Financial post: Air Canada Cargo and Cargojet war

aero-singidunum · Post by **aero-singidunum** » Fri Jul 08, 2005 3:02 am

Did anybody read this in Financial Post, looks that ACE will be stuck in middle with this, Air canada and cargojet want that DC-10.....
Does anybody have more inside info? Cargodog, you are the man for this

teacher · Post by **teacher** » Fri Jul 08, 2005 7:03 am

Is this what you're talking about?

http://www.yyznews.com/Jun.html

Air Canada (AC/ACA) a)...the official announcement about a second World Airways MD-11F joining the Air Canada Cargo network was made on the evening of June 7th. Effective June 19th the second MD-11F started flying from Toronto to Shanghai via Anchorage. This route will now have five flights per week with the two World MD-11Fs. However, on June 16th an announcement was made that the planned stop in Calgary on four nights per week will not happen right away. CargoJet Holdings Ltd. has applied to begin flying to China but does not yet have the aircraft to make the trip and has complained to the Canadian Transportation Agency (CTA) that Air Canada is unfairly leasing a U.S. aircraft and crew to fly domestic cargo service between Toronto and Calgary which competes directly with CargoJet's domestic services. The CTA has not yet issued a ruling on the complaint.

Or do you mean they want the DC-10 that is allegedly painted in ACE colours in AZ?

boeingboy · Post by **boeingboy** » Fri Jul 08, 2005 9:32 am

Not allegedly........The DC-10 IS painted in ACE colors.

195psi · Post by **195psi** » Fri Jul 08, 2005 9:34 am

It si not allegedley painted, it is. There was a picture of it either here or on pprune.com. Registration was FACX like the first 727-100. Looks good and is apparently ready to go but awaiting work.

teacher · Post by **teacher** » Fri Jul 08, 2005 10:20 am

So AC and CJ want ownership of THAT particular DC10?

aero-singidunum · Post by **aero-singidunum** » Fri Jul 08, 2005 7:19 pm

Hello Teacher, not ownership, a wet-lease would be the correct.
C-registred plane give operator right to stop yyc, yvr.
CargoJet (as per Mr. Virmani did apply 2 yrs ago to lease US registred plane and fly to China, and was turned down, and same agancy allowed Air Canada to do same...

So Air Canada stops in yyc and moves domestic cargo on US plane......
So as i can see ACE will be

Rebel · Post by **Rebel** » Sat Jul 09, 2005 6:06 am

It should be interesting what sort of compromise is reached although I understand that the -10 is not really the aircraft type for the job. I expect or at least hope that the triple 7F can and does live up to its expectations when we get them.

For sure no one on this forum can influence any of the decision making we’ll just have to wait and see how it plays out...

teacher · Post by **teacher** » Sun Jul 10, 2005 7:46 pm

Interesting...

Cargodog · Post by **Cargodog** » Mon Jul 11, 2005 4:28 am

Hi Aero,

The application two years ago in August 2003 was for a short term Miami Air to operate on the CJT domestic runs and was denied by the CTA (think it was due to some aircraft down for some heavy mntc work). Had nothing to do with China.

Additionally, the Air Canada CTA ruling has not been released yet and they do not have permission as of yet to operate the MD11 point to point within Canada. The aircraft is not currently operating via YYC.

Cargodog

aero-singidunum · Post by **aero-singidunum** » Mon Jul 11, 2005 4:37 pm

Thanks, C-dog, i am just copying frpm National Post, i am sure that you may know better having inside info.
This is found on YYZ news:

"Air Canada Cargo on behalf of itself and World Airways has applied to the Canadian Transportation Agency (CTA) for an approval to permit Air Canada to provide its scheduled international all-cargo service between Canada and the United States using aircraft and flight crew provided by World Airways Inc. from July 9, 2005 to August 31, 2007. The CTA has approved the request. It is believed to be primarily to allow local cargo to be carried between Toronto and Anchorage and back on the flights operating between Toronto and Shanghai. (New Information as of July 9th ----AC Cargo intends to begin a Saturday night departure at 2335hrs to Los Angeles with a World MD-11F, returning on Sundays at 1115hrs. The first flight departs tonight--July 9th. Frequency is expected to increase in September with an additional flight on Thursdays. There are also plans to begin a weekly cargo flight to Mexico City in September, but no details yet on the actual schedule.) "

Cargodog · Post by **Cargodog** » Mon Jul 11, 2005 4:56 pm

Hi Aero,

From the snip you provided:

1. This discusses YYZ-ANC-PVG. Not YYZ-YYC-PVG as currently being debated.

2. This discusses operating between Canada and the US, which will not be an issue.

3. The Canada to mexico could be an issue, but just a 5th freedom so not a biggie. It's the point to point within Canada that most are curious about.

