By Chris Sorensen - Wednesday, April 10, 2013 - 0 Comments
When the news first broke that Porter Airlines was about to announce a conditional purchase of 30 of Bombardier’s new C-Series jets, which could be used to service destinations across North America and effectively make Porter Canada’s third national airline, many assumed CEO Robert Deluce intended to fly them out of airports in Montreal or Ottawa—or possibly Toronto’s Pearson. That’s because Porter’s main hub at Toronto’s island airport currently prohibits commercial jet aircraft under a decades-old agreement signed by the City of Toronto, Ottawa and the Toronto Port Authority, which oversees the airport. Plus, the runways at the island are currently too short to comfortably handle the C-Series, designed to compete with the smallest jets made by Boeing and Airbus.
But that’s not the way Deluce does business. He’ s an extremely cagey operator—not unlike the airline’s raccoon mascot—and he knows that going up against Air Canada and WestJet on an equal footing is a recipe for bankruptcy. On the other hand, flying longer-haul routes out of Billy Bishop Toronto City Airport—to Vancouver, Calgary and Los Angeles, among other places—gives Porter a huge competitive advantage since the island is within spitting distance of Toronto’s downtown (whereas Pearson is about 40 minutes away in Mississauga) and Air Canada’s presence there is strictly limited (Porter controls most of the take-off and landing slots thanks to a sweetheart deal with the port authority), while WestJet doesn’t operate there at all. And, right on cue, Deluce today revealed that he will indeed attempt to have the ban on jets on the island repealed and the runways lengthened.
Opening up the tripartite agreement to accommodate Porter’s expansion promises to spark a vicious political battle. Toronto’s former Mayor David Miller successfully ran for office in 2003 on a campaign that opposed the further development of the airport, arguing that it would negatively impact efforts to redevelop Toronto’s then largely industrial waterfront. Other opponents argued that Deluce wouldn’t be satisfied with a small, regionally-focused operation at the island, and would eventually push for a bigger, more disruptive operation—a fear that turned out to be spot-on. Not surprisingly, then, several city councillors have already spoken out against Deluce’s latest plans.
But here, too, Deluce is making an astute calculation. Unlike Miller, Toronto Mayor Rob Ford has made it clear he’s a Porter fan, as have the federal Conservatives. And the port authority has been on Porter’s side since Day 1. Nor does it hurt that Porter is buying from Bombardier, a Canadian company that’s received its fair share of government support in the past. Most importantly, there’s little evidence to suggest Porter’s presence at the island since 2006 has made Toronto’s waterfront a less desirable place. It certainly hasn’t stopped thousands of people from snapping up pricey units in the huge condo towers that have been built within earshot of the airport’s runways. And if those people aren’t worried about planes zipping by their floor-to-ceiling windows, Deluce no doubt reasons, why should anyone else be?
Though speculation about Porter’s future has swirled ever since it shelved its IPO plans in 2011, Deluce’s latest gambit suggests he has a few tricks up his sleeve yet.
By James Cowan - Tuesday, March 5, 2013 at 12:34 PM - 0 Comments
The solution to late flights and lengthy waits on the tarmac? More airlines, writes James Cowan
On a snowy morning in early February, around 200 passengers in Toronto boarded Flight 794 to Costa Rica. They were scheduled to leave at 7 a.m.; the plane eventually left at midnight. In the intervening 17 hours, a compounding series of misfortunes—a broken de-icing machine, frozen engines and brakes, a lack of gates at the terminal, a plane that idled so long it had to refuel, a crew that worked so long it needed to be replaced—turned the flight into an almanac of the indignities of modern air travel. The passengers complained they were poorly fed, ill-informed, refused onboard entertainment and trapped in the cabin for one 13-hour stretch. Sunwing, the airline, offered $25 off airport food and a $150 credit—in case passengers wanted to risk a do-over—as compensation.
This isn’t an unusual story. Within a week of the debacle, two Air Canada flights to Mexico imprisoned passengers on their planes for more than eight hours. These are just extreme examples of an endemic problem. Only 58.6% of Air Canada flights were on time in January; the industry average is 78.3%, according to tracking service Flightstats.
