altiplano wrote:Cherniavsky is a WS corporate puppet and that question was likely a plant to give GS a chance to pass a message indirectly to the pilots without having to bring it up himself.
Cherniavsky is as critical about WS's foibles as anyone else. Perhaps the better question is why Ben is apparently not permitted on AC conference calls?
No one, including WJ itself, is patting themselves on the back for a flawless 767 roll-out. However, BC recognizes that WS's unit cost advantage continues to give WJ a huge advantage in the marketplace.
Lest anyone forget, it was Cherniavsky who alerted the markets that the UK and now Europe was in a yield meltdown 3 months ago. The problem escalated about 3 weeks ago when a number of yield bastion markets that have NEVER been available on a one-way discounted basis suddenly were being fire saled during the busiest travel season of the year.
For example, when one-way n/s fares on YVR-LHR tomorrow, July 31st, during the busiest travel period of the year, are c$525 compared to $1,628 from at least January 2016 through the end of June, there's probably a problem. British Airways are still holding to premium one-way fares, ($1,683). The cheapest one-way fare from SEA to LHR tomorrow is c$2,533. That's what happens when airlines don't flood the market with capacity.
YYC-YUL-BCN on AC next Weds is $2,100. Why pay that when you can fly YYC-LHR on AC for $497 and then fly Iberia or Veuling from LHR to BCN for under $200. Tough choice. $2,100 or $697? What would you do? Both are one-stop flights.
There are virtually countless examples of this sort of thing, to and from all markets in North America and Europe. It has gotten progressively worse this month compared to last, (ie, in the 3rd quarter), as more markets have been opened to discounting, one of the latest being FRA. There are more.
It doesn't take people very long to figure this sort of stuff out. As it occurs, the uptake becomes almost exponential as people talk to people, word spreads about the crazy deals and the discounting starts to spread like a run in the wife's nylons during the period of highest demand when fares should be at an absolute premium.
Add them all up and their impact on rasm and it paints a very troubling picture on the TATL this summer and into the future. It's not as if it can be made up by filling more seats. The TATL ran at 88% last summer. Lest anyone forget, the TATL has been an enormous source of profitability for legacy airlines in the peak summer years for as long as TATL air travel has ever existed.
WJ's 2Q numbers weren't great, but consider that WJ's 2Q has traditionally been their worst quarter for a decade or more as they transition from their winter "north-south" schedule to their summer "east-west" schedule and they incurred some pretty significant strategic growth pains in the quarter. I doubt we'll ever know the true costs of what they incurred over the first 8 weeks of the LGW program. It was undoubtedly a very large chunk of change.
2Q has always been Air Canada's 2nd best quarter and their growth has been of the easy variety. For example, adding Lyon to the network, just 25 miles further than the existing YUL-GVA operation, or Warsaw, 370 miles further than YYZ-FRA, using existing or brand new equipment with long established infrastructure isn't a big stretch.
Adding a new fleet type, (B767-300's) and operating it into utterly new markets, (LGW), the closest of which is 3,500 miles from home is a very different kettle of fish, but a challenge WJ needs to overcome if the airline is to move into different geographic realms. No one said it was going to be easy in the short term.
As was the case with Norwegian's TATL roll out, their were some significant burps but they ultimately settle down. OTP has been pretty good now for a little over 3 weeks. WJ is having no issues filling its TATL capacity. Flights are regularly sold-out and often can't be booked on-line.
I'd say this is all unfolding pretty much as predicted.
Now it's up to the pilots to come to terms on a long term deal for WJ WB growth, without which I'd estimate the odds of further expansion, or even replacement of the existing WB fleet are somewhere between slim and none.