The article was in the FP last Wednesday.

Main Gear · Post by **Main Gear** » Tue Jul 19, 2005 2:25 pm

Cargojet welcomes transport minister's ruling

MISSISSAUGA, ON, July 19 /CNW/ - The Honourable Minister of Transport,
Jean Lapierre, announced today that Air Canada's application to utilize and
offer domestic service on a wet lease basis from foreign air cargo operators,
Gemini and World Airways, was denied.
"We find the Honourable Minister's ruling to be just and fair", says Ajay
K. Virmani, President & CEO of Cargojet. "Cargojet is extremely satisfied with
the ruling as the application for exemption was met with heavy opposition from
all major industry stakeholders, all of whom cited lack of economic benefits
for Canadian shippers and the aviation industry. We are pleased that the
Minister has endorsed the views of the industry acknowledging that this
application does not meet public interest requirements nor is it beneficial to
Canadian consumers," adds Virmani.

abc xyz · Post by **abc xyz** » Tue Jul 19, 2005 2:56 pm

We find the Honourable Minister's ruling to be just and fair", says Ajay
K. Virmani, President & CEO of Cargojet. "Cargojet is extremely satisfied with
the ruling as the application for exemption was met with heavy opposition from
all major industry stakeholders, all of whom cited lack of economic benefits
for Canadian shippers and the aviation industry. We are pleased that the
Minister has endorsed the views of the industry acknowledging that this
application does not meet public interest requirements nor is it beneficial to
Canadian consumers," adds Virmani.[/quote]

I guess Starjet will give the PM a good rate next election 2 for their airplane. I cant see how this flight would cause any adverse effect to the Canadian economy. Smells fishy to me. U draw your own conclusions. I simply dont trust politicians.

From CJ website

http://www.cargojet.com/assets/Files/CJ ... %20PDF.pdf

Rebel · Post by **Rebel** » Tue Jul 19, 2005 4:19 pm

Okay all that means is that AC was denied permission to operate the service with a wet lease operated foreign crew and aircraft. What happens when AC applies using AC aircraft and crew? Interesting times ahead me thinks..

prop2jet · Post by **prop2jet** » Wed Jul 20, 2005 3:16 am

Okay all that means is that AC was denied permission to operate the service with a wet lease operated foreign crew and aircraft. What happens when AC applies using AC aircraft and crew? Interesting times ahead me thinks..

UH, Is that not the point? Keep jobs in this country instead of contracting our work out?

Cargodog · Post by **Cargodog** » Wed Jul 20, 2005 5:03 am

abc xyz,

Ummm, you don't see an adverse effect of a foreign carrier carrying domestic product point to point within Canada? So, you wouldn't see an impact if it was American Airlines operating point to point within Canada with passengers??? Or even if American Airlines wet leased their aircraft and flew for Air Canada/Westjet/Canjet etc so that there were no Canadian aircraft or crews flying within Canada but rather all subleased from foreign operators with foreign crews???!!

Might want to do some research on what cabotage means.

Smells fishy? Hmmm, not really. Would smell fishy if the minister sold out the Canadian airline industry because of the whims of one company who has decided to dabble in cargo now.

Do you honestly think this was Cargojet versus Air Canada? Every cargo carrier in ATAC and all of the courier companies lobbied against the application. Cargojet was simpy the carrier highlighted. Ask KFC, Morningstar, PEAir, UPS, DHL, Skylink, etc what roles they had in trying to protect the Canadian market place.