There are now efforts afoot to improve airline customer service through regulation. The NDP this month proposed an Air Passengers’ Bill of Rights, which would require airlines to pay customers $100 for each hour trapped on the tarmac up to the cost of the ticket. The notion has populist appeal but is self-defeating. Faced with onerous fines, airlines will either increase ticket prices or reduce spending on other customer perks—it’s not like they can pay the fines using their gas money or employees’ wages. Furthermore, much of the discomfort experienced by airline passengers is caused by government rules. Sunwing couldn’t serve its grounded passengers hot meals because regulations prohibit operating a plane’s ovens until it’s airborne; ditto for the on-board entertainment system. (The concern is that passengers might miss safety announcements if they’re wearing headsets; the concept of a mute button has clearly eluded regulators.) If government agencies want to improve passengers’ lives, they should focus on reducing hassles, not adding to them.
Here’s a place to start cutting—the restrictions on foreign ownership in the Canadian airline sector. Hiking competition is the best way to improve the travelling experience, both in terms of customer service and arriving on schedule. Not only does an airline with a monopoly on a route experience greater delays, but it will also pad its schedule to make customers feel like they arrived promptly even if they could have arrived sooner, according to a Kellogg School of Management study. If nothing else, competition prevents airlines from dawdling.
Opening Canada to unfettered foreign competition is unrealistic. Only one country in the world, Chile, places no restriction on ownership of its air carriers. But Canada, which limits foreign investment to 25%, lags other jurisdictions. The European Union allows outsiders to control 49% of their airlines, as do Australia and New Zealand. A 2008 federal government panel suggested Canada adopt a similar standard, citing lower fares and better service as likely benefits.
The impediment to allowing foreign carriers into Canada is a fear that it would rob the country of jobs and revenue. But New Zealand and Australia found an elegant solution to appeasing such worries. For more than two decades, both have permitted foreign companies to establish a separate air carrier within their borders. The country’s second-largest carrier, Virgin Australia, was founded thanks to this policy change, with roughly two-thirds foreign ownership today. Competition between six domestic airlines means flights were on schedule 80% of the time in 2012. Fares dropped 21% in the first year of the new rules. Flight frequency increased. Carriers saw an uptick in travellers.
If Canada took this approach, it would mean foreign carriers paying taxes, providing jobs and creating competition. Canada’s air industry doesn’t need more rules; it needs more airlines.
James Cowan is deputy editor of Canadian Business.
By The Canadian Press - Tuesday, January 22, 2013 at 4:19 PM - 0 Comments
MONTREAL – Air Canada’s chief executive took aim at Canadian airport fees Tuesday, likening…
MONTREAL – Air Canada’s chief executive took aim at Canadian airport fees Tuesday, likening them to “sin” taxes that add to ticket costs and contribute to driving almost five million Canadians to use U.S. border airports.
“Airport improvement fees, airport rent, security surcharges, navigation fees and the list goes on, all serve to make airline tickets in Canada more expensive,” Calin Rovinescu said in a speech to the Metropolitan Montreal Board of Trade.
As a result, Quebec’s fastest growing airport is located in Plattsburgh, N.Y., just over an hour by car from Montreal, Rovinescu told his audience. Montreal is served by Pierre Elliott Trudeau International Airport.
Rovinescu said higher taxes and fees in Canada represent about $1 billion more than if his Montreal-based airline operated as a U.S. carrier with the same volume of traffic.
By The Canadian Press - Thursday, January 10, 2013 at 11:04 PM - 0 Comments
TORONTO – A computer problem led to numerous flight delays and some cancellations in…
TORONTO – A computer problem led to numerous flight delays and some cancellations in and out of Toronto’s Pearson International Airport on Thursday night.
Nav Canada spokesman Ron Singer said a flight planning computer crashed resulting in significant delays for flights leaving Pearson, and cancellations and delays for incoming flights.
“To maintain safe operations we are processing flight information manually for departures, and we are now clearing the backlog,” Singer said Thursday night in an email.
Singer stressed that the flight planning system problem was not affecting the safe operation of the air traffic control system at the airport.
All radar and surveillance and communications systems are working normally, Singer said.
“Air traffic controllers can see the aircraft and talk to pilots in their airspace,” he added.
“The measures we have put in place to manage a safe and orderly flow of traffic, at a slower pace, are intended to ensure safety: unfortunately we regret that this is what has caused delays,” he said.
