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ScottB
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Joined: Fri Jul 28, 2000 1:25 am

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 5:42 pm

IceCream wrote:
And I mean, looking at the actual ruling itself, it did seem a bit arbitrary and not very fair to DL/WS


How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA. If they were that concerned about the value of the slots being depressed during a pandemic, I think a reasonable accommodation might have been allowing DL/WS to lease slots to new/limited entrants for two or three years, with an auction then occurring once traffic had rebounded somewhat.

To some degree, I see their point about the interline requirement, but AFAIK AC doesn't refuse interlines with U.S. carriers and the UA/AC JV pre-dates much of the consolidation in the industry on both sides of the border. Transborder market conditions are different now vs. when the UA/AC JV was allowed to go forward.
 
bigb
Posts: 1735
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Re: Delta/WestJet Joint Venture Tentatively Approved

Sat Nov 21, 2020 5:44 pm

aemoreira1981 wrote:
SurfandSnow wrote:
Ishrion wrote:
Update: Yep, Delta and WestJet are withdrawing the application.



https://www.regulations.gov/document?D= ... -0154-0056


Interesting. Maybe the LGA slots are worth more to DL and WS than some seem to believe. In 5 years time, when the world has moved on from the pandemic and NYC has bounced back, LGA slots could be quite the scarce commodity again.


Also, DL tends to use its slots a lot and LGA/JFK is the largest operation for DL outside of ATL. (Pre-COVID, LGA/JFK had about 500 combined flights a day.) NK also had a valid point, and I'm surprised they made it rather than F9. The only way to get slots at LGA really is to buy or lease from someone else (that is how WN got into LGA...first acquiring TZ's slots). Could the reconfigured LGA also allow for more slots, since there will be more ramp space with the terminals basically up against the Grand Central Parkway?

Giving up 16 pairs of slots at LGA has to be the dealbreaker though. With vaccinations en masse likely during the summer of 2021, one has to expect that the market will rebound for winter 2021, and then it would be extremely valuable.

These were the slot holdings for W19, the last reliable period (the FAA did not publish a Summer 2020 slot holding) (only at least 5x weekly slots are counted) https://www.faa.gov/about/office_org/he ... LS-W19.pdf

AA: 327
AC: 41
B6: 31
DL: 555
F9: 4
NK: 22
UA: 76
WN: 69
WS: 16

LGA basically existed (pre-COVID) as a duopoly between DL (41.8 percent market share) and AA (25.5 percent market share) WN is a distant third at 9.4 percent, but carries an absolute majority of cargo into and out of LGA.


Ramp and taxiway configuration doesn’t determine slots, it’s runway capacity (departure and arrival rates) and airspace configuration that determines if a airport will be slot controlled by the FAA.
 
MIflyer12
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 6:11 pm

ScottB wrote:
IceCream wrote:
And I mean, looking at the actual ruling itself, it did seem a bit arbitrary and not very fair to DL/WS


How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA. If they were that concerned about the value of the slots being depressed during a pandemic, I think a reasonable accommodation might have been allowing DL/WS to lease slots to new/limited entrants for two or three years, with an auction then occurring once traffic had rebounded somewhat.

To some degree, I see their point about the interline requirement, but AFAIK AC doesn't refuse interlines with U.S. carriers and the UA/AC JV pre-dates much of the consolidation in the industry on both sides of the border. Transborder market conditions are different now vs. when the UA/AC JV was allowed to go forward.


Market share for DL/WS would be far under AC/UA -- and the DOT is welcome to withdraw approval for AC/UA if it thinks that 27% would be too much

'Arbitrary and capricious' is a key phase in DL/WS's reply. The DOT's JV decisions are made under the Administrative Procedure Act - and the APA prohibits decisions that are arbitrary and capricious, leaving DL the path of taking the DOT's decision to court.

The carriers could have continued to negotiate this with the DOT. Instead of 16 LGA slots, 'How about 12 LGA slots and a gate at SLC?' kind of thing.

There really are a few good reasons why DL or WS could be happy with this ruling. To start:

- Heck no - we don't want to be stuck with 50% of their losses now that Covid has crushed demand!

- WestJet's abandonment of some airports in the East https://calgaryherald.com/news/local-ne ... 20industry.

- anything they may have discovered since the first announcement of intent to submit the JV application nearly 36 months ago, including little use by the other's network under codesharing
 
AMALH747430
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 6:29 pm

DL has been a pretty savvy (maybe the most savvy in the US) operator in recent times. As someone mentioned, NYC is their second largest market after ATL. I think they probably want to see how things shake with the AA/B6 codeshare that's pending government approval before they turn loose of valuable LGA slots. AA and/or B6 would probably be unlikely to receive any of those slots, but a more fragmented market would benefit their market share battle with DL. Additionally, DL may not want to put this many eggs in the Canada basket right now as they may need those slots to compete on the domestic front. Add to that, you've got a somewhat desperate WN taking an aggressive "dartboard" like approach to expansion in an attempt to chase revenue to make up for their staffing surplus. If WN were to obtain more LGA slots they could do a little short term damage there, though they haven't been all that successful long term they can still do damage from the point of sale in their "focus cities."
 
capejet
Posts: 199
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 6:51 pm

I think it would make a lot of sense for West Jet to look into codesharing with AA now. I could see AA pulling down all their Canada service except for a few Toronto - LaGuardia flights and West Jet could fly all the LAX/PHX/DFW/ORD/MIA/CLT/PHL/JFK markets for AA. There is no way AA will want to keep money losing routes alive with all the debt they are carrying. AA will gladly let West Jet take over almost all Canada markets.
 
Thomaas
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 6:54 pm

I doubt that the LGA slots is what truly led to the dissolution of the JV, especially when you consider that they would simply need to backfill for 8x daily LGA-YYZ, from which Delta pulled out of following the codeshare with WestJet on the route. This represents less than 3 percent of their slot portfolio at LGA, DL already being much larger than #2 AA at the airport. You also have to consider that the WS slots were remedy slots acquired as a condition for the DL-US slot swap, so the fact they were even allowed to codeshare and effectively have access to those slots is questionable at best.
 
usflyer msp
Posts: 4583
Joined: Tue May 23, 2000 11:50 am

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 7:57 pm

Thomaas wrote:
I doubt that the LGA slots is what truly led to the dissolution of the JV, especially when you consider that they would simply need to backfill for 8x daily LGA-YYZ, from which Delta pulled out of following the codeshare with WestJet on the route. This represents less than 3 percent of their slot portfolio at LGA, DL already being much larger than #2 AA at the airport. You also have to consider that the WS slots were remedy slots acquired as a condition for the DL-US slot swap, so the fact they were even allowed to codeshare and effectively have access to those slots is questionable at best.


I suspect WS did not want to give up their only LGA slots, a valuable asset in normal times that they would likely be unable to get back later if they broke up with DL. Heck, WS does not have alot of assets so they might have used those slots as collateral on a loan and can't give them up.
 
Whiteguy
Posts: 1760
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 8:04 pm

usflyer msp wrote:
Thomaas wrote:
I doubt that the LGA slots is what truly led to the dissolution of the JV, especially when you consider that they would simply need to backfill for 8x daily LGA-YYZ, from which Delta pulled out of following the codeshare with WestJet on the route. This represents less than 3 percent of their slot portfolio at LGA, DL already being much larger than #2 AA at the airport. You also have to consider that the WS slots were remedy slots acquired as a condition for the DL-US slot swap, so the fact they were even allowed to codeshare and effectively have access to those slots is questionable at best.


I suspect WS did not want to give up their only LGA slots, a valuable asset in normal times that they would likely be unable to get back later if they broke up with DL. Heck, WS does not have alot of assets so they might have used those slots as collateral on a loan and can't give them up.


The requirement wasn’t for WS specifically to give up their slots, I doubt this really anything to do with the pausing of the JV. I think it’s more of a “time out” for both companies as they navigate COVID and they’ll look at it again in a few years.
 