Additionally, do you think there is any reciprocity with the US if a Canadian carrier wanted to do the same thing in the states? Absolutely not, they'd never allow it. So why in the world would Canadians give them rights that wouldnt be extended to Canadian operators south of the border.

AC is totally welcome to use their own aircraft or a Canadian carrier, without any issue or complaint for the market place.

Cargodog

Cargodog · Post by **Cargodog** » Wed Jul 20, 2005 6:50 am

http://www.canada.com/national/national ... eeee8f207a

Interesting Read...

abc xyz · Post by **abc xyz** » Wed Jul 20, 2005 8:56 am

Hi Cargodog

I really dont think this agreement is the big bad demon you make it out to be . Is it the best solution possible. An emphatic No. Is it a livable solution - Yes. My key concern would be is the money repatriated to Canada in this deal. I doubt AC is in it to not make money. The deal is structured as a short term lease where ACPA will eventually take over. This is not in perpetuity like you intimated with your claims of American airlines dominating the Canadian skies. Quite frankly i see no difference in this compared to Skyservces deal with Air 2000, Cubana and ACE or ICC with Emery back in the day.

The cargo market is whole different ball of wax - carriers need for lift varies as often as the seasons change. Hence the ACMI lease agreements. Whether its international flying or domestic flying if the deal is structured for x number of days the cause and effect of the local economy is far more positive than negative. If AC had a viable option within Canada to provide short term lift of an md-11's magnitude i could see your beef. However short term proving runs are hardly ruining the Canadian marketplace. Aviation is a global medium and should be modernized to reflect such.

I have no doubt all cargo carriers in Canada bitch and complained. Last thing they want is a healthy AC with deep pockets running them out of business. As much as Kelowna and Cargojet probably have nice operations im sure their ability to compete with a competitive cargo side of Air Canada is slim to none.

corytrevor · Post by **corytrevor** » Wed Jul 20, 2005 10:00 am

So abc,

You obviously think that an Air Canada with deep pockets should be allowed to run Cargojet and Kelowna out of buisiness. How would that be good for anyone? Air Canada would have to run at a huge loss for some time to be able to compete with those guys because their costs, and unproductive labour force, would preclude any profit. Why should AC be allowed to do that?

Cargodog · Post by **Cargodog** » Wed Jul 20, 2005 11:11 am

Abc xyz,

You're arguing with the wrong guy if you're attempting to "educate" me on the cargo industry in Canada.

As the news article said, the only request is for a level playing field and not that any airline be stopped from growing.

Let's start to break down your well thought out response shall we...

I really dont think this agreement is the big bad demon you make it out to be . Is it the best solution possible. An emphatic No. Is it a livable solution - Yes. My key concern would be is the money repatriated to Canada in this deal. I doubt AC is in it to not make money.

Really. So allowing cabotage in your opinion for three years isn't an issue? Flying on lanes currently serviced by existing Canadian operators (Morningstar, Cargojet, Kelowna, etc) isn't detrimental to the Canadian marketplace in your opinion? Wrong. It's only selfserving to Air Canada and serves no benefit to the aviation community in Canada.

If Air Canada cannot make money doing this operation (YYZ-ANC-PVG) via the 5th freedom rights, then they maybe shouldn't have entered into the operation without thinking they could ram through a cabotage ruling to make the operation work. And in doing so attempt to take away work from other stakeholders in Canadian aviation.

No one would have an issue with Air Canada either securing their OWN aircraft or subcontracting a Canadian operator to flying domestic product within the country. The more Canadian carriers in the sky, the better. Good for everyone, good for competition, good for jobs. But not a foreign carrier stealing jobs and monies from Canadian employees, companies, and stakeholders.

This is not in perpetuity like you intimated with your claims of American airlines dominating the Canadian skies.

Oh, so you don't think something like this is a precedent setting decision? Interesting. And, with the possible "open-skies" discussions you think it wise to give away bargining chips prior to attempts to strike a deal? You think the fact there there is ZERO RECIPROCITY of these rights in the US for Canadian operator carries no bearing here? The fact that no Canadian carrier would ever be allowed to fly domestic passengers or cargo between two US points has no relevance here?

