Porters Real reason for existance

[ng78]

I know Georgian was asked to bid on the AC island Q400 flying but did not get it. Have also heard Skyservice business put in a bid as well. Seems AC might be adding another CPA partner. This all relates to the recent ACPA meltdown over scope and the apparent need for imminent changes to the CA as requested by the company, something interesting is in the works for the island flying I think.

Some big Skyservice folks are definitely up to something, and this seems to be an accepted theory by a few people out there. The big question is why Air Canada would want to have a second company do Q400 flying for them when they have Jazz? It should be interesting to see what happens here.

[BLZD1]

I can think of two:

1. Jazz CPA is way to expensive to compete against Porter with.
2. Jazz 757 flying is competing against AC vacation. There seat mile is lower than AC's.

[Brick Head]

This really is simple. There really shouldn't be any kind of us and them going on as this develops. Just as it makes good business for Jazz to diversify so to for AC.

Lack of diversification equals risk. The lack of multiple suppliers undermines competition, and drives up cost as the single supplier has a choke hold on pricing. A company with a single supplier is also at risk if the supplier fails, strikes or has some other sort of mishap that prevents the supply of the service.

Diversification away from a single regional feeder is just the next step in the evolutionary process since Jazz's divestiture. It has always been inevitable.

For the same reasons Jazz itself is diversifying and evolving away from providing service to just one contractor. The business motivation is simple.

However is anyone paying attention to the eventual ramifications for the profession? Just look south to see what happens when groups have to compete for work. Just think it was not that long ago that pilots themselves were trying to get DC9 size aircraft into the mix of aircraft that would eventually go out to tender. We really aren't very good at protecting ourselves are we, even with the example south of us as to what to expect.

[Mig29]

However is anyone paying attention to the eventual ramifications for the profession? Just look south to see what happens when groups have to compete for work. Just think it was not that long ago that pilots themselves were trying to get DC9 size aircraft into the mix of aircraft that would eventually go out to tender. We really aren't very good at protecting ourselves are we, even with the example south of us as to what to expect.

This statement is right on the mark! The business strategy makes sense, but what happens to pilot wage/lifestyles after this happens...well, like Brick Head said, just look down south.

[BLZD1]

You do not half to look south of the boarder. Just look at what happen between Jazz and Skyservice. Jazz can obviously do the work cheaper than Skyservice.

[mattedfred]

[aerosexual]

What's wrong with your eyes? Care to elaborate?

[mbav8r]

I believe Matted rolled his eyes because the comparison above his, Jazz and Skyservice is not even remotely close to what happens down south. The condensed version for you aerosexual, Skyservice was failing, Thomas Cook needed someone else to do the work of the company that was going bankrupt. It was not Jazz undercutting Skyservice for the work.
Also, in case no one has been paying attention, the TC contract had an initial 2 years with a deadline to extend to 5 years. The deadline came and went with no announcement, leading one to believe that it has not happened. Guess we weren't the cheapest afterall.

[teacher]

Jazz is far from the cheapest in Canada and for the millionth time, TC is paying market rate for the 757 no less (please refer to the massive amounts of posts explaining status pay on this site) .

For those applauding AC for diversifying remember it is a double edged sword. AC looking for a cheaper option pulls EVERYONE's wages down including those at mainline. It's a slippery slope and the only ones who lose are the employees. Again, look south to see what happens when companies start fighting for pennies and the bottom of the barrel.

[genetic jack hammer]

I believe Matted rolled his eyes because the comparison above his, Jazz and Skyservice is not even remotely close to what happens down south. The condensed version for you aerosexual, Skyservice was failing, Thomas Cook needed someone else to do the work of the company that was going bankrupt. It was not Jazz undercutting Skyservice for the work.
Also, in case no one has been paying attention, the TC contract had an initial 2 years with a deadline to extend to 5 years. The deadline came and went with no announcement, leading one to believe that it has not happened. Guess we weren't the cheapest afterall.

When was the deadline? Is it still too late for an announcement still?

[mbav8r]

I believe the original was May 31, but was extended to July 1 due to on going contract negotiations. No news since then, I am and most likely alot of us, are assuming it didn't happen. I don't think they can sit on information like that being a publicly traded company.

[ChallengerDan]

from: http://phx.corporate-ir.net/phoenix.zht ... highlight=
Jazz Air LP announces flight services agreement with Thomas Cook Canada to operate Boeing 757-200 aircraft

(...)

If on or before May 30, 2010 Jazz and Thomas Cook are able to agree on pricing for the third, fourth and fifth winter seasons, then the agreement will be for a term ending April 30, 2015. Otherwise the agreement will have an initial term ending April 30, 2012.