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Polot
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 8:11 pm

Whiteguy wrote:
usflyer msp wrote:
Thomaas wrote:
I doubt that the LGA slots is what truly led to the dissolution of the JV, especially when you consider that they would simply need to backfill for 8x daily LGA-YYZ, from which Delta pulled out of following the codeshare with WestJet on the route. This represents less than 3 percent of their slot portfolio at LGA, DL already being much larger than #2 AA at the airport. You also have to consider that the WS slots were remedy slots acquired as a condition for the DL-US slot swap, so the fact they were even allowed to codeshare and effectively have access to those slots is questionable at best.


I suspect WS did not want to give up their only LGA slots, a valuable asset in normal times that they would likely be unable to get back later if they broke up with DL. Heck, WS does not have alot of assets so they might have used those slots as collateral on a loan and can't give them up.


The requirement wasn’t for WS specifically to give up their slots, I doubt this really anything to do with the pausing of the JV. I think it’s more of a “time out” for both companies as they navigate COVID and they’ll look at it again in a few years.

No, the slots could have come from DL but Thomaas inadvertently touched upon the issue without realizing it. DL does not fly LGA-YYZ, rather they codeshare with WS. In fact DL currently does not serve Canada at all from LGA. So in other words there are not duplicate DL Canadian flights that DL/WS can drop, so any DL slot that cedes is a flight in another market that they have to drop. And WS has limited options on where they can use their slots (airport must be within perimeter and have preclearance) and I doubt they want to drop their precious few slots in the event of a DL/WA breakup in the future...
 
PSU.DTW.SCE
Posts: 9328
Joined: Mon Jan 28, 2002 11:45 am

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 9:10 pm

MIflyer12 wrote:
ScottB wrote:
IceCream wrote:
And I mean, looking at the actual ruling itself, it did seem a bit arbitrary and not very fair to DL/WS


How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA. If they were that concerned about the value of the slots being depressed during a pandemic, I think a reasonable accommodation might have been allowing DL/WS to lease slots to new/limited entrants for two or three years, with an auction then occurring once traffic had rebounded somewhat.

To some degree, I see their point about the interline requirement, but AFAIK AC doesn't refuse interlines with U.S. carriers and the UA/AC JV pre-dates much of the consolidation in the industry on both sides of the border. Transborder market conditions are different now vs. when the UA/AC JV was allowed to go forward.


Market share for DL/WS would be far under AC/UA -- and the DOT is welcome to withdraw approval for AC/UA if it thinks that 27% would be too much

'Arbitrary and capricious' is a key phase in DL/WS's reply. The DOT's JV decisions are made under the Administrative Procedure Act - and the APA prohibits decisions that are arbitrary and capricious, leaving DL the path of taking the DOT's decision to court.

The carriers could have continued to negotiate this with the DOT. Instead of 16 LGA slots, 'How about 12 LGA slots and a gate at SLC?' kind of thing.

There really are a few good reasons why DL or WS could be happy with this ruling. To start:

- Heck no - we don't want to be stuck with 50% of their losses now that Covid has crushed demand!

- WestJet's abandonment of some airports in the East https://calgaryherald.com/news/local-ne ... 20industry.

- anything they may have discovered since the first announcement of intent to submit the JV application nearly 36 months ago, including little use by the other's network under codesharing

This sure seems like an easy way to abandon immediate plans for the JV since business conditions have obviously changed. The JV wouldn’t even be beneficial to either party until at least 2022 or 2023 and even then all depends on how things recover.

I frankly never understood what exactly was beneficial to DL out of this that they couldn’t fly from their own hubs on their own metal.
 
Cointrin330
Posts: 2268
Joined: Sat Jul 16, 2016 12:23 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 9:42 pm

AmericanAir88 wrote:
Why would B6 want slots at LGA? They have a 4 gate terminal. Plus aren’t they making a power move in EWR

Will B6 move out of the MAT at LGA once everything is built?


Likely, yes given the AA/B6 partnership which will include some cooperation there too. As for EWR, they are indeed continue to grow it but the transcons have been very poor performers but it's too early to tell.
 
tphuang
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 10:00 pm

Cointrin330 wrote:
AmericanAir88 wrote:
Why would B6 want slots at LGA? They have a 4 gate terminal. Plus aren’t they making a power move in EWR

Will B6 move out of the MAT at LGA once everything is built?


Likely, yes given the AA/B6 partnership which will include some cooperation there too. As for EWR, they are indeed continue to grow it but the transcons have been very poor performers but it's too early to tell.

what? Transcons have been their best performers out of their new EWR routes. They have scheduled more flights on EWR-LAX than JFK-LAX in December.
 
TYWoolman
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 10:49 pm

Very interesting. Maybe Delta and WestJet should have just called it a "strategic partnership" instead. This wan't even between two domestic carriers trying to carve out separate growth strategies in a defect merger scenario in a dwindling, covid environment. Smart move on Delta's part here. Not the right time.
 
tphuang
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 11:00 pm

TYWoolman wrote:
Very interesting. Maybe Delta and WestJet should have just called it a "strategic partnership" instead. This wan't even between two domestic carriers trying to carve out separate growth strategies in a defect merger scenario in a dwindling, covid environment. Smart move on Delta's part here. Not the right time.


Well, JV allows you to act as one. They are already strategic partners.
 
TYWoolman
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Joined: Sat Jun 24, 2017 8:24 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 11:12 pm

Delta and WestJet should just continue to codeshare, keep all valuable slots, and allow the post-covid market dynamic to get rid of inefficiencies within their own organizations first. This way they can get their pseudo-JV in this current crisis.
 
jimbo737
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 11:37 pm

usflyer msp wrote:
Thomaas wrote:
I doubt that the LGA slots is what truly led to the dissolution of the JV, especially when you consider that they would simply need to backfill for 8x daily LGA-YYZ, from which Delta pulled out of following the codeshare with WestJet on the route. This represents less than 3 percent of their slot portfolio at LGA, DL already being much larger than #2 AA at the airport. You also have to consider that the WS slots were remedy slots acquired as a condition for the DL-US slot swap, so the fact they were even allowed to codeshare and effectively have access to those slots is questionable at best.


I suspect WS did not want to give up their only LGA slots, a valuable asset in normal times that they would likely be unable to get back later if they broke up with DL. Heck, WS does not have alot of assets so they might have used those slots as collateral on a loan and can't give them up.


Prior to Covid, WS had one of the best balance sheets in the business. Onex reported a $500m profit in their latest quarter. WS is in no more danger of failing than any other North American airline.
 
PSU.DTW.SCE
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sat Nov 21, 2020 11:47 pm

Dumb question, but US-Canada have complete open skies correct?

Meaning there are no restrictions on the amount of flying between the two countries?
 
Cubsrule
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 12:20 am

PSU.DTW.SCE wrote:
Dumb question, but US-Canada have complete open skies correct?

Meaning there are no restrictions on the amount of flying between the two countries?


Correct, at least for US and Canadian-flagged carriers.
 
Dominion301
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 3:32 am

Polot wrote:
Whiteguy wrote:
usflyer msp wrote:

I suspect WS did not want to give up their only LGA slots, a valuable asset in normal times that they would likely be unable to get back later if they broke up with DL. Heck, WS does not have alot of assets so they might have used those slots as collateral on a loan and can't give them up.


The requirement wasn’t for WS specifically to give up their slots, I doubt this really anything to do with the pausing of the JV. I think it’s more of a “time out” for both companies as they navigate COVID and they’ll look at it again in a few years.

No, the slots could have come from DL but Thomaas inadvertently touched upon the issue without realizing it. DL does not fly LGA-YYZ, rather they codeshare with WS. In fact DL currently does not serve Canada at all from LGA. So in other words there are not duplicate DL Canadian flights that DL/WS can drop, so any DL slot that cedes is a flight in another market that they have to drop. And WS has limited options on where they can use their slots (airport must be within perimeter and have preclearance) and I doubt they want to drop their precious few slots in the event of a DL/WA breakup in the future...


