VIA Rail

[hipster duck]

Originally Posted by Nouvellecosse

any competition is more between the modes rather than the operators. And if AC has an incentive to gain something from rail's success rather than just lose, I see that as providing more competition since they can be partners in making a second mode more appealing.

Yep. I think the goal of anti-competitive laws is to benefit the consumer with superior options, ultimately in the form of either lower prices or better service.

Saying that an airline entering a partnership with a HSR proposal is "anti-competitive" is an admission that HSR is the superior travel option for consumers within this corridor, because it provides faster door-to-door service with more legroom, less risk of disruption and fewer steps (e.g. no travel to the airport, security checks, etc.). With HSR, the other airlines would be forced to be competitive. With better service, they might have to lower their prices.

[Urban_Sky]

Originally Posted by Nouvellecosse

I'm not sure I'm quite as concerned. I'd take issue with it if AC was able to influence pricing, scheduling, or other substantive policy. That would give them an ability to sabotage rail service and reduce its impact on the air business. Even if there was no evidence of them actually using such an ability, the appearance and potential would still be a problem. But I don't know that it's anti-competitive for them just to be involved. To be honest, I'd be more concerned about anti-competitive behaviour if they weren't involved since they'd likely be behind the scenes lobbying against it and wouldn't advertise or facilitate any partnerships.

Passenger rail in Canada has no direct competition as it is since there's only one rail operator. But any process that improves passenger experience allows it to better compete with road and air. So if AC's involvement does anything to improve rail service, I see it as automatically increasing competition. For a service provider that isn't profitable (aka is subsidized) and isn't a private business, the concept of competition doesn't really mean the same thing. For such an entity, the goal is to provide a service in accordance with its mandate rather than to make profit and capture market share. So any competition is more between the modes rather than the operators. And if AC has an incentive to gain something from rail's success rather than just lose, I see that as providing more competition since they can be partners in making a second mode more appealing.

As I wrote on Urban Toronto, the interests of an airline operating flights to and within cities served by HFR are inherently incompatible with that of a railroad operating HFR services:

Just to be sure: I have no issue with airlines partnering up with railways for code-share purposes, but they should not have any commercial or competitive control over said railroad, as the railroads‘ interests (to have as many airlines as possible sign up while still confronting any overlapping air operations) and those of the partner airline (to gain a competitive advantage over competing airlines and to protect its profitable routes) certainly don’t align…

User @crs1026 added that the obligations of a publicly listed airline and a HFR proponent also appear to be irreconcilable:

To join the consortium, one has to assume they accept a fiduciary duty to that project..... in plain language, they have a duty to advance the project and work from a position of protecting the project's interests. Their existing fiduciary duty however is to build their air business and protect their shareholders' investments in airplanes and competition in the air market. I am having trouble reconciling those two fiduciary duties.

If Air Canada is saying to its shareholders, hey we can make more money by investing in VIA than by buying
more airplanes.....well, that would be a wonderful statement. But I'm a bit suspicious about that just yet.

[acottawa]

There is a global shortage of aircraft and most aircraft useable for short haul flights have long order backlogs (Airbus has a backlog of 8,579 jets). It seems pretty clear why Air Canada would prefer to code share a train, particularly on the Ottawa-Montreal leg.

[Urban_Sky]

Originally Posted by acottawa

There is a global shortage of aircraft and most aircraft useable for short haul flights have long order backlogs (Airbus has a backlog of 8,579 jets). It seems pretty clear why Air Canada would prefer to code share a train, particularly on the Ottawa-Montreal leg.

Have you seen anyone here denying the mutual benefits of code-sharing? We are talking about an airline appearing to seeking control over commercial decisions which will dictate with which airlines to enter code-sharing at which price and for which departures. What do you think how WestJet will like having to negotiate with its fiercest competitor about market access to code-sharing? Or PP and his Conservatives, for that matter…?

[acottawa]

Originally Posted by Urban_Sky

Have you seen anyone here denying the mutual benefits of code-sharing? We are talking about an airline appearing to seeking control over commercial decisions which will dictate with which airlines to enter code-sharing at which price and for which departures. What do you think how WestJet will like having to negotiate with its fiercest competitor about market access to code-sharing? Or PP and his Conservatives, for that matter…?

Westjet doesn’t operate any flights in the corridor. They have limited incentive to get involved.

