YVR Airport & Sea Island Developments Discussion

[twoNeurons]

There's very little to no charter traffic right now between Asia and North America. It seems there is a window for a LCO in this space, especially one that is formed from an existing airline that wants to lower the cost of Union pensions etc.

I wouldn't be surprised if they focused any human expansion on a low-cost operator like this.

[ACT7]

Originally Posted by twoNeurons

There's very little to no charter traffic right now between Asia and North America. It seems there is a window for a LCO in this space, especially one that is formed from an existing airline that wants to lower the cost of Union pensions etc.

I wouldn't be surprised if they focused any human expansion on a low-cost operator like this.

Didn't some LCC out of HK try to YVR not too long ago and it failed miserably. I can't remember the name anymore but they had a red and white livery. They've since gone under...

My guess is that whatever AC comes up with, it will have to be some sort of hybrid product. If you've had the misfortune of being stuck on one of AC's older 767's that operate between YYZ and FCO, even their premium economy is shit.

[Gordon]

I wonder what equipment they intend to use ? the 767s have significant problems with fuel efficiency, so in the long run 767s are not the way to go.

[st7860]

Originally Posted by Gordon

I wonder what equipment they intend to use ? the 767s have significant problems with fuel efficiency, so in the long run 767s are not the way to go.

Still a lower burn rate than a 747-400 right?

[twoNeurons]

Originally Posted by ACT7

Didn't some LCC out of HK try to YVR not too long ago and it failed miserably. I can't remember the name anymore but they had a red and white livery. They've since gone under...

My guess is that whatever AC comes up with, it will have to be some sort of hybrid product. If you've had the misfortune of being stuck on one of AC's older 767's that operate between YYZ and FCO, even their premium economy is shit.

Harmony Airways? Oasis? There's been a couple. All startups, though, nothing with a large carrier backing it and able to shuffle passengers to it.

767s aren't as efficient, that's true. However, they're a pretty good size and have a good bang for buck when it comes to range. Most of East Asia is the perfect range for that plane.

If I were to take a guess, I'd think that instead of retiring their 767 fleet when they take delivery of their 787s, they'll "sell" them to the new LCO. Air Canada will be looking to make money on a cheaper work force, fuller planes and my guess, a standardized livery. That's just a shot in the dark, though.

[ACT7]

Originally Posted by twoNeurons

Harmony Airways? Oasis? There's been a couple. All startups, though, nothing with a large carrier backing it and able to shuffle passengers to it.

767s aren't as efficient, that's true. However, they're a pretty good size and have a good bang for buck when it comes to range. Most of East Asia is the perfect range for that plane.

If I were to take a guess, I'd think that instead of retiring their 767 fleet when they take delivery of their 787s, they'll "sell" them to the new LCO. Air Canada will be looking to make money on a cheaper work force, fuller planes and my guess, a standardized livery. That's just a shot in the dark, though.

Yup, Hong Kong Oasis, you're right. I could also see the 76's being shuffled over to a new LCC. Maybe throw on some winglets to make them more efficient.

[sacrifice333]

Originally Posted by incognism

From a consumer standpoint, AC's pricing for the YVR-HKG route is somewhat bizarre.

They've chosen to basically match CX's pricing, which makes sense on the surface since they're the only two non-stop options on the route.

The price-sensitive travellers are priced-out of AC's offering, and generally will book one-stop options with Air China (PEK), or China Eastern (PVG).

So that leaves AC in direct competition for CX -- and since they aren't competing with CX on price, that pretty much only leaves competing with them on service.

In Economy, it's pretty much a toss-up, although I'd venture to guess that CX has a better brand presence overall. Nonetheless, the two products in cattle class is fairly similar.

However, in Business, AC's product (especially their soft product) is vastly inferior to CX. They are consistently either equal or above Cathay's pricing in Business, and I can't imagine many people opting for AC unless they are Star Alliance diehards.

Long story short, the case for OD passengers to fly AC YVR-HKG is fairly weak. I'm not surprised they are struggling on this route.

Except I would point out, that although CX has a lot of flights... most are not at the starting prices. They've got some sneaky computer engineers working for them that have managed to snake most booking sites into thinking all their flights are at the "entry-level price" when in fact they're actually quite a bit more expensive.

This scenario "got me" when I was trying to book a flight to BKK: $1270 economy flights became $1800+ and forced me into the arms of JAL Bus. Class for only $2500!!!

[trofirhen]

I read in a Parisian morning paper that in China they are currently digging the ground for 60 (sixty) major new airports to be finished by 2015. That will no doubt translate into a boon for YVR, all conditions being "normal."