Pre-COVID DL were serving YUL and YOW out of LGA. Now, they've indefinitely suspended the latter...quite the turn of events given DL were going to increase YOW's capacity by 50% in summer 2020. Tough times to say the least.
 
ScottB
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 5:21 am

Polot wrote:
WS has limited options on where they can use their slots (airport must be within perimeter and have preclearance)


That's not a terribly meaningful limitation on their LGA ops. There really aren't any Canadian airports without preclearance which could support daily service on anything in the WS/WR/WO fleets to NYC with the exception of YTZ. YYC and YVR could support non-stops to LGA, but then again, so could SEA, SFO, LAX, PHX, LAS, SLC, AUS, SAT, etc.

MIflyer12 wrote:
Market share for DL/WS would be far under AC/UA -- and the DOT is welcome to withdraw approval for AC/UA if it thinks that 27% would be too much


It doesn't appear that the combined DL/WS market share in the aggregate transborder market was DOT's primary concern, so try again.
 
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Polot
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 11:47 am

ScottB wrote:
Polot wrote:
WS has limited options on where they can use their slots (airport must be within perimeter and have preclearance)


That's not a terribly meaningful limitation on their LGA ops. There really aren't any Canadian airports without preclearance which could support daily service on anything in the WS/WR/WO fleets to NYC with the exception of YTZ. YYC and YVR could support non-stops to LGA, but then again, so could SEA, SFO, LAX, PHX, LAS, SLC, AUS, SAT, etc.

I didn’t mean that statement as a bad thing for WS, just that by looking at the broader WS/DL JV and where they could cut flights if they gave up the 16 slots WS does not have a lot of options for cuts and where to spread flights around to lessen the pain on their network.
 
tphuang
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 12:26 pm

Polot wrote:
ScottB wrote:
Polot wrote:
WS has limited options on where they can use their slots (airport must be within perimeter and have preclearance)


That's not a terribly meaningful limitation on their LGA ops. There really aren't any Canadian airports without preclearance which could support daily service on anything in the WS/WR/WO fleets to NYC with the exception of YTZ. YYC and YVR could support non-stops to LGA, but then again, so could SEA, SFO, LAX, PHX, LAS, SLC, AUS, SAT, etc.

I didn’t mean that statement as a bad thing for WS, just that by looking at the broader WS/DL JV and where they could cut flights if they gave up the 16 slots WS does not have a lot of options for cuts and where to spread flights around to lessen the pain on their network.


The slots don't have to come from WS. They can come from DL. Frankly, a lot of these short haul high frequency markets out of LGA aren't going to have the business demand to need those frequency levels for a long long time in this post COVID world.
 
Cointrin330
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Re: Delta/WestJet Joint Venture Tentatively Approved

Sun Nov 22, 2020 1:03 pm

tphuang wrote:
TigerFlyer wrote:
The DOT decision was incredibly over-reaching and a slap in the face to WestJet and the Canadian competition authorities who approved the transaction more than a year ago. I would not be surprised to see both carriers walk on this approval, which comes at too high a price. AA/BA walked on an ATI approval condition requiring 16 LHR slot divestitures in 2002, and got it approved, albeit some years later with only 4 LHR slots. DL and US rejected the DOT's initial conditions on the LGA/DCA slot swap and re-filed and got it approved a short time later with much less onerous conditions.

WS stepped up to the plate and invested in the slots, which it won fare and square at auction for some $17M. To require them to divest all of them, just as they finally stand a chance of turning a profit in a JV with Delta is ridiculous. The JV needs this "pipeline" capacity on LGA-YYZ to enable the network benefits of the JV. If auctioned, it will just go to SWA for more FLL service, which NYC needs like a hole in the head. At minimum WS should get to keep 4 slots to preserve its own metal service in the one of the largest U.S. international markets.

Not what you'd expect from a "pro business" administration. The carriers are better off taking their chances in the next one.


LGA slots right now is an albatross for DL. Demand out of LGA on business routes is next to 0, EWR and even JFK are doing much better than LGA in terms of demand. And this trend will continue for a while as companies have allowed people to work from home until at least next summer. Which has enabled a lot of people to move to the outer boroughs. DL themselves have said they have to get used to demand not coming back to New York for a long time.

All of this means the value of LGA slots for a business traffic oriented airline like DL have dropped a lot. This is a small price to pay. Slot waiver is probably going away by Q2 of 2021. DL is really going to hurt financially trying to utilize those slots.

Also, why in the world would WN try LGA-FLL when they haven't been able to make any NYC to Florida route work? They have many focus cities that would do well with additional LGA slots.


You have this completely wrong. DL, in spite of the pandemic and the very soft demand into and out of NYC, is in it for the long game. They've invested billions in NYC and took them years to turn a profit at JFK/LGA. During that time, they've captured a much larger slice of the Greater NYC corporate travel pie and even as demand there will remain low for a time, it will eventually ramp up again. DL is well positioned competitively at JFK and at LGA and will absorb the costs of holding on to slots. You also don't understand the competitive landscape and see it through the eyes of B6 only. B6 is a great airline and a cut above the industry's broad offerings, but it's share of corporate travel is fairly small and for that reason, it needs the partnership with AA (while AA needs B6 to help sustain long haul at JFK and reduce costs at LGA where it can cede some traffic to B6 and reduce its costs while still reaping some profits with lower overhead. You seem convinced that AA on the horizon will be left with a single JFK-LHR frequency and not much else. You have it so wrong, it's comical. I'll agree that AA has mismanaged NYC for years, and had the upper hand before DL's big buildup and B6's lower costs reshaped the landscape making AA's higher cost structures pre-Chapter 11 unable to make JFK work to its advantage. But AA had turned the corner at JFK in 2019. The shift to all 777 service on long hauls to Europe and standardizing the entire JFK intercontinental operation on the 777 was a smart move and AA acknowledged, it made the operation profitable. The 777 has larger cargo capacity, a better dispatch rate than the 767, and all 77W/772 service at JFK had the P/E cabin. AA and BA dwarf everyone else in the NYC-LON market and combined, capture the biggest slice and premium of what was, pre-pandemic, a $1BN revenue route. AA will be just fine where it is at JFK and at LGA, as the #2 carrier pre-COVID, it does quite well. The B6 partnership, whatever comes of it, will allow AA to exit a lot of the regional flying it has/had at JFK, and frankly, doesn't really need, as JFK has not been a "hub" for AA for years. AA and B6 will need to develop a fast, reliable and business friendly shuttle air side between T8 and T5 and potentially, provide B6 customers with lounge access at JFK as B6 doesn't have premium lounges, which are what pull it down on transcons. As someone who flies AA out of JFK to Europe and Latin America up to 15 times a year (pre-pandemic) flights were always full, notably in the front. Not a sign of profitability, I am aware of that, but T8 even at its busiest times, is a breeze compared to the nightmare that T4 is with clogged security lines and long walks to gates. Putting most of oneworld under the T8 roof will also be a strong selling point for NYC corporate sales when they come back. Lastly, the AS entry into oneworld is not insignifcant. I predict AS will exit LAX/SFO from JFK, focus on SEA, PDX, and maybe SAN, so AA does not need to fly those and all that will help AA preserve LAX/SFO share it has, while still being able to compete with DL, UA, and B6 in the market, the biggest domestic one and the richest, in the country.
 
TYWoolman
Posts: 796
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Re: Delta/WestJet Joint Venture Tentatively Approved

Sun Nov 22, 2020 1:32 pm

Cointrin330 wrote:
tphuang wrote:
TigerFlyer wrote:
The DOT decision was incredibly over-reaching and a slap in the face to WestJet and the Canadian competition authorities who approved the transaction more than a year ago. I would not be surprised to see both carriers walk on this approval, which comes at too high a price. AA/BA walked on an ATI approval condition requiring 16 LHR slot divestitures in 2002, and got it approved, albeit some years later with only 4 LHR slots. DL and US rejected the DOT's initial conditions on the LGA/DCA slot swap and re-filed and got it approved a short time later with much less onerous conditions.