Quite frankly i see no difference in this compared to Skyservces deal with Air 2000, Cubana and ACE or ICC with Emery back in the day.

ICC never operated cabotage. ACE never operated cabotage (5th freedom between Newark and Bermuda, but not cabotage). Don't have enough info on Cubana or Air 2000 but I'd like to see a record of a foreign operator carrying domestic service within Canada or the US (unless an EXTREME situation - eg need for an AN24). I think you may be confusing Fifth Freedom Rights with Cabotage. What other countries like Cuba may allow is a different matter as they dont have the infrastructure to support their needs. There are more than enough Canadian operators to serve Canadian needs without giving away our industry to foreigners.

The cargo market is whole different ball of wax - carriers need for lift varies as often as the seasons change. Hence the ACMI lease agreements. Whether its international flying or domestic flying if the deal is structured for x number of days the cause and effect of the local economy is far more positive than negative. If AC had a viable option within Canada to provide short term lift of an md-11's magnitude i could see your beef. However short term proving runs are hardly ruining the Canadian marketplace. Aviation is a global medium and should be modernized to reflect such.

Much like my name would indicate, I work in cargo and have a pretty good idea of Canada's cargo needs. But I am not quite sure what you're trying to say here. And contrary to your claim of seasons, there are really only two - the first 10 months of the year, and peak from November-December (maybe mid October).

What you seem to miss in your statement above is that to require a domestic MD11 and apply for cabotage approval one must demonstrate a market need for such an aircraft. The market is currently 100% contained thanks to Morningstar, Kelowna, Cargojet, Westjet belly, AC, Canjet, etc. The only purpose of an MD11 operating domestic is to remove product from existing Canadian operators using Canadian aircraft and crews.

No one here is arguing the current 5th freedom operation, but rather the cabotage request for approval.

So, aviation is a global medium and should be modernized to reflect such. Hmmm, ok, then again, you would have no issues with open skies? Or US carriers performing wet leases on any domesitc passenger run? Guess you don't have too much an investiment (carrier, finances, etc) in Canadian aviation.

I have no doubt all cargo carriers in Canada bitch and complained. Last thing they want is a healthy AC with deep pockets running them out of business.

Now you're really demonstrating your lack of knowledge about cargo in Canada.

1. Air Canada folded their cargo division about 15 years ago..

2. Since their fold of the cargo division carriers like KFC, Morningstar, CJT, etc have flourished by offering high levels of service and performance.

3. The existing carriers contain almost all of the domestic product in Canada. Why in the world do you think they would leave because some division at Air Canada decides to try and dabble in cargo once again LOL.

As much as Kelowna and Cargojet probably have nice operations im sure their ability to compete with a competitive cargo side of Air Canada is slim to none.

You need to understand how you compete in cargo. It's through performance, customer service, and a proven track record. Both CJT and KFC have demonstrated that year after year which is why many of the current contract both companies hold are 5 year deals. This isnt a business where companies flip flop their product each night. Couriers/Freight forwards/auto manufactures all stake their business in the services provided by their overnight carriers. Trucking networks, hubs, sort facilities, driver runs, etc are all geared to whoever their supplier is and that doesnt just change like the weather - it requires complete retooling of their operations.

Just out of curiosity. How about you enlighten me on you claim "I'm sure their ability to compete with a competitive cargo side of Air Canada is slim to none"... I just love statements like that which are made without any type of supporting argument... Brilliant.

Freighter · Post by **Freighter** » Wed Jul 20, 2005 12:53 pm

I had to check after reading abc's informative and fact-filled postings, figured that we were being given insight from the very top echelons of AC management, turns out that things aren't quite what they seem...here's a quote from the venerable mr xyz...
<quote>
Just my 2 cents

Im 25 and seen the best and worst of the industry

Take Care
<unquote>
Never mind the poor sentence structure and grammar exhibited in almost every posting from our AC fanboy, he was 10 yrs old (if I am doing the math correctly) the last time that AC had a dedicated cargo arm, making his insight somewhat suspect.

Guess I'll just have to go back to crew room gossip to find out the real dirt on the cargo industry in Canada...