Air Canada told concerned travellers via Twitter that the delays and cancellations were out of its control.
One passenger tweeted that her plane had left the gate “three hours ago” but had not taken off.
“At least waiting for 2 hours in your plane includes free movies, music and plugs. Wanna be home though,” another passenger tweeted.
By The Canadian Press - Wednesday, January 9, 2013 at 7:22 PM - 0 Comments
TORONTO – Porter Airlines says it will provide regular service despite a strike by…
TORONTO – Porter Airlines says it will provide regular service despite a strike by employees who fuel the aircraft.
Twenty-two workers were set to go on strike Thursday at 12:01 a.m. after talks broke down with the airline Wednesday.
Although the company said it has other trained employees to fuel the aircraft, the union representing the workers said it was concerned that the replacements do not have the skills to do the job properly.
The Canadian Office and Professional Employees Union says it will take those concerns, which include safety concerns, to federal Labour Minister Lisa Raitt.
“There will be zero impact on the business. All fights will operate,” Porter spokesman Brad Cicero said of the operations at Billy Bishop Airport in Toronto.
By The Canadian Press - Monday, January 7, 2013 at 9:45 AM - 0 Comments
Canada’s major airlines are reporting record load factors for December as they carried substantially…
Canada’s major airlines are reporting record load factors for December as they carried substantially more passengers with modest increases to capacity.
WestJet (TSX:WJA) says its load factor for December hit a record 81.9 per cent while Air Canada (AC.B) hit record load factors for the month and the year.
Montreal-based Air Canada says its load factor rose to 82.1 per cent last month while the full-year number was 82.7 per cent, up 1.1 points in each case. Continue…
By The Associated Press - Thursday, December 20, 2012 at 5:59 AM - 0 Comments
HONG KONG – Flight attendants at Cathay Pacific Airways will be smiling after all…
HONG KONG – Flight attendants at Cathay Pacific Airways will be smiling after all over the Christmas holidays after settling a labour dispute on Thursday with the Hong Kong airline.
The agreement means passengers flying over the busy holiday season on Cathay, known for its top-notch service, won’t have to suffer from threatened industrial action that included withholding food, alcohol and even smiles from passengers.
Cabin crew had voted at a union meeting last week in favour of the action if the airline didn’t meet their demands, which centred on pay and working conditions.
The union had also threatened to work to rule, which could have delayed flights. Working to rule involves doing no more than the minimum work required in contracts and precisely following safety regulations.
The union wanted a 5 per cent pay raise but the airline, which lost $120 million in the first half of 2012 mainly because of higher fuel costs, didn’t budge on its 2 per cent offer.
But the union’s nearly 6,000 members were “very happy” with other proposals, which included higher allowances and better working arrangements such as longer rest time on certain flight patterns, said Julian Yau, vice chairman of the Cathay Pacific Flight Attendants Union.
By The Associated Press - Monday, December 3, 2012 at 4:56 AM - 0 Comments
NEW YORK, N.Y. – Delta Air Lines Inc. is mulling the purchased of a…
NEW YORK, N.Y. – Delta Air Lines Inc. is mulling the purchased of a 49 per cent stake in British airline Virgin Atlantic Airways from Singapore Airlines Ltd., according to media reports.
The remaining 51 per cent of Virgin Atlantic is owned by billionaire Richard Branson, who founded the airline in 1984.
Singapore has been considering selling its stake in Virgin for several years and has talked with Delta about a sale in the past, according to the Wall Street Journal.
Virgin has been looking for a possible suitor, too. It hired investment firm Deutsche Bank in 2010 to explore its options.
Buying Virgin is attractive to a carrier like Delta because of its potential to unlock more access to London’s Heathrow airport, a key international gateway. Virgin is the second-biggest airline there after British Airways.
By Chris Sorensen - Tuesday, November 13, 2012 at 12:45 PM - 0 Comments
As carriers park old fuel-guzzling jets, plane makers are battling to win sales and crush newcomers
Business travellers flying between New York and Singapore recently learned they will no longer be able to make the 15,000-km journey on a single non-stop flight, the world’s longest. Singapore Airlines said it decided to cut the 19-hour route because it’s no longer profitable as oil prices rise and big corporations cut back on their travel budgets.