WS stepped up to the plate and invested in the slots, which it won fare and square at auction for some $17M. To require them to divest all of them, just as they finally stand a chance of turning a profit in a JV with Delta is ridiculous. The JV needs this "pipeline" capacity on LGA-YYZ to enable the network benefits of the JV. If auctioned, it will just go to SWA for more FLL service, which NYC needs like a hole in the head. At minimum WS should get to keep 4 slots to preserve its own metal service in the one of the largest U.S. international markets.

Not what you'd expect from a "pro business" administration. The carriers are better off taking their chances in the next one.


LGA slots right now is an albatross for DL. Demand out of LGA on business routes is next to 0, EWR and even JFK are doing much better than LGA in terms of demand. And this trend will continue for a while as companies have allowed people to work from home until at least next summer. Which has enabled a lot of people to move to the outer boroughs. DL themselves have said they have to get used to demand not coming back to New York for a long time.

All of this means the value of LGA slots for a business traffic oriented airline like DL have dropped a lot. This is a small price to pay. Slot waiver is probably going away by Q2 of 2021. DL is really going to hurt financially trying to utilize those slots.

Also, why in the world would WN try LGA-FLL when they haven't been able to make any NYC to Florida route work? They have many focus cities that would do well with additional LGA slots.


You have this completely wrong. DL, in spite of the pandemic and the very soft demand into and out of NYC, is in it for the long game. They've invested billions in NYC and took them years to turn a profit at JFK/LGA. During that time, they've captured a much larger slice of the Greater NYC corporate travel pie and even as demand there will remain low for a time, it will eventually ramp up again. DL is well positioned competitively at JFK and at LGA and will absorb the costs of holding on to slots. You also don't understand the competitive landscape and see it through the eyes of B6 only. B6 is a great airline and a cut above the industry's broad offerings, but it's share of corporate travel is fairly small and for that reason, it needs the partnership with AA (while AA needs B6 to help sustain long haul at JFK and reduce costs at LGA where it can cede some traffic to B6 and reduce its costs while still reaping some profits with lower overhead. You seem convinced that AA on the horizon will be left with a single JFK-LHR frequency and not much else. You have it so wrong, it's comical. I'll agree that AA has mismanaged NYC for years, and had the upper hand before DL's big buildup and B6's lower costs reshaped the landscape making AA's higher cost structures pre-Chapter 11 unable to make JFK work to its advantage. But AA had turned the corner at JFK in 2019. The shift to all 777 service on long hauls to Europe and standardizing the entire JFK intercontinental operation on the 777 was a smart move and AA acknowledged, it made the operation profitable. The 777 has larger cargo capacity, a better dispatch rate than the 767, and all 77W/772 service at JFK had the P/E cabin. AA and BA dwarf everyone else in the NYC-LON market and combined, capture the biggest slice and premium of what was, pre-pandemic, a $1BN revenue route. AA will be just fine where it is at JFK and at LGA, as the #2 carrier pre-COVID, it does quite well. The B6 partnership, whatever comes of it, will allow AA to exit a lot of the regional flying it has/had at JFK, and frankly, doesn't really need, as JFK has not been a "hub" for AA for years. AA and B6 will need to develop a fast, reliable and business friendly shuttle air side between T8 and T5 and potentially, provide B6 customers with lounge access at JFK as B6 doesn't have premium lounges, which are what pull it down on transcons. As someone who flies AA out of JFK to Europe and Latin America up to 15 times a year (pre-pandemic) flights were always full, notably in the front. Not a sign of profitability, I am aware of that, but T8 even at its busiest times, is a breeze compared to the nightmare that T4 is with clogged security lines and long walks to gates. Putting most of oneworld under the T8 roof will also be a strong selling point for NYC corporate sales when they come back. Lastly, the AS entry into oneworld is not insignifcant. I predict AS will exit LAX/SFO from JFK, focus on SEA, PDX, and maybe SAN, so AA does not need to fly those and all that will help AA preserve LAX/SFO share it has, while still being able to compete with DL, UA, and B6 in the market, the biggest domestic one and the richest, in the country.


Your predictions support why DOJ should examine AA's domestic "alliance" proposals because rationalization in this current environment should be borne by natural market forces, not ambiguous collusion tactics that force efficiency at the detriment of other carriers who may not be (and decidedly so) accepting the same higher level of government hand-outs as the parties involved in these alliances are.
 
MIflyer12
Posts: 11169
Joined: Mon Feb 18, 2013 11:58 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 1:48 pm

ScottB wrote:
MIflyer12 wrote:
Market share for DL/WS would be far under AC/UA -- and the DOT is welcome to withdraw approval for AC/UA if it thinks that 27% would be too much


It doesn't appear that the combined DL/WS market share in the aggregate transborder market was DOT's primary concern, so try again.


I was responding to your remarks about AC/UA and how the market is different from when the AC/UA JV was approved.

ScottB wrote:
To some degree, I see their point about the interline requirement, but AFAIK AC doesn't refuse interlines with U.S. carriers and the UA/AC JV pre-dates much of the consolidation in the industry on both sides of the border. Transborder market conditions are different now vs. when the UA/AC JV was allowed to go forward.
 
MIflyer12
Posts: 11169
Joined: Mon Feb 18, 2013 11:58 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 2:00 pm

PSU.DTW.SCE wrote:
Dumb question, but US-Canada have complete open skies correct?

Meaning there are no restrictions on the amount of flying between the two countries?


I'm wondering where you thinking of going with that. The U.S. has Open Skies agreements with 125+ countries yet repeatedly U.S. carriers look for international JV or codeshare partners. It's to reduce competition (although they deny this, and the DOT looks for offsetting benefits like the prospects for new routes thus rationalizing the loss of competition), operating efficiencies, foreign point of sale strength, and network breadth.

https://www.state.gov/civil-air-transport-agreements
 
samuelx88
Posts: 104
Joined: Thu Jan 31, 2019 5:16 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 2:12 pm

ScottB wrote:
Polot wrote:
WS has limited options on where they can use their slots (airport must be within perimeter and have preclearance)


That's not a terribly meaningful limitation on their LGA ops. There really aren't any Canadian airports without preclearance which could support daily service on anything in the WS/WR/WO fleets to NYC with the exception of YTZ. YYC and YVR could support non-stops to LGA, but then again, so could SEA, SFO, LAX, PHX, LAS, SLC, AUS, SAT, etc.


Yes, there's YQB that could have daily flights to LGA if it had preclearance.
 
tphuang
Posts: 7075
Joined: Tue Mar 14, 2017 2:04 pm

Re: Delta/WestJet Joint Venture Tentatively Approved

Sun Nov 22, 2020 2:45 pm

Cointrin330 wrote:
tphuang wrote:
LGA slots right now is an albatross for DL. Demand out of LGA on business routes is next to 0, EWR and even JFK are doing much better than LGA in terms of demand. And this trend will continue for a while as companies have allowed people to work from home until at least next summer. Which has enabled a lot of people to move to the outer boroughs. DL themselves have said they have to get used to demand not coming back to New York for a long time.

All of this means the value of LGA slots for a business traffic oriented airline like DL have dropped a lot. This is a small price to pay. Slot waiver is probably going away by Q2 of 2021. DL is really going to hurt financially trying to utilize those slots.

Also, why in the world would WN try LGA-FLL when they haven't been able to make any NYC to Florida route work? They have many focus cities that would do well with additional LGA slots.