Mike

Cargodog · Post by **Cargodog** » Wed Jul 20, 2005 1:37 pm

Hey Abc,

I guess this snippet from today's big article isn't an issue to you either:

Cargojet, a domestic-only carrier with scheduled overnight service to 13 Canadian cities, said Air Canada is not playing by the rules. It complained to the Canadian Transportation Agency (CTA) that Air Canada ran domestic cargo routes on its leased U.S. freighters without a proper licence during the past year.

The CTA responded by launching an inquiry. According to a letter sent by the CTA to both parties, Air Canada initially denied Cargojet's allegations in a sworn affidavit, but later admitted it did solicit business for a Toronto-Vancouver route on one of the leased planes in question.

In its letter, the CTA said it was "deeply concerned" about Air Canada's failure to file a full and accurate affidavit in response to the allegations raised by Cargojet. "Air Canada either failed to conduct a diligent enquiry ... or it failed, upon discovery of these irregularities, to amend its affidavit accordingly."

Now, what were you saying about smelling fishy?

Education, it's a wonderful thing.

abc xyz · Post by **abc xyz** » Wed Jul 20, 2005 3:39 pm

Sorry Mr Freighter i guess being up all night then writing a post on an internet website is bad for grammer. These places are meant to be fun and off the cuff - guess you were expecting the Wall St journal of responses. For that I am truly sorry.

Its not so much pro AC as pro business. Who benefits from not having this flight?????? CJ and KFC plus a handful of smaller ops. Who loses out - to many people to mention but ill say Calgary shippers are on the top of the list.

Cargodog

Never claimed my arguements were perfect nor right in everyones opinion. Im of the the opinion that market liberalizations is better for our economy and eventually this industry instead of 1930's protectionism.

If AC says they want an md11 for x number of days to try out fill your boots if the money stays in Canada. If Cargojet is weary that a 767 might be an airplane for them subcontract one to see if it works.

There are times when the economy and business demand creative thinking for growth. It might not be a perfect idea of allowing temporary rights to foreign carriers here but it sure ourweighs not persuing potential business opportunities. Our market growth as a 30 million person nation depends on it. What works in the states doesnt mean its right for us.

'Just out of curiosity. How about you enlighten me on you claim "I'm sure their ability to compete with a competitive cargo side of Air Canada is slim to none"... I just love statements like that which are made without any type of supporting argument... Brilliant

Do you honestly believe that if AC were to redevelop both a continental and international dedicated cargo network that the likes of Cargojet could sustain growth. This is not to slight Cargojet, just reality. You work there so you are biased. I just dont see that if AC cut cargo doors into some old 767-300 ER and began running them across the country every night that they could not dry up your market. Maybe im naive but my money is on AC.

Rebel · Post by **Rebel** » Wed Jul 20, 2005 5:01 pm

prop2jet

Maybe I didn’t make my point clear enough. I agree that AC shouldn’t be wet leasing foreign aircraft and crew to operate on Canadian leg segments. What I was trying to say is that AC will probably be reapplying in the near future to operate those Canadian segments using their own aircraft and crew subject to pilot agreement. Then what? The competition problem is not going to go away.

There is a fly in the ointment however as one of the primary reasons that AC got out of cargo in the first place was an inability to reach an agreement with the pilot union over working conditions. There is no guarantee that they will reach an agreement with the pilots in the future. Typically the pilots shoot themselves in the foot time over time and will probably do it again in the future as we have just witnessed over the Boeing fiasco

IMHO all the a/c mentioned except probably the 777F are not the right a/c for the job and to own only one is not smart business.

Cargodog · Post by **Cargodog** » Wed Jul 20, 2005 6:06 pm

Abc Xyz,

You gotta be in the business to have an appreciation for it and it's needs. It's a bit more complex than you'd like to imagine it.

I appreciate that you dad is retired Air Canada and your mom is an ex stewie (as you put it) so you have a bias towards AC.

I also read that you're with CP in YYZ which is great (no sarcasm) but I'm curious how that gives you such an insight into the YYC Shippers needs. Since you claimed that they would be so negatively impacted along with a list of names too long to mention.

Never claimed my arguements were perfect nor right in everyones opinion. Im of the the opinion that market liberalizations is better for our economy and eventually this industry instead of 1930's protectionism.