[stupido]

Hey MIG29......I like your profile picture......Is it N-60 or NJ-21???

Cheers!!!!

[pointyertoes]

...N-60, or NJ-21
Cheers!!!!

...J-22 ....They're all the Yugo's of the tactical jet world

[Mig29]

Had me thinking now pointyertoes

Got some dust off of some old photos in my files....(I think) it's a G-2 two seater or N60 in Yugo code.

[Localizer]

I'd like to think/hope ACPA is against another CPA partner. All the talk about pilot wages being driven down and industry standard .. This puts the ball in ACPA's court to stand up for the "industry standard". (and I don't mean the US industry standard)

Just as it makes good business for Jazz to diversify so to for AC.

Jazz CPA is way to expensive to compete against Porter with.

Jazz has to diversify in order to grow .. There is no room in the CPA for Jazz to get any bigger, so the only way to do that is go outside the CPA. The CPA cost are high, yes .. but there are a lot of kick backs to AC on profits/clauses etc .. so really how high are the CPA cost?? .. You nor I will ever really know the true numbers.

[Brick Head]

I'd like to think/hope ACPA is against another CPA partner. All the talk about pilot wages being driven down and industry standard .. This puts the ball in ACPA's court to stand up for the "industry standard". (and I don't mean the US industry standard)
.

You know it is not that simple. It is certainly a concern. So to is the price tag associated with the Jazz CPA, how much is flowing to stakeholders other than employees, and the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains. Our pension is at risk, and we haven't had a raise in 9 years. The 20% pay cuts we took are now, after inflation, approaching 35%. All this has an effect on industry standard as well.

What's your suggestion?

[Dark Helmet]

Well, Global Solutions would have been a start. However, you and I both know that is dead in the water. enough said.

I was going to ask you the same thing Brickhead. You are very good a identifying the problems and flaws, but do you have a solution?

Say, what would happen if ACPA shot down this "scope modification clause"

[Brick Head]

Well, Global Solutions would have been a start. However, you and I both know that is dead in the water. enough said.

I was going to ask you the same thing Brickhead. You are very good a identifying the problems and flaws, but do you have a solution?

Say, what would happen if ACPA shot down this "scope modification clause"

Anything short of everyone on the same national list will fail to protect the profession. Every CA has to recognize that list. It has to be universal or else the group within will get whip sawed by anyone on the outside. GS was flawed because it wasn't universal. Can we do it though? Can we agree to national list? Could the College make that happen? Would we find it acceptable that if someone looses a job, they can use that national number elsewhere? Would WJ buy into it? It is however the only thing that will work.

Since that is probably a pipe dream. The next best thing would be every CA stipulating min wages and working conditions that must be met, for their company to do business with another. Not nearly as good but still helps. They can get there cost savings from areas other than pilot wages and working conditions.

JMO

[Localizer]

You know it is not that simple. It is certainly a concern. So to is the price tag associated with the Jazz CPA, how much is flowing to stakeholders other than employees, and the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains. Our pension is at risk, and we haven't had a raise in 9 years. The 20% pay cuts we took are now, after inflation, approaching 35%. All this has an effect on industry standard as well.

What's your suggestion?

I said it before .. Brick Head .. Can you say without a shadow of doubt that the Jazz CPA is too high? Considering you nor I know the true cost in the end? My answer ... It has to be working for AC in one way or another because they divested a long time ago yet they extended the CPA by an additional 5 years. That tells me AC is content with the Jazz product.

I wanna remind you that Jazz pilots did take a hit as well (CCAA) .. it wasn't a one sided deal. But to be clear your statement "the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains." says, you're willing to drive down the industry as long as you are able to capitalize off whatever means are necessary.

This statement bothers me because it seems you're talking out of both sides of your mouth. Jazz is potentially expanding on the Thomas Cook flying outside AC and not affecting AC pilots .. we're told we're driving the industry down. You're telling me ACPA is looking to use the Jazz CPA as a bargaining chip to gain, thus driving the industry down .. but thats ok? ..

Another thing I wanna be clear on ... is your pension at risk? or is the Top Hat at risk? ... I'm by no means a pension expert nor do I claim to know anything about the AC pension, but most pensions are protected to some degree, just not the top hat.

[Kevin Russell]

Hi Loc,

I certainly do not wish to contribute to the reduction of wages among our profession. Maybe I'm wrong but I seem to remember that not that long ago the Jazz pilot group was lobbying to fly the 175/190 for lower wages than is being done by AC pilots. Please correct me if I'm wrong.