You have this completely wrong. DL, in spite of the pandemic and the very soft demand into and out of NYC, is in it for the long game. They've invested billions in NYC and took them years to turn a profit at JFK/LGA. During that time, they've captured a much larger slice of the Greater NYC corporate travel pie and even as demand there will remain low for a time, it will eventually ramp up again. DL is well positioned competitively at JFK and at LGA and will absorb the costs of holding on to slots. You also don't understand the competitive landscape and see it through the eyes of B6 only. B6 is a great airline and a cut above the industry's broad offerings, but it's share of corporate travel is fairly small and for that reason, it needs the partnership with AA (while AA needs B6 to help sustain long haul at JFK and reduce costs at LGA where it can cede some traffic to B6 and reduce its costs while still reaping some profits with lower overhead. You seem convinced that AA on the horizon will be left with a single JFK-LHR frequency and not much else. You have it so wrong, it's comical. I'll agree that AA has mismanaged NYC for years, and had the upper hand before DL's big buildup and B6's lower costs reshaped the landscape making AA's higher cost structures pre-Chapter 11 unable to make JFK work to its advantage. But AA had turned the corner at JFK in 2019. The shift to all 777 service on long hauls to Europe and standardizing the entire JFK intercontinental operation on the 777 was a smart move and AA acknowledged, it made the operation profitable. The 777 has larger cargo capacity, a better dispatch rate than the 767, and all 77W/772 service at JFK had the P/E cabin. AA and BA dwarf everyone else in the NYC-LON market and combined, capture the biggest slice and premium of what was, pre-pandemic, a $1BN revenue route. AA will be just fine where it is at JFK and at LGA, as the #2 carrier pre-COVID, it does quite well. The B6 partnership, whatever comes of it, will allow AA to exit a lot of the regional flying it has/had at JFK, and frankly, doesn't really need, as JFK has not been a "hub" for AA for years. AA and B6 will need to develop a fast, reliable and business friendly shuttle air side between T8 and T5 and potentially, provide B6 customers with lounge access at JFK as B6 doesn't have premium lounges, which are what pull it down on transcons. As someone who flies AA out of JFK to Europe and Latin America up to 15 times a year (pre-pandemic) flights were always full, notably in the front. Not a sign of profitability, I am aware of that, but T8 even at its busiest times, is a breeze compared to the nightmare that T4 is with clogged security lines and long walks to gates. Putting most of oneworld under the T8 roof will also be a strong selling point for NYC corporate sales when they come back. Lastly, the AS entry into oneworld is not insignifcant. I predict AS will exit LAX/SFO from JFK, focus on SEA, PDX, and maybe SAN, so AA does not need to fly those and all that will help AA preserve LAX/SFO share it has, while still being able to compete with DL, UA, and B6 in the market, the biggest domestic one and the richest, in the country.


Most of your comment have very little to do with my post or the topic. If you are ready to discuss the impact of COVID on demand out of LGA and EWR/JFK, I'd gladly discuss with you here.

You have to make business decisions on what the future will look like rather than how much money you have invested in it in the past. LGA has a long path to recovery. The acceptance of zoom/webex in work place, the liberalization of work from home policies and the move to decentralized offices mean that fewer people will travel for business out of NYC and even fewer of them will find LGA the most convenient airport. The extension of PATH to EWR airport means that EWR will be more convenient for out of town travelers who want to get to wall street or midtown. And now, more competition at EWR means more people will look for EWR in their bookings. All of which reduces the value of LGA slots and increase the value of EWR gates before EWR becomes slot constrained again.

This comes back to the original point that 8 slot pairs is not a lot to give up. DL and WS must be finding that the value of JV over code shares is not that much. I think we will see that relationship deteriorate and WS will possibly code share with AA again.
 
MIflyer12
Posts: 11169
Joined: Mon Feb 18, 2013 11:58 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 2:49 pm

jimbo737 wrote:
Prior to Covid, WS had one of the best balance sheets in the business. Onex reported a $500m profit in their latest quarter. WS is in no more danger of failing than any other North American airline.


Huh? A single quarter's profit doesn't imply a strong balance sheet. The balance sheet reflects accumulated debts, not op income minus interest expense in a quarter or year. Even saying they had persistently good margins (and I don't know that about WS) doesn't mean they have a strong balance sheet, although if above-average margins continue it would mean they are accumulating new debt more slowly.

Income statements (WS titles it 'Condensed Consolidated Interim Statements of Earnings') and balance sheets ('Condensed Consolidated Interim Statements of Financial Position') seek to resolve very different questions. See pages 33 and 34 - and then statement of cash flows on page 35.

https://www.westjet.com/assets/wj-web/d ... Report.pdf
 
User avatar
IceCream
Posts: 474
Joined: Mon Jul 20, 2020 9:46 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 5:56 pm

ScottB wrote:
IceCream wrote:
And I mean, looking at the actual ruling itself, it did seem a bit arbitrary and not very fair to DL/WS


How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA. If they were that concerned about the value of the slots being depressed during a pandemic, I think a reasonable accommodation might have been allowing DL/WS to lease slots to new/limited entrants for two or three years, with an auction then occurring once traffic had rebounded somewhat.

To some degree, I see their point about the interline requirement, but AFAIK AC doesn't refuse interlines with U.S. carriers and the UA/AC JV pre-dates much of the consolidation in the industry on both sides of the border. Transborder market conditions are different now vs. when the UA/AC JV was allowed to go forward.


I guess I'm going to have to agree with what you're saying, but the interline didn't seem necessary.
 
User avatar
IceCream
Posts: 474
Joined: Mon Jul 20, 2020 9:46 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 5:59 pm

MIflyer12 wrote:
jimbo737 wrote:
Prior to Covid, WS had one of the best balance sheets in the business. Onex reported a $500m profit in their latest quarter. WS is in no more danger of failing than any other North American airline.


Huh? A single quarter's profit doesn't imply a strong balance sheet. The balance sheet reflects accumulated debts, not op income minus interest expense in a quarter or year. Even saying they had persistently good margins (and I don't know that about WS) doesn't mean they have a strong balance sheet, although if above-average margins continue it would mean they are accumulating new debt more slowly.

Income statements (WS titles it 'Condensed Consolidated Interim Statements of Earnings') and balance sheets ('Condensed Consolidated Interim Statements of Financial Position') seek to resolve very different questions. See pages 33 and 34 - and then statement of cash flows on page 35.

https://www.westjet.com/assets/wj-web/d ... Report.pdf

WestJet isn't in a significantly worse position than any other major airline though, and being under Onex certainly isn't a terrible situation either.
 
Cubsrule
Posts: 15632
Joined: Sat May 15, 2004 12:13 pm

Re: Delta/WestJet Joint Venture Tentatively Approved

Sun Nov 22, 2020 6:06 pm

tphuang wrote:
Cointrin330 wrote:
tphuang wrote:
LGA slots right now is an albatross for DL. Demand out of LGA on business routes is next to 0, EWR and even JFK are doing much better than LGA in terms of demand. And this trend will continue for a while as companies have allowed people to work from home until at least next summer. Which has enabled a lot of people to move to the outer boroughs. DL themselves have said they have to get used to demand not coming back to New York for a long time.

All of this means the value of LGA slots for a business traffic oriented airline like DL have dropped a lot. This is a small price to pay. Slot waiver is probably going away by Q2 of 2021. DL is really going to hurt financially trying to utilize those slots.

Also, why in the world would WN try LGA-FLL when they haven't been able to make any NYC to Florida route work? They have many focus cities that would do well with additional LGA slots.


