because they also happen to be Canadian, is lost on anyone.

This is fairly basic mercantilist / rent-seeking language. Doesn’t sit well with the notion of competition. It is admittedly an amusing and audacious - if incredibly cynical - ploy; harnessing the notion of “competition” to benefit from rent-seeking ;).

Also notable that WS doesn’t challenge the JVs and anti-trusts that have created the current Canada-EU market conditions that doomed the AC-TS merger. Take those away and it becomes a different ballgame. But WS hasn’t gone down that route, presumably because it, too, harbours hopes of joining one of those anti-trust JVs. Which, not that it really needs to be pointed out, is inconsistent with its apparent support for competition.

WS’ position is, frankly, about what you’d expect from one rent-seeker having a go at another: meaningless barbs, but careful to avoid any actual criticism of deep-rooted structural problems that it too hopes to benefit from. “Competition”, “consumers” etc are meaningless buzzwords in this context.

cirrusdragoon wrote:
The merger would have just further created more barriers for anyone trying to gain marketshare between Europe and Canada. I believe by the EU not hastily agreeing to this , it signifies that indeed they did think of possible new entrants who might want to establish themselves. Just because the EU states WS does not have much presence in EU is precisely why this was not signed off on. They were not about to allow further monopolization by Air Canada. Of course they see WS’s early presence as not enough to create competition to the merger. That is the point of not approving the deal. Do you expect an infant to find the derivative of an equation to compete with adult who knows or has all the answers to the exam questions?


I doubt the EU cares about WS’s potential (at WS’ current decision making rate, when should we expect it to become a serious TATL player? 2035? 2040? 2050?).

I suspect that they - like many of us here - simply looked at the numbers, wondered what Canada was thinking, and decided that they had no interest in allowing Canada to export the somewhat inevitable and problematic outcome of its aviation policies.

I think they’ve sent a firm message back to Canada that if it intends to play the “Canadian champion” game with its relatively more protectionist policies, creating these kinds of market imbalances, it should be prepared to sacrifice other Canadian airlines on that altar; no cake-ism.

With any luck, TS survives.

cirrusdragoon wrote:
Do you expect an infant to find the derivative of an equation to compete with adult who knows or has all the answers to the exam questions?


I could argue that a 20 + year old is not an infant. But I won’t. Instead, I’ll take your cue and point out that infants should refrain from commenting on grown up issues they evidently lack the education for.

I kid, of course, but you did serve it up on a silver platter :).
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