But what’s been bad for airlines and their customers—a shaky global economy and expensive jet fuel—has been a boon for plane manufacturers. Boeing Co. and Airbus SAS are assembling jetliners at Mach speed as airlines increasingly park older, fuel-guzzling jets and replace them with more efficient models. Boeing’s long-range 787 Dreamliner, for example, promises a 20 per cent reduction in fuel burn and a 30 per cent reduction in maintenance expenses. More than 800 have been ordered by airlines at a list price of up to US$243 million each.
Demand for other models is also running high. Boeing now churns out its 777 model at a rate of 8.3 planes a month, up from seven, the fastest it has ever made a twin-aisle plane. Last month, rival Airbus inaugurated a factory in Toulouse, France, for production of its A350 jet, which competes with the 787.
An all-out battle for market share is brewing as forecasts call for huge growth ahead. Boeing estimates North American airlines alone will buy 7,290 airplanes worth $8 billion between now and 2020. But analysts warn the future is not at all certain. “It’s all about fuel prices,” says Richard Aboulafia, an aerospace analyst with Virgina-based Teal Group. Older aircraft will once again look economical if the price of oil falls below $70 a barrel, he says. Conversely, if it goes above $110, many airlines will be losing too much money to contemplate multi-billion-dollar plane purchases. Continue…
By Chris Sorensen - Tuesday, September 25, 2012 at 2:04 PM - 0 Comments
Many carriers now charge for every piece of luggage, including carry-ons
The airport departure lounge used to be a relaxing oasis—at least by post-9/11 air travel standards. Safely past security and its gauntlet of X-rays, metal detectors and body scanners, travellers sipped coffees, flipped through magazines and stared idly at the planes taxiing past floor-to-ceiling windows.
Lately, though, the gate has a more frantic feel. Passengers try to board early. Frazzled agents remind everyone to wait until their row is called. Once on the plane, the source of the angst becomes clear: too many bulging backpacks and overloaded carry-on suitcases and not nearly enough overhead bins in which to stow them.
An ugly battle in the aisle ensues.
It’s a predictable response to the industry’s latest money-making gambit: charging passengers to check in their luggage—any piece of luggage. Even seasoned travellers admit they’re guilty of contributing to the mess. “If you’re allowed two carry-ons, I generally have one fairly aggressively sized carry-on and a smaller bag for my laptop or whatever I’m working on,” says Rick Erickson, a Calgary-based airline consultant who regularly flies all over the globe. “So I get there early and get into a good spot where I can dash to the front of the line. That way I can get my bag into an overhead bin where it’s not going to be inconvenient.”
By Aaron Hutchins - Monday, July 16, 2012 at 10:09 AM - 0 Comments
The carrier is adding more planes, and regional routes, to its successful schedule
For one day last month, more than 42,000 Canadians lived in WestJetville. When the clock struck midnight to begin June 29, they were all back in Penticton, B.C., but they got their point across with the name-change stunt announced by Penticton’s mayor. They want WestJet to start flying out of their city—and they aren’t the only ones. Across the country recently, small communities have come together with flash mobs, petitions with more than 10,000 signatures, and earnest videos in an effort to convince the airline to expand to their cities when it rolls out regional service across the country, beginning in the second half of 2013.
WestJet has announced it will add 20 Bombardier Q400s to its fleet next year, with an option for purchasing an extra 25 of the turboprop planes designed for short-haul flights. Not all of the 78-passenger planes will be designated for new routes to smaller cities. The Q400s will also be used to connect major cities where the airline currently flies its Boeing 737s, but doesn’t offer direct links. For example, flying WestJet from Saskatoon to Winnipeg today would require backtracking through Calgary. A direct route on a smaller plane would shorten travel times and open more seats on busier medium-haul flights. The company also plans to adjust the frequency of some existing flights that require fewer seats.
Divvying up the relatively small number of new planes means most of the hopeful cities will remain without WestJet service for the foreseeable future. “For a large country, 45 aircraft, when you start to sprinkle it around, is not a lot,” say Robert Kokonis, president of AirTrav Inc., an aviation consulting firm. But WestJet sees this move as a logical, albeit cautious, expansion. “We think that it’s important to go small first in order to bring traffic into our network,” says company spokesperson Robert Palmer. Another key part of the strategy is giving partner airlines (foreign and U.S. carriers that have lucrative code-sharing agreements with WestJet) “better depth and access to the Canadian market,” adds Kokonis.