You have this completely wrong. DL, in spite of the pandemic and the very soft demand into and out of NYC, is in it for the long game. They've invested billions in NYC and took them years to turn a profit at JFK/LGA. During that time, they've captured a much larger slice of the Greater NYC corporate travel pie and even as demand there will remain low for a time, it will eventually ramp up again. DL is well positioned competitively at JFK and at LGA and will absorb the costs of holding on to slots. You also don't understand the competitive landscape and see it through the eyes of B6 only. B6 is a great airline and a cut above the industry's broad offerings, but it's share of corporate travel is fairly small and for that reason, it needs the partnership with AA (while AA needs B6 to help sustain long haul at JFK and reduce costs at LGA where it can cede some traffic to B6 and reduce its costs while still reaping some profits with lower overhead. You seem convinced that AA on the horizon will be left with a single JFK-LHR frequency and not much else. You have it so wrong, it's comical. I'll agree that AA has mismanaged NYC for years, and had the upper hand before DL's big buildup and B6's lower costs reshaped the landscape making AA's higher cost structures pre-Chapter 11 unable to make JFK work to its advantage. But AA had turned the corner at JFK in 2019. The shift to all 777 service on long hauls to Europe and standardizing the entire JFK intercontinental operation on the 777 was a smart move and AA acknowledged, it made the operation profitable. The 777 has larger cargo capacity, a better dispatch rate than the 767, and all 77W/772 service at JFK had the P/E cabin. AA and BA dwarf everyone else in the NYC-LON market and combined, capture the biggest slice and premium of what was, pre-pandemic, a $1BN revenue route. AA will be just fine where it is at JFK and at LGA, as the #2 carrier pre-COVID, it does quite well. The B6 partnership, whatever comes of it, will allow AA to exit a lot of the regional flying it has/had at JFK, and frankly, doesn't really need, as JFK has not been a "hub" for AA for years. AA and B6 will need to develop a fast, reliable and business friendly shuttle air side between T8 and T5 and potentially, provide B6 customers with lounge access at JFK as B6 doesn't have premium lounges, which are what pull it down on transcons. As someone who flies AA out of JFK to Europe and Latin America up to 15 times a year (pre-pandemic) flights were always full, notably in the front. Not a sign of profitability, I am aware of that, but T8 even at its busiest times, is a breeze compared to the nightmare that T4 is with clogged security lines and long walks to gates. Putting most of oneworld under the T8 roof will also be a strong selling point for NYC corporate sales when they come back. Lastly, the AS entry into oneworld is not insignifcant. I predict AS will exit LAX/SFO from JFK, focus on SEA, PDX, and maybe SAN, so AA does not need to fly those and all that will help AA preserve LAX/SFO share it has, while still being able to compete with DL, UA, and B6 in the market, the biggest domestic one and the richest, in the country.


Most of your comment have very little to do with my post or the topic. If you are ready to discuss the impact of COVID on demand out of LGA and EWR/JFK, I'd gladly discuss with you here.

You have to make business decisions on what the future will look like rather than how much money you have invested in it in the past. LGA has a long path to recovery. The acceptance of zoom/webex in work place, the liberalization of work from home policies and the move to decentralized offices mean that fewer people will travel for business out of NYC and even fewer of them will find LGA the most convenient airport. The extension of PATH to EWR airport means that EWR will be more convenient for out of town travelers who want to get to wall street or midtown. And now, more competition at EWR means more people will look for EWR in their bookings. All of which reduces the value of LGA slots and increase the value of EWR gates before EWR becomes slot constrained again.

This comes back to the original point that 8 slot pairs is not a lot to give up. DL and WS must be finding that the value of JV over code shares is not that much. I think we will see that relationship deteriorate and WS will possibly code share with AA again.


I don't know that I disagree with anything you have written. But maybe more to the point for a carrier like WS, inbound business travel to NYC is going to decrease too. NYC is fundamentally a knowledge and finance economy (as opposed to a "stuff" economy, i.e. manufacturing or logistics), and replacement of trips revolving around that economy with Zoom and the like affects travel both directions.
 
ctrabs0114
Posts: 1125
Joined: Mon Oct 09, 2017 8:09 am

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 7:00 pm

capejet wrote:
I think it would make a lot of sense for West Jet to look into codesharing with AA now. I could see AA pulling down all their Canada service except for a few Toronto - LaGuardia flights and West Jet could fly all the LAX/PHX/DFW/ORD/MIA/CLT/PHL/JFK markets for AA. There is no way AA will want to keep money losing routes alive with all the debt they are carrying. AA will gladly let West Jet take over almost all Canada markets.


I wouldn't mind seeing WS make a return to DFW in the long-term...
 
jimbo737
Posts: 645
Joined: Mon Jan 18, 2016 12:18 am

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Sun Nov 22, 2020 7:10 pm

MIflyer12 wrote:
jimbo737 wrote:
Prior to Covid, WS had one of the best balance sheets in the business. Onex reported a $500m profit in their latest quarter. WS is in no more danger of failing than any other North American airline.


Huh? A single quarter's profit doesn't imply a strong balance sheet. The balance sheet reflects accumulated debts, not op income minus interest expense in a quarter or year. Even saying they had persistently good margins (and I don't know that about WS) doesn't mean they have a strong balance sheet, although if above-average margins continue it would mean they are accumulating new debt more slowly.

Income statements (WS titles it 'Condensed Consolidated Interim Statements of Earnings') and balance sheets ('Condensed Consolidated Interim Statements of Financial Position') seek to resolve very different questions. See pages 33 and 34 - and then statement of cash flows on page 35.

https://www.westjet.com/assets/wj-web/d ... Report.pdf


Thanks for the education. 8-)
 
MrPeanut
Posts: 289
Joined: Fri Nov 23, 2018 8:36 pm

Re: Delta/WestJet Joint Venture Tentatively Approved

Mon Nov 23, 2020 1:06 am

Cointrin330 wrote:
But AA had turned the corner at JFK in 2019. The shift to all 777 service on long hauls to Europe and standardizing the entire JFK intercontinental operation on the 777 was a smart move and AA acknowledged, it made the operation profitable


That was part of it, but I would imagine a bigger part was the discontinuation of the money losing/underperforming TATL routes ex-JFK. AA paired back a lot of international routes from JFK.
Last edited by MrPeanut on Mon Nov 23, 2020 1:12 am, edited 1 time in total.
 
MrPeanut
Posts: 289
Joined: Fri Nov 23, 2018 8:36 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Mon Nov 23, 2020 1:11 am

capejet wrote:
I think it would make a lot of sense for West Jet to look into codesharing with AA now. I could see AA pulling down all their Canada service except for a few Toronto - LaGuardia flights and West Jet could fly all the LAX/PHX/DFW/ORD/MIA/CLT/PHL/JFK markets for AA. There is no way AA will want to keep money losing routes alive with all the debt they are carrying. AA will gladly let West Jet take over almost all Canada markets.


While AA will be leveraging partnerships more in the future, I wouldn’t be surprised if Canada performed ok for AA (unlike Europe or Asia where AA stated they always underperformed).
 
Cointrin330
Posts: 2268
Joined: Sat Jul 16, 2016 12:23 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Mon Nov 23, 2020 1:31 am

MrPeanut wrote:
capejet wrote:
I think it would make a lot of sense for West Jet to look into codesharing with AA now. I could see AA pulling down all their Canada service except for a few Toronto - LaGuardia flights and West Jet could fly all the LAX/PHX/DFW/ORD/MIA/CLT/PHL/JFK markets for AA. There is no way AA will want to keep money losing routes alive with all the debt they are carrying. AA will gladly let West Jet take over almost all Canada markets.


While AA will be leveraging partnerships more in the future, I wouldn’t be surprised if Canada performed ok for AA (unlike Europe or Asia where AA stated they always underperformed).