Great! You're more than welcome to your opinions, however they carry little weight or merit when you can't justify them by at the least providing some sort of a backing arguement which you've yet to provide.

Why not continue to say "I support communism" or "I support PETA tactics" etc etc etc. Without providing some shread of an structured opinion, you're statement carry little value or constructive meaning and does not add to the value of an open forum such as this.

There are times when the economy and business demand creative thinking for growth. It might not be a perfect idea of allowing temporary rights to foreign carriers here but it sure ourweighs not persuing potential business opportunities. Our market growth as a 30 million person nation depends on it. What works in the states doesnt mean its right for us.

So, by creative thinking you really mean at the detriment of the rest of the airline industry in Canada. I'd suggest that you consider the meaning of the word 'reciprocity'. Without reciprocity with the foreign country we want to entertain a cabotage agreement holds no value to us as Canadians only losses.

In negotiating it's generally not wise to give something unless you're going to receive something in return.

I know you like the pink sky aproach of viewing the world as a "global community". So by that mindset, on the extreme, lets shift all of our manufacturing over to China and let next-to-slave labour perform the functions of North Americans. Hey, it's a global community right? And without money being produced by Canadians how do you suggest the economy here survives.

How about Westjet try out the 7E7s and ground all the 737s, lay off all the pilots, dismiss all the mechanics, and get a Chinese/American/Mexican/whatever firm to supply the crew/aircraft/etc here in Canada. Would that work for you? I doubt it would for the thousands of Westjet employees.

I am sorry, but I do not think you fully see how cargo works in this country. You see, YYC does not need domestic MD11 service from a foreign operator any more than it needs an AN24 running between YQR and YYC. YYC has ample lift daily and does not require YYC-PVG service as the product can easily be moved into YVR/YYZ/etc to make connections abroad.

In fact, if YYC is in such need of the service, why would AC not base the MD11 there and simply operate YYC-PVG?

If AC says they want an md11 for x number of days to try out fill your boots if the money stays in Canada.

I guess when you say X number of days you really mean 3+ years since that's the terms of the contracts with Gemini and World. But hey, days years what's the difference right?

Money stays in Canada? Hmmm, well, let's see about that. Unless Gemini is doing this work pro bono I think the money is going south of the border, along with the jobs that support their operation.

If Cargojet is weary that a 767 might be an airplane for them subcontract one to see if it works.

Didn't know that CJT was "weary" about the 767. All has to do with the mission and the needs. '67 is right for some, wrong for others.

Do you honestly believe that if AC were to redevelop both a continental and international dedicated cargo network that the likes of Cargojet could sustain growth. This is not to slight Cargojet, just reality. You work there so you are biased. I just dont see that if AC cut cargo doors into some old 767-300 ER and began running them across the country every night that they could not dry up your market. Maybe im naive but my money is on AC.

Naive yes. Don't bet your student loan. Again, no structure or support of your claim, so really not worth a response. As futile as "I know you are, but what am I".

Who benefits from not having this flight?????? CJ and KFC plus a handful of smaller ops. Who loses out - to many people to mention but ill say Calgary shippers are on the top of the list.

Ummmm, care to elaborate on the "too many people to mention, but I'll say Calgary shippers are on the top of the list". Please enlighten me as you must have some market intelligence that I lack.

I guess the half empty Asiana flight 3 x per week from YYC, the failed attempt by Korean Cargo with their freighters ex YYC, and the struggling Cargolux flights all out of YYC are not offering something that an MD11 on a cabotage YYZ-YYC route would? lol. *Sigh*

Good for Air Canada to grow their business, good for All Canada Express, good for KFC, Morningstar, Cargojet, whoever. Growing using an equal ruling system is good for everyone. But keep things on a level playing field regarding the regulations for all operators.

If the government decides to change the legislation (Open Skies), that's another issue. Write your MP and state your opinions. But until that time, we are governed by the CTA and TC and all need to follow the regulations of the Aeronautic Act, which includes not allowing cabotage.

Financial post: Air Canada Cargo and Cargojet war

Financial post: Air Canada Cargo and Cargojet war

Dog, don't waste your time