By Alan Parker - Wednesday, May 16, 2012 at 3:58 PM - 0 Comments
The last bastion of freedom from the intrusive, ubiquitous, unrelenting tyranny of cell phone clamour is about to disappear
Virgin Atlantic has announced it will soon allow passengers to make in-flight phone calls on their personal mobile devices. The service will initially be available only on Virgin Atlantic’s A330 service between London and New York, but will be offered on at least 10 of its routes by the end of 2012. Other airlines won’t be far behind.
And that will be the end of the last refuge on earth — or 30,000 feet above it — from the tentacled control of telephones over our lives.
It used to be — in the good old days — that even the most hardened business traveller and tech junkie was forced to switch off his or her cell phone at the boarding gate and spend the next six or 10 or 16 hours cut off from that constantly pumping umbilical connection with the rest of the world.
Whether they would admit it or not, most of them found the enforced abstinence a blessed relief.
As for the rest of us without a telephone addiction, there has always been a special letting-go feeling of being cocooned in that metal tube hurtling through time and space with only the most tenuous connection to the earthly concerns of our daily lives.
Of course there were always the wailing babies and expansive seat mates, but that’s a different form of encroachment — almost a life-affirming intimacy — than the telephonic intrusiveness that now pervades coffee shops, elevators, restaurants and most public spaces, even theatre performances.
I do not want to be trapped on a seven-hour flight from Heathrow to Pearson with the person beside me droning endlessly into his cellphone about his chihuahua’s scabies and the person in front of me engaging in a loud, soul-destroying argument about technical specifications with a colleague on the other side of the world.
I want my seven-hour cocoon trajectory back. And that’s just for an Atlantic crossing. I simply can’t image how noisesomely awful a flight across the Pacific will be a year or two from now when everyone is allowed to chatter incessantly on their iPhones and BlackBerries all the way from Vancouver to Hong Kong.
If long-distance airline flights are now a form of moving purgatory, the addition of cell phone cacophony will make them a living hell.
By Peter Nowak - Wednesday, May 2, 2012 at 3:16 PM - 0 Comments
The winner of the “Dumbest Move Involving Technology Award” this week goes to WestJet for the airline’s plan to ditch its in-flight entertainment system in favour of renting tablets to passengers.
Yup, you read that right–for the low, low price of $10 to $12, WestJet will rent you a tablet pre-loaded with movies, TV shows and possibly games. And if you don’t want to pay? You’ll be stuck looking at the clouds for hours. Unless your flight is at night, in which case you won’t even be that lucky.
The airline is considering deploying the tablets on four planes by the end of the year while it searches for a more permanent solution to a lacklustre entertainment system that includes live TV, which one aviation consultant has called “a complete failure.”
By Chris Sorensen - Monday, April 23, 2012 at 11:42 AM - 0 Comments
It is the country’s biggest and most dysfunctional airline, at war with its unions, losing money and protected by Ottawa. There may be only one way out.
The Air Canada back-to-work legislation, passed March 14, was meant to spare Canadians from the nightmare, both personal and economic, of a crippling strike by ground workers and a lockout of pilots at the country’s biggest airline. So far, however, it’s only made a bad situation worse, fuelling more labour hostilities and chaos for passengers.
As they returned from March break, sun-seekers still faced long delays after an unusually large number of pilots called in sick. A few days later, dozens of flights were delayed or cancelled after angry baggage handlers in Toronto launched another wildcat strike—this time in apparent retaliation for Air Canada’s decision to discipline three workers who gave federal Labour Minister Lisa Raitt a mocking “slow clap” as she strolled through Pearson’s airy concourse.
More recently, television viewers were treated to the spectacle of pilots’ union president Paul Strachan on the CBC issuing veiled warnings about the potential for deteriorating safety standards at his employer. Wearing full uniform, he suggested the bankruptcy of Aveos Fleet Performance Inc., the airline’s former maintenance arm and major maintenance provider, could lead to future aircraft repairs being done at low-cost facilities in El Salvador, where employees can be paid as little as $16,000 a year. “My question to you is: Is this the man you want maintaining the aircraft that you fly on so frequently?” said Strachan. “I suspect not.”