AA is a pretty well established player in the US/Canada trans border market and can hold its own. I doubt AA would cede all of its services to Canada to WS nor does that seem really necessary but comparing Canada to TATL or TPAC for AA is a little uneven. American Airlines has never really been able to make TPAC work. LAX has not worked for Asia TPAC for AA (all pre-pandemic) because of the market is crowded. Australia and New Zealand were bright spots made even more potentially lucrative once the AA/QF JV was approved, but now it is going to take a long time for US-Australia traffic to rebuild and US-NZ was, pre-pandemic, mainly a leisure market. AA can't make Asia work except for DFW, and even there, it is marginal. What is so surprising is that AA is the one with substantial TPAC partners (CX, JL, QF, China Southern). Time will tell if traffic rebounds and AA can make money on these routes. TATL is another story. AA started flying to Europe in the early 1980s from DFW to LGW and its big expansion began in earnest in 1987 when it launched a number of ORD-Europe routes, plus JFK to ORY, FRA, ZRH. The merger with US gave it a TATL gateway at PHL where it has little competition, but even then could not make a lot of trunk routes work, like FRA and MUC. Like Asia, AA has weaker POS originating in some big European markets, notably Germany. Years of underinvesting in its premium products (the first revamp of the AA International Business Class product in the mid-2000s was a joke. The product as it exists now on the 77W/772 and 789/788 is much improved, and competitive, but at JFK, it relies on O&D exclusively and I think some routes will be very slow to come back on line, like seasonals to FCO (it did very well in 2018 and 2019), GIG, and even BCN which depends on robust cruise traffic to work. But you make it sound like AA drew down TATL at JFK in a major way and suddenly. That's not really the case. It has been a slow draw down and for the most part, of short lived routes that did not work (BHX, MAN, EDI, DUB). BRU and ZRH were long standing JFK routes (ZRH operated continuously from 1987 to when it shifted to PHL in 2015) because DL entered the JFK-ZRH market and AA lost the Credit Suisse corporate contract for US-originating service from NY to ZRH. AA never had a major footprint at JFK to Europe. It was always more or less what it was until COVID19 numbers-wise. Some odd-ball routes like BUD were so short lived, they hardly even count.
 
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cirrusdragoon
Posts: 635
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Mon Nov 23, 2020 5:37 pm

I wonder if WS will want to enter skyteam now, as in, does this setback make joining an alliance more appealing?
 
TigerFlyer
Posts: 244
Joined: Tue Apr 25, 2017 7:51 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Mon Nov 23, 2020 9:44 pm

ScottB wrote:
IceCream wrote:
And I mean, looking at the actual ruling itself, it did seem a bit arbitrary and not very fair to DL/WS


How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA.


Very unfair to WS. As predicted, DL was not going to give up a single pair of LGA slots to fund this JV. WS matters little to DL relative to the strategic importance of LGA. There was zero competitive nonstop overlap between DL and WS on LGA-YYZ or any LGA-Canada route. This was a shake down of WS by DOT to promote a wholly unrelated domestic competition agenda. WS won the slots fair and square at auction. It should not have to give up its "own metal" presense on the single most important transborder route.

Interestingly, DOT took exactly the opposite position with the Gov't of Japan, and insisted that United and American have their "own metal" slots at Tokyo Haneda, notwithstanding the fact that JAL and ANA "own" that airport. Very unfair to WS and Canada.
 
Corpsnerd09
Posts: 646
Joined: Tue Mar 30, 2004 2:05 pm

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Mon Nov 23, 2020 10:30 pm

cirrusdragoon wrote:
I wonder if WS will want to enter skyteam now, as in, does this setback make joining an alliance more appealing?


Why join Skyteam when DL has basically said it's worthless anyway.

WS should look back into it's old strategy of having multiple partners again, regardless of alliance.
 
usflyer msp
Posts: 4583
Joined: Tue May 23, 2000 11:50 am

Re: Updated: Delta/WestJet Joint Venture Withdrawn

Mon Nov 23, 2020 10:55 pm

TigerFlyer wrote:
ScottB wrote:
IceCream wrote:
And I mean, looking at the actual ruling itself, it did seem a bit arbitrary and not very fair to DL/WS


How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA.


Very unfair to WS. As predicted, DL was not going to give up a single pair of LGA slots to fund this JV. WS matters little to DL relative to the strategic importance of LGA. There was zero competitive nonstop overlap between DL and WS on LGA-YYZ or any LGA-Canada route. This was a shake down of WS by DOT to promote a wholly unrelated domestic competition agenda. WS won the slots fair and square at auction. It should not have to give up its "own metal" presense on the single most important transborder route.

Interestingly, DOT took exactly the opposite position with the Gov't of Japan, and insisted that United and American have their "own metal" slots at Tokyo Haneda, notwithstanding the fact that JAL and ANA "own" that airport. Very unfair to WS and Canada.


How is it solely a domestic competitive issue if WS was allowed to acquire the slots? If the DOT was solely concerned about domestic competition at LGA they would have mandated that the slots go to a domestic carrier.
 
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klm617
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 1:24 am

TigerFlyer wrote:
ScottB wrote:
IceCream wrote:
And I mean, looking at the actual ruling itself, it did seem a bit arbitrary and not very fair to DL/WS


How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA.


Very unfair to WS. As predicted, DL was not going to give up a single pair of LGA slots to fund this JV. WS matters little to DL relative to the strategic importance of LGA. There was zero competitive nonstop overlap between DL and WS on LGA-YYZ or any LGA-Canada route. This was a shake down of WS by DOT to promote a wholly unrelated domestic competition agenda. WS won the slots fair and square at auction. It should not have to give up its "own metal" presense on the single most important transborder route.

Interestingly, DOT took exactly the opposite position with the Gov't of Japan, and insisted that United and American have their "own metal" slots at Tokyo Haneda, notwithstanding the fact that JAL and ANA "own" that airport. Very unfair to WS and Canada.


I agree why should WS give up any slots when they only have 16 the slots. The DOT should have mandated that DL give up the slots because they have 555 and since this is a US Canada JV these slots should have only been awarded to a carrier for US-Canada services.
 
TigerFlyer
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 1:31 am

usflyer msp wrote:
How is it solely a domestic competitive issue if WS was allowed to acquire the slots? If the DOT was solely concerned about domestic competition at LGA they would have mandated that the slots go to a domestic carrier.


The rules regarding US and Canadian slot allocations at US slot controlled airports are somewhat complex. In fact, for years, U.S. law required that preference be given to foreign carriers at "High Density Rule" airports, i.e. LGA, JFK, EWR, ORD, JFK. Air Canada has something in excess of 40 slot pairs at LGA, mostly acquired during that era and when AA/Canadian received ATI on the very same New York - Toronto route with no slot divestitures. Likewise, United was not required to give up slots on ORD-YYZ when it acquired ATI with AC.

Suffice it to say that there are significant political considerations at play. Even though the public interest may be better served by Toronto-LGA service, taking from WS to give to SWA at auction for more LGA-FLL puts "America First." That is no slight at SWA or Spirt, or any other U.S. carrier. I'd bid too. Its just that U.S. Gov't should be a more honest referee. U.S. carriers could face the same abroad with foreign governments demanding that U.S. carriers give up slots at the primary airports in order to form JVs. A very dangerous and troubling precedent.
 
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IceCream
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 1:33 am

klm617 wrote:
TigerFlyer wrote:
ScottB wrote:

How so? WS's slots at LGA came from the slot divestitures required back when Delta and US Airways swapped gates and slots at DCA and LGA, respectively. Allowing Delta indirect control of those slots via a joint venture would be entirely opposite to the intent of allowing WS, as a new entrant, to acquire those slots to maintain competition at LGA.


Very unfair to WS. As predicted, DL was not going to give up a single pair of LGA slots to fund this JV. WS matters little to DL relative to the strategic importance of LGA. There was zero competitive nonstop overlap between DL and WS on LGA-YYZ or any LGA-Canada route. This was a shake down of WS by DOT to promote a wholly unrelated domestic competition agenda. WS won the slots fair and square at auction. It should not have to give up its "own metal" presense on the single most important transborder route.

Interestingly, DOT took exactly the opposite position with the Gov't of Japan, and insisted that United and American have their "own metal" slots at Tokyo Haneda, notwithstanding the fact that JAL and ANA "own" that airport. Very unfair to WS and Canada.