[Urban_Sky]

Originally Posted by acottawa

Westjet doesn’t operate any flights in the corridor. They have limited incentive to get involved.

Which is why they would have been a prime partner for a code-share agreement, but presumably not with a railroad where its fiercest competitor dictates the price and conditions of access…

[hipster duck]

Originally Posted by Urban_Sky

Which is why they would have been a prime partner for a code-share agreement, but presumably not with a railroad where its fiercest competitor dictates the price and conditions of access…

I don't think AC is the 1,000 pound gorilla in the partnership that calls the shots on scheduling, pricing, service patterns, etc.

Construction and engineering partners aside, there are the operational partners (Keolis, SNCF) and there is the money (CDPQ infra) and then there is the government. I don't see them letting this multibillion dollar project get defined by AC to suit their narrow interests. And I really doubt that Air Canada is planting themselves in the consortium like a Manchurian candidate - ready to take it down from the inside with an inferior product that guarantees that they can keep operating short haul flights. That goes against the fiduciary interests of the other 5 partners, and is probably less profitable to AC as well.

WS and Porter are free to join up with the other 2 consortia that were invited to the RFP.

And even if they lose out, and a portion of the revenues from HFR passengers flow to AC, I still think a HSR system would be a net positive for WS and Porter in the long run. They too can axe their short haul flights in the corridor and reallocate their resources to the more profitable long haul market.

[Urban_Sky]

Originally Posted by hipster duck

I don't think AC is the 1,000 pound gorilla in the partnership that calls the shots on scheduling, pricing, service patterns, etc.

It doen’t matter who calls the shots. What matters is the obvious conflict of interest and the potential to distort competition between AC and WJ. From the perspective of passengers, taxpayers and the airline or railroad industry, there is absolutely zero benefit in allowing AC to have any role in HFR beyond that of a customer…

Originally Posted by hipster duck

WS and Porter are free to join up with the other 2 consortia that were invited to the RFP.

Wrong, neither AC, nor WJ nor Porter have any business in engaging in anti-competitive behaviour. If they want more travel options for their own customers, they can negotiate a code-share alliance with the future operator…

[Djeffery]

Air Canada is already involved in buses (and can't wait to see where they expand that project to, and how long until they start busing from airports they currently fly from), so why not get into trains too. Isn't their big Star Alliance partner in Europe already doing this?

[Urban_Sky]

Oh dear, so much confusion and so many false equivalences in one short statement…

Originally Posted by Djeffery

Air Canada is already involved in buses (and can't wait to see where they expand that project to, and how long until they start busing from airports they currently fly from), so why not get into trains too.

Roads are open infrastructure, which can be used by any road vehicle. Rail infrastructure is a closed infrastructure (also known as „natural monopolies“), which can only be used by railroads which obtain slots from an infrastructure owner. AC obtaining partial control over HFR could lead to a situation like a car manufacturer like GM acquiring a stake in the 407 Highway operators and starting to manipulate the pricing so that it favours cars and trucks manufactured by (you guessed it) GM, while discriminatibg against other manufacturers‘ cars and trucks.

Isn't their big Star Alliance partner in Europe already doing this?

I challenge you to name a single European airline owning a stake in any European railroad or vice versa.

Seriously, if people here had even the faintest understanding of code-sharing (a commercial arrangement between two airlines, whereby one sells seats on a flight operated by the other) and partnering up in a consortium (a group made up of two or more individuals, companies, or governments that work together to achieving a common objective), they wouldn‘t constantly confuse these two diametrically opposite concepts of cooperation between businesses…

[acottawa]

It is weird the railfans are opposing something that might actually drive ridership and might actually make an upgraded service viable.

This is why Canada can't have nice things.

[Urban_Sky]

Originally Posted by acottawa

It is weird the railfans are opposing something that might actually drive ridership and might actually make an upgraded service viable.

This is why Canada can't have nice things.

I guess it’s pointless to discuss with people who are too intellectually lazy to acknowledge the difference between code-sharing (which maximizes rail ridership) and an airline gaining control over a rail service (which introduces severe conflicts of interest, as the airline might be more concerned about protecting their own core air business by making sure that other airlines are shut or priced out any code-share agreements of their own)…

[acottawa]

Originally Posted by Urban_Sky

I guess it’s pointless to discuss with people who are too intellectually lazy to acknowledge the difference between code-sharing (which maximizes rail ridership) and an airline gaining control over a rail service (which introduces severe conflicts of interest, as the airline might be more concerned about protecting their own core air business by making sure that other airlines are shut or priced out any code-share agreements of their own)…

Code share agreements are pretty marginal at driving ridership. Ridership is driven by an airline having a stake in incentivizing the train. This is why Air Canada pushes traffic onto the Lufthansa Group (which shares revenue with Air Canada) and not on other Star Alliance members.