[Localizer]

Hi Loc,

I certainly do not wish to contribute to the reduction of wages among our profession. Maybe I'm wrong but I seem to remember that not that long ago the Jazz pilot group was lobbying to fly the 175/190 for lower wages than is being done by AC pilots. Please correct me if I'm wrong.

Hey Kevin ..

I can't honestly tell you if that's correct or not? .. I'd like to think not, but i'm not privy to what happens behind closed doors. I can't see Jazz operating them for anything less then the present rates which aren't too far off the present AC rates. I don't think anyone at Jazz was disillusioned to think the 175/90's would show up on the property, which is why they have gone out to find more work. Room for expansion in the CPA is minimal and AC's recent statements regarding new routes/expansion prove that.

Regardless, this is going to affect all of us .. its another group being mixed in the fray and another partner in the whipsaw process. (hope i'm wrong)

[Brick Head]

I said it before .. Brick Head .. Can you say without a shadow of doubt that the Jazz CPA is too high? Considering you nor I know the true cost in the end? My answer ... It has to be working for AC in one way or another because they divested a long time ago yet they extended the CPA by an additional 5 years. That tells me AC is content with the Jazz product.

Localizer,

Fact. The CASM AC pays for the lift in the Jazz CPA is way out of line with industry standard. Yes it is convoluted. True the only ones that would really know is AC an Jazz.

Fact. If AC was happy with the cost of the Jazz CPA they would not be requesting contractual changes on scope, due cost, as they are doing right now.

Fact. The CPA was extended to 2020 in exchange for a margin reduction.

Fact. The CPA was extended to 2020 however the MADUG could very well end Dec 31, 2015.

In addition to establishing the annual minimum number of Block Hours on which the MADUG is based, the CPA Amending Agreement provides Air Canada with the right to revise the MADUG effective in January 2016 in the event Air Canada’s domestic market share for the twelve month period from October 1, 2014 to September 30, 2015 has decreased by a fixed percentage compared to its domestic market share for the twelve month period from August 1, 2008 to July 31, 2009. In the event of such a decrease, the CPA Amending Agreement requires that Air Canada and Jazz agree upon a revised MADUG by November 17, 2015, failing which Air Canada shall have the right to unilaterally set a revised MADUG by sending Jazz notice by November 20, 2015. The CPA Amending Agreement provides Jazz with the right to send Air Canada notice by December 18, 2015 of Jazz’s intention to either accept the revised MADUG or exercise its right to terminate the CPA as of December 31, 2016.

I'd like to know what the fixed percentage is. This statement by passes an arbitrated resolution.

failing which Air Canada shall have the right to unilaterally set a revised MADUG

It would appear the actual extension achieved was 1 year. Anything beyond Jan 2016? Who knows. AC's actions do not reflect a company happy with the cost of the Jazz CPA. They reflect a company doing there best to limit exposure to the Jazz CPA. The 5 aircraft out of the Island for example. Are they the 5 fins that can be removed from the Jazz CPA as a result of Jazz entering into a commercial agreement with TC for 5 aircraft?

But to be clear your statement "the affect it has on AC's bottom line, and in turn our ability to achieve collective bargaining gains." says, you're willing to drive down the industry as long as you are able to capitalize off whatever means are necessary.

Absolutely not. Defending the Jazz CPA is not defending the profession. It is defending the cash flow of those who capitalized on the divestiture of Jazz, at the expense of the profession. And more than that it is a temporary haven. It will not last. Is that good for the profession?

There are other ways to defend the profession from a US style race to the bottom, without defending the Jazz CPA. That is all I am saying.

Another thing I wanna be clear on ... is your pension at risk? or is the Top Hat at risk?

The pension deficit is not being payed at the moment. In the summer of 2009 all AC unions signed a moratorium on the deficit payments. It was approved by the OSFI. That moratorium ends in the spring of 2011. First payment in summer 2011. Unless we see a rebound in the deficit on its own (stock or bond rates) between now and then, the back service payments (deficit), not even including going concern contributions, amount to about 1/2 a billion/year all pensions combined. AC very much has their sights set on our pension. CR made that pretty clear recently in fact.

[Brick Head]

As I stated to Rudder earlier in the thread. This is not done.

AC does not have an agreement with ACPA on this issue. It is generating much debate and I am sure much more will take place.

There is however no mistaking what the company wants.

[teacher]

Yes your right it is very clear, pay less, make more. Make no mistake that your salaries, your pension and your working conditions are in their sights too. If you thought our negotiations were tough, I'm afraid to see what yours are like. Don't get me wrong, I wish you guys the best BUT if mainline wants less from us, they'll want less from you too. The CPA over payment (as some would claim) is but a minor dent in ACs cash flow but as it's seen time and time again, it's an easy target for pilots to complain about.