I agree why should WS give up any slots when they only have 16 the slots. The DOT should have mandated that DL give up the slots because they have 555 and since this is a US Canada JV these slots should have only been awarded to a carrier for US-Canada services.


Apparently there's a chance WS/DL try again with the next administration. And yeah, the slot and interline requirements really didn't seem uniform or fair at all.
 
onwFan
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 3:20 am

Funny how some folks are attempting to twist things unnecessarily on a political line. All that the DOT is saying is that DL can’t grab a chunk of LGA slots when the requirement was to make some of them available to another carrier; and then get away with forming a JV with that same carrier (which is what B6 and WN rightfully claimed). Clearly, DL is just trying to have its cake and eat it - DOT is having none of that...

No one is forcing DL to form a JV with WS. It was their own undertaking. One thing is clear: WS has made it clear to DL that they are not giving up any slots. DL has decided that they are not going to give it up either just for a JV (and btw it is 16 of what, 555 slots, really???). Either DL values its LGA slots so much more than the JV (or) somehow they wanted to get out of this JV - it’s simple as that. To me, the latter makes so much more sense...
 
ScottB
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 7:19 am

klm617 wrote:
I agree why should WS give up any slots when they only have 16 the slots. The DOT should have mandated that DL give up the slots because they have 555 and since this is a US Canada JV these slots should have only been awarded to a carrier for US-Canada services.


DOT gave DL and WS a choice: Either WS would have to divest its slots, or DL would have to divest 16 slots at LGA. I don't think it's necessarily in the best interest of competition for the government to dictate that slots be used for service to Canada, though.

TigerFlyer wrote:
U.S. carriers could face the same abroad with foreign governments demanding that U.S. carriers give up slots at the primary airports in order to form JVs. A very dangerous and troubling precedent.


The precedent is neither dangerous nor troubling. WestJet acquired their LGA slots as a competition remedy -- to prevent greater dominance at LGA by Delta as a result of their slot swap with US Airways. It makes zero sense for resources granted or acquired as part of a remedy for an anticompetitive transaction to later come under the direct or indirect control of the beneficiary of the anticompetitive transaction. If JetBlue, for example, were to acquire slots at LHR as a remedy for the AA/BA transatlantic joint venture, they most certainly should not subsequently be permitted to use those remedy slots if they were to join the joint venture at some later date.

TigerFlyer wrote:
Likewise, United was not required to give up slots on ORD-YYZ when it acquired ATI with AC.


Slots at ORD weren't tied to specific routes, and UA has faced head-to-head competition at ORD from AA for decades. And IIRC slots at ORD had been phased out by the time UA and AC applied for their transborder JV.
 
tphuang
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 12:42 pm

onwFan wrote:
Funny how some folks are attempting to twist things unnecessarily on a political line. All that the DOT is saying is that DL can’t grab a chunk of LGA slots when the requirement was to make some of them available to another carrier; and then get away with forming a JV with that same carrier (which is what B6 and WN rightfully claimed). Clearly, DL is just trying to have its cake and eat it - DOT is having none of that...

No one is forcing DL to form a JV with WS. It was their own undertaking. One thing is clear: WS has made it clear to DL that they are not giving up any slots. DL has decided that they are not going to give it up either just for a JV (and btw it is 16 of what, 555 slots, really???). Either DL values its LGA slots so much more than the JV (or) somehow they wanted to get out of this JV - it’s simple as that. To me, the latter makes so much more sense...


I'd say it's the latter also. And I would also say it's time for AA to court WS.
 
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cirrusdragoon
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 4:43 pm

tphuang wrote:

I'd say it's the latter also. And I would also say it's time for AA to court WS.


I hope not , I much prefer Delta’s brand over Americans.
 
FromCDGtoSYD
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 5:32 pm

I fail to see how this helps anyone. If it's supposed to help americans wanting to go to Canada then the DOT could have requested that there was no reduction in flights. If it was to protect domestic destinations from LGA then they could have banned DL from using current slots to fly to Canada. Instead AC and UA are allowed to control almost half the market uncontested over a few slots DL doesn't currently control (directly anyway). This one leaves me scratching my head.
 
TigerFlyer
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Re: Updated: Delta/WestJet Joint Venture Withdrawn

Tue Nov 24, 2020 8:10 pm

ScottB wrote:

The precedent is neither dangerous nor troubling. WestJet acquired their LGA slots as a competition remedy -- to prevent greater dominance at LGA by Delta as a result of their slot swap with US Airways. It makes zero sense for resources granted or acquired as part of a remedy for an anticompetitive transaction to later come under the direct or indirect control of the beneficiary of the anticompetitive transaction. If JetBlue, for example, were to acquire slots at LHR as a remedy for the AA/BA transatlantic joint venture, they most certainly should not subsequently be permitted to use those remedy slots if they were to join the joint venture at some later date.

TigerFlyer wrote:
Likewise, United was not required to give up slots on ORD-YYZ when it acquired ATI with AC.


Slots at ORD weren't tied to specific routes, and UA has faced head-to-head competition at ORD from AA for decades. And IIRC slots at ORD had been phased out by the time UA and AC applied for their transborder JV.


Respectfully, this is one of the worst DOT policy decisions in decades. It is an abandonment of the free market principles of Open Skies - and a green light to countries like Japan and China that use restrictive slot policies at their airports to frustrate the growth of U.S. carriers. The U.S. has railed against that for years, and is now doing the same thing to an underdog carrier from one of our best bilateral aviation partners, Canada.

Delta and WestJet do not compete on LGA-YYZ. There is no competitive harm from an antitrust perspective. AA/BA involved direct nonstop competitive overlap of more than 30 daily flights on six U.S.-LHR routes. Even then, DOT only required AA/BA to give up just four slot pairs -- much less American's entire LHR slot portfolio. DOT's airport concentration theory at LGA is not based on sound antitrust principles, and is just "social engineering" to favor LCCs. As applied here, it is Robinhood in reverse, taking away slots from WS which barely has a toe hold at the airport in the underserved U.S.-Canada market, and auctioning them to SWA and JetBlue for still more duplicative flights to FLL and MDW.

Together DL and WS have less than 45% of the slots at LGA. Just across the Hudson River at EWR, United has greater than a 70% share, but EWR slots are not confiscated and redistributed when United adds a new Star ATI partner. Nor should they be.

Imagine a hypothetical where some years from now we have an open skies bilateral with China. China Eastern holds a dominant slot position at Shanghai/PVG. CAAC says, gee, we'd like to have more new entry at Shanghai, so, Delta, you can have a JV with China Eastern -- you just have to give up all of your slots at PVG so we can auction them off to Chinese carriers. China Eastern can do all the actual flying out of the most important airport, and you can codeshare on them. We've got room for U.S. carriers to operate their own-metal JV services to Chengdu.

This is very unfair to WS, and puts them at a long term disadvantage to Air Canada and United. Incidentally, DOT approved the now defunct American/Canadian ATI alliance back in the 1996 which involved direct nonstop overlap on New York-Toronto, but did not require slots to be divested.

WestJet cannot use any of its slots on LGA domestic routes, since it is prohibited cabotage. It will therefore, by definition, have zero impact on U.S. domestic competition or concentration. If DOT was really concerned that the JV would pull the slots out of Canada and redeploy them on domestic routes (of which there is no indication) it could have solved the problem with less restrictive means by just requiring that WS remain the operator. The WS slots are not tied to the specific route - but can be used for Montreal, Halifax, Ottawa, etc. Unfortunately, WS is not allowed to use the LGA slots to serve its important hub at Calgary because YYZ is outside the LGA perimeter. Yet, conveniently, DEN is "grandfathered" in as an exemption to the Perimeter Rule for U.S. carriers. These is exactly the type of airport restrictions and slot policies the U.S. has been complaining about in Japan for years. Guess where JCAB got the idea for a Haneda perimeter rule? Yup. Right here in the USA.

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