By Chris Sorensen - Monday, April 23, 2012 at 2:24 AM - 0 Comments
Delta Air Lines Inc. may have found a solution to rising fuel costs
For the past five years, airlines around the globe have struggled to contain their rapidly rising fuel bills. Solutions have included everything from ditching magazines and wine bottles to taxiing with one engine shut off. Air Canada even tried stripping the paint off one of its planes to reduce weight.
But Delta Air Lines Inc. may have come up with the best idea yet: make your own jet fuel. The airline’s executives are rumoured to be considering a US$100-million purchase of an idled ConocoPhillips reﬁning facility in Trainer, Penn. It’s estimated that Delta could shave as much as 10 per cent off its US$12 billion in annual fuel purchases by making jet fuel at the refinery and shipping it to hub airports in New York, saving on the so-called “crack spread,” the price difference between refined fuel products and raw oil, in the process.
While some have cautioned that the refinery business is a difficult one, at least one analyst described the bold plan as the “ultimate hedge.”
By Gustavo Vieira - Monday, February 13, 2012 at 12:37 PM - 0 Comments
Just as there’s no such thing as a free lunch, everybody knows you can’t…
Just as there’s no such thing as a free lunch, everybody knows you can’t fly anywhere for $49, despite the tricky ads promising incredibly discounted flights. To save passengers the trouble of learning the real prices of flights from fine print, the Canadian Transportation Agency is drafting new marketing rules for airlines that would require them to place full fares, including taxes, airport fees and other costs, in their ads. Consultations start on Monday on the new regulations are expected to be in place by the end of the year. Though they’ve previously resisted calls to do so, airlines such Air Canada and Porter seem to have anticipated the rules and started posting “all-in” fares on print ads and on their websites last week, while WestJet placed newspaper ads as early as January with all-inclusive fares.
The CTA, which has a quasi-judicial power, is also looking at how airlines use Facebook and Twitter to determine what counts as advertising and draft rules for advertising in social networks. All-in airline ads may be new to Canada, but they are already in use in the United States and Europe, where a new emissions-reduction fee has been imposed for all flights in and out of the old continent, adding about $6 to those trips’ fares and angering non-EU countries, including Canada, which are now considering retaliatory measures against European air carriers.
By Chris Sorensen - Tuesday, November 29, 2011 at 9:15 AM - 0 Comments
Why are some airlines shelling out tens of billions of dollars to scoop up the latest state-of-the-art planes?
Aircraft makers are racking up huge sales of fuel-efficient planes. But who’s going to foot the bill?
Airlines facing turbulent economic times have historically turned on the “fasten seat belt” sign and tried to ride out the chop, cutting underperforming routes and offering seat sales to boost others. With high fixed costs, the name of the game is preserving cash flow. So why then, with the economy looking so gloomy, are some now shelling out tens of billions of dollars to scoop up the latest state-of-the-art planes? It’s all about fuel.
With the price of oil hovering just under US$100 a barrel, airline executives are gambling that newer, more fuel-efficient planes will translate into huge cost savings down the road. Boeing, for example, revealed last week that it had signed the biggest-ever order in history with Indonesia’s Lion Air, which agreed to buy 320 Boeing 737s in a deal worth US$21 billion, based on list prices. Of those, 201 will be the 737MAX, outfitted with more efficient engines that burn up to 12 per cent less fuel than a regular 737 (Boeing also sold 50 of its 777 jets to Emirates Airlines for US$18 billion a week earlier). Similarly, Airbus’s A320 NEO, which has also been outfitted with more fuel-efficient engines, has proven to be the manufacturer’s fastest-selling model ever.
By Richard Warnica - Wednesday, November 2, 2011 at 1:10 PM - 2 Comments
The company is loved, loathed and hugely successful in Europe
It can be hard to know exactly how serious Michael O’Leary is. The CEO of Ireland’s Ryanair has proposed many things over the years—a surcharge on fat passengers, standing-room airplanes—that have never come to be. So when he mused recently about yanking two of three toilets from his airplanes to make room for more seats, you could almost see the eyes rolling from the other side of the Atlantic. O’Leary, pugnacious and confrontational, can come off as a clown. He once dressed as the pope to advertise a new Italian route. Another time, he called the agency that operates British airports a bunch of “overcharging rapists.” But for all his ideas that go nowhere—like pay-per-use toilets—an equal number have spun into business gold.