How much traffic does the Emirates code share drive?

[Urban_Sky]

Originally Posted by acottawa

Code share agreements are pretty marginal at driving ridership. Ridership is driven by an airline having a stake in incentivizing the train. This is why Air Canada pushes traffic onto the Lufthansa Group (which shares revenue with Air Canada) and not on other Star Alliance members.

How much traffic does the Emirates code share drive?

I have no idea what you believe to be referring to, but last time I checked, no airline had an ownership stake in Deutsche Bahn or any other railroad. If you are able to name any precedent for what Aur Canada is proposing, we can discuss this proposal based on these experiences. Otherwise, please stop pretending that this is just usual industry practice…

[hipster duck]

Originally Posted by Urban_Sky

I have no idea what you believe to be referring to, but last time I checked, no airline had an ownership stake in Deutsche Bahn or any other railroad.

We don't know if Air Canada has an ownership stake either.

As I said before, I really doubt that the other partners who have much more of an ownership stake will let Air Canada "gain control over [this] rail service", as you alluded to.

Finally, this is just at the RFP stage. There are other bidders.

I don't know why you're choosing to die on this hill.

[acottawa]

Originally Posted by Urban_Sky

I have no idea what you believe to be referring to, but last time I checked, no airline had an ownership stake in Deutsche Bahn or any other railroad. If you are able to name any precedent for what Aur Canada is proposing, we can discuss this proposal based on these experiences. Otherwise, please stop pretending that this is just usual industry practice…

At no point have I said it is usually industry practice. The usual industry practice is not to dick around with a proposal for a decade. It is a mechanism to drive ridership in a pretty marginal proposal.

[YOWetal]

Originally Posted by acottawa

At no point have I said it is usually industry practice. The usual industry practice is not to dick around with a proposal for a decade. It is a mechanism to drive ridership in a pretty marginal proposal.

Exactly and it needs all the help it can get. If it's 30 minutes from Ottawa to YUL you could argue they could pay for it by completely closing Ottawa's airport and selling off the land. We are short of housing and the LRT that goes there could be extended into the new development.

[Truenorth00]

Originally Posted by Urban_Sky

I guess it’s pointless to discuss with people who are too intellectually lazy to acknowledge the difference between code-sharing (which maximizes rail ridership) and an airline gaining control over a rail service (which introduces severe conflicts of interest, as the airline might be more concerned about protecting their own core air business by making sure that other airlines are shut or priced out any code-share agreements of their own)…

Not sure I understand how one partner among several, especially a later one, can drive the agenda and convince the other partners to pass up commercial interests.

AC may be able to secure preferential terms on codeshare or interlining. But even then, it's not likely to be a problem that would seriously damage the rail proposal. We're talking about other airlines maybe paying $20 more for a ticket. They'd still do it. Their profits are made on long haul. Not on Corridor feeder services. And the same is true for Air Canada. The Corridor is the busiest and most competitive aviation market in the country. In an environment where there's a shortage of pilots, shortage of short haul aircraft and their two biggest hubs are slot constrained, moving some feeder services to rail is highly advantageous. They can use those pilots and slots for long haul, or less competitive destination, where the real profits. Why use a slot and crew for Ottawa and make $100 per ticket when they can fly to Sudbury for less cost and charge $200 per ticket?

[Nouvellecosse]

I think there's so much disagreement about Air Canada here because we don't yet know the details of their involvement and what, if any, control or influence it would provide them. But I'd hope we'd all agree that anything they do to stifle the success of the railway would constitute anti-competitive behaviour, and any ability or potential for them to exert such influence would be a conflict of interest.

[Truenorth00]

Could Air Canada attempt anti-competitive behaviour? Absolutely. I'm not dismissing the risk. I just don't understand why the rest of the consortium partners (who don't own an airline) would go along with ideas hurting their commercial interests. For them, rail succeeding and maximizing ridership is what will make them money.