Over the past dozen years, as other airlines have struggled to cope with high fuel costs, pension obligations and new competition, Ryanair has thrived. The company flew about five million passengers in 1999 and earned $81 million in profit. By fiscal 2011, it had more than quadrupled its customers and doubled its cash, all in a year when it lost 9,400 flights to the Icelandic volcano.
Ryanair’s success rests on two promises: cheap tickets, as low as a few dollars on some routes, and on-time flights. Everything else, well, there’s the rub. Buying a Ryanair ticket is a gamble; it’s a bet between customer and company that the former can get through the flight without being too badly milked for extra fees for things like printing a boarding pass, carrying an extra bag, or a cup of tea.
By Chris Sorensen - Monday, April 25, 2011 at 10:00 AM - 13 Comments
Can it learn from past mistakes?
The late 1990s were heady days for penny-pinching North American air travellers. Southwest Airlines, Frontier and WestJet were shaking up the industry with rock-bottom airfares and an army of fresh-faced employees in golf shirts prone to making jokes over the cabin public-address system. Suddenly ﬁnding themselves under attack, big, bloated network carriers attempted to respond by rolling out their own discount outﬁts, splashed with spirited names like Ted (United Airlines), Song (Delta Air Lines), MetroJet (U.S. Airways) and Tango and Zip (Air Canada). The idea was to not only mimic their new rivals’ low prices (although not necessarily their low cost structures), but also the look and feel of a fresh upstart—sometimes with amusing results.
“Somebody at United determined that one of the reasons Southwest was so successful was because they wore shorts,” says Marc-David Seidel, a professor at the University of British Columbia’s Sauder School of Business, recalling a visit to the California operations of Shuttle by United, another big carrier discount attempt. “So, you know the classic pseudo-military United uniforms that are made out of polyester? They basically just took those and cut off the legs.” It gets worse. “One day management decided employees were supposed to have more ‘fun,’ so all these poor people were running around San Francisco airport wearing those little beanies with a propeller on top.” Needless to say, the strategy didn’t work, and Shuttle was scuttled in 2001. Most of the other “airline-within-an-airline” efforts met a similar fate.
Now, a full decade later, Air Canada is once again toying with the idea. It’s trying to convince its unionized workers to support the creation of a new discount airline that would fly all-economy-class planes to various vacation destinations. But can Air Canada really make money on the cheap seats this time around? Though it’s far from clear whether the project will come to fruition after a key agreement with the airline’s pilots got bogged down last week, the reality is that Air Canada, which has seen its stock plunge nearly 90 per cent to around $2.40 since its post-restructuring IPO in late 2006, is steadily losing market share to younger, cheaper competitors such as WestJet, Transat and Toronto’s Porter Airlines. All this at a time when fuel prices, typically the second-biggest expense for an airline after labour, threaten to eat into already thin profit margins. It has no choice but to attempt a little shaking up of its own.
By macleans.ca - Tuesday, December 14, 2010 at 12:18 PM - 1 Comment
Air Canada and WestJet introduced new second-bag fees in November
Airlines in the United States have raked in $2.5-billion so far this year by charging extra fees for bags, according to the Bureau of Transportation Statistics. In 2007, that figure was just $464-million—or one fifth as much. Delta alone made $733 million from baggage fees this year. Most American airlines began charging for the service of checking one or more bags in the last year. In November, WestJet began charging $20 for customers who check a second bag. Air Canada added a $20 second-bag fee the following day.
By Jason Kirby - Sunday, December 5, 2010 at 12:00 PM - 17 Comments
Airlines are booming again and that’s bad news for holiday fliers
Back in 2008, the world’s airlines were in survival mode. Fuel prices had soared and consumers were cutting back. With analysts openly fretting about whether Air Canada might once again crash-land in bankruptcy court, mass layoffs of front-line staff and an array of new fees and penalties were but the most visible changes impacting travellers. Some foreign carriers took even more drastic measures to cut costs, ripping out entertainment systems and even ordering passengers not to flush toilets, lest they burn precious fuel in the process.
The mood in the skies these days couldn’t be more different. Over the past year, carriers have been able to drive down costs, fill their planes to the brim, and chart a path to stellar financial results. In November, Air Canada’s operating income quadrupled to $327 million, while WestJet’s third-quarter profits jumped 72 per cent to $54 million. So far this year Air Canada’s share price has surged 176 per cent, to $3.70, while WestJet recently instituted its first-ever quarterly dividend to investors.
By Chris Sorensen - Thursday, November 25, 2010 at 8:00 AM - 1 Comment
Inside one airline’s quest to build the world’s most luxurious plane
When it comes to the rarified world of first class flying, the global airline industry has historically engaged in an arms race measured in centimetres. Who offers the widest seat? The most reclined? Whose personal TV screens are the biggest? But Lars Kroeplin, a Lufthansa executive who headed up cabin development of the airline’s flagship Airbus A380 double-decker planes, says the German carrier decided to jettison conventional wisdom during a recent overhaul of its first class offerings, which cater mainly to high-powered CEOs and celebrities—basically anyone who can afford to pay in the neighbourhood of US$10,000 for a one-way ticket.
So while competitors are touting personal “suites,” Lufthansa surprised many by giving the A380’s first class cabin a more conventional layout. Lufthansa’s “lie-flat” seats are still arranged in pairs down the middle of the plane, and only a movable privacy screen separates passengers. The idea was to give the cabin an open, airy atmosphere, which is reinforced by a lack of overhead bins. “In some airlines, they try to build a suite with a wall that’s as high as possible,” says Kroeplin, who recently took over the job as Lufthansa’s regional director for Canada. “But our surveys of passengers told us they didn’t want to be completely concealed for the full eight to 10 hours.”
By Nicholas Köhler - Thursday, September 30, 2010 at 11:40 AM - 0 Comments
Switzerland’s Edelweiss Air is blooming in these harsh times
As other air carriers grapple with the rocky terrain of recession by cutting routes, Switzerland’s Edelweiss Air, like the mountain flower that gives it its name, is blooming in these harsh times, and has announced plans to introduce a direct Zurich-Whitehorse flight next spring. “We think we will have success with this business,” says Andreas Hobrack, sales manager at Edelweiss, which, assuming it receives the approval of Canadian authorities, will dispatch a 285-capacity Airbus A330-200 to the Yukon capital (and then on to Anchorage) once a week during the 2011 summer season.
The new flight exploits a fascination among German-speaking Europeans with Canada’s north, say Yukon tourism operators. Whitehorse is already serviced by a direct flight from Frankfurt through Germany’s no-frills Condor air carrier, while in May the Hanover Adventure Zoo unveiled Yukon Bay, an attraction featuring faux northern landscapes, polar bears and snowy owls. “I have become convinced that, if you’re born in Germany, you grow up with Robert Service and Jack London,” says Frank Turner, whose Muktuk Adventures offers dogsledding-themed experiences to visitors from around the world—many of them from Germany and Switzerland. “Without them,” he says, “we wouldn’t be viable.”
By Chris Sorensen - Friday, August 13, 2010 at 8:43 AM - 0 Comments
How Robert Deluce took over a Toronto airport, launched Porter Airlines and screwed over Air Canada
At first glance, Robert Deluce seems an unlikely giant killer. The founder and chief executive of Toronto-based Porter Airlines stands shorter than many of the retro-uniformed flight attendants working his airplanes, and his small-town Ontario mannerisms—unfailingly polite with a tendency to ramble—are about as far away from Bay Street big shot as you can get.
On a recent afternoon, he ambled through the departure lounge of Porter’s terminal at the Billy Bishop Toronto City Airport and chatted awkwardly with pilots and other staff, resembling a sort of Columbo of Canadian commercial aviation, minus the scruffy trench coat. And like the fictional TV detective, he is not to be underestimated.
By Chris Sorensen - Thursday, July 8, 2010 at 10:40 AM - 0 Comments
Canadian and U.S. airlines are limited to cross-border runs
Irish discount airline Ryanair is advertising flights from London to Frankfurt (Hahn) for the equivalent of about $11, plus fees and taxes. There’s a few catches: one checked bag can cost an extra $38 and the small Hahn airport is over an hour away from the German financial centre by bus.