[incognism]

Originally Posted by sacrifice333

Except I would point out, that although CX has a lot of flights... most are not at the starting prices. They've got some sneaky computer engineers working for them that have managed to snake most booking sites into thinking all their flights are at the "entry-level price" when in fact they're actually quite a bit more expensive.

This scenario "got me" when I was trying to book a flight to BKK: $1270 economy flights became $1800+ and forced me into the arms of JAL Bus. Class for only $2500!!!

Yeah, those JL discount Biz fares are a steal. YVR-NRT-XXX (virtually any major Asian airport outside Japan).

Definitely not par for the course though.

[Canadian74]

Originally Posted by mezzanine

Jetstar seems to have a business class. If anything, jetstar seems to be doing well, while qantas faces stiff competition and similar rigid restrictions similar to AC. perhaps johnny aussie has more perspective.

I believe Jetstar's "Business Class" is really a Premium Economy product, not full business class.

Also, is AC's YVR-HKG service down to 5 weekly?

[Yume-sama]

Originally Posted by Canadian74

I believe Jetstar's "Business Class" is really a Premium Economy product, not full business class.

Also, is AC's YVR-HKG service down to 5 weekly?

Hmm, it actually is, which is quite surprising to me!

2:45 am → 6:55 am YVR-HKG S M T W T F S Cathay Pacific 889
1:50 pm → 5:55 pm YVR-HKG S - T - T F S Air Canada 7
3:00 pm → 7:00 pm YVR-HKG S M T W T F S Cathay Pacific 837

[ACT7]

Originally Posted by Yume-sama

Hmm, it actually is, which is quite surprising to me!

2:45 am → 6:55 am YVR-HKG S M T W T F S Cathay Pacific 889
1:50 pm → 5:55 pm YVR-HKG S - T - T F S Air Canada 7
3:00 pm → 7:00 pm YVR-HKG S M T W T F S Cathay Pacific 837

Then that's consistent with what the article was talking about, that AC is struggling on international routes out of YVR.

Also, regarding the 60 new Chinese airports, I don't know if that automatically translates into explosive growth for YVR. You have to remember that internal travel in China is what's really exploding, even though there is substantial more international travel than there used to be. PEK is now the second busiest airport in the world but the VAST majority is domestic travel. With a 1.3 billion person market, it's no surprise.

[Valley_Refugee]

China also has a penchant for building absolutely useless infrastructure.

[Hourglass]

Originally Posted by Valley_Refugee

China also has a penchant for building absolutely useless infrastructure.

Care to elaborate?

Not saying you're wrong, but wrt to aviation, without exception, every single domestic flight I've ever been on in China (and there have been many) has been completely full, so the need to build that many new airports isn't exactly a stretch. Remember, even tier 2 cities in China like Changsha still have 7 million people, which is almost 3x Metro Vancouver's population.

[ACT7]

Originally Posted by Hourglass

Care to elaborate?

Not saying you're wrong, but wrt to aviation, without exception, every single domestic flight I've ever been on in China (and there have been many) has been completely full, so the need to build that many new airports isn't exactly a stretch. Remember, even tier 2 cities in China like Changsha still have 7 million people, which is almost 3x Metro Vancouver's population.

I think you're both right. There is probably a need for larger (and more) airports within China but lets not forget about China creating the illusion of wealth and employment by building unnecessary infrastructure. Ghost cities come to mind immediately. Anyway, I know this is not a political thread about China, so moving on...

[st7860]

Originally Posted by Hourglass

Care to elaborate?

Not saying you're wrong, but wrt to aviation, without exception, every single domestic flight I've ever been on in China (and there have been many) has been completely full, so the need to build that many new airports isn't exactly a stretch. Remember, even tier 2 cities in China like Changsha still have 7 million people, which is almost 3x Metro Vancouver's population.

Exactly. China isn't into building infrastructure thatn isn't needed. You could walk around Vancouver and say there are ghost areas too! Furthermore there's a high demand for expat pilots in China.

[Gordon]

The 767s in a single class configuration could be profitable because passenger capacity is up to 350 depending on the model.

[twoNeurons]

Originally Posted by Gordon

The 767s in a single class configuration could be profitable because passenger capacity is up to 350 depending on the model.

And given that they will probably restrict passengers to 1 piece of luggage and charge for snacks etc. (flights to Japan currently allow 2 pieces @ 23kg each) they will be able to have a full load with luggage and save some money on fuel that way as well.

[Valley_Refugee]

Exactly. China isn't into building infrastructure thatn isn't needed.

The capital waste in China on things like roads and stadiums is well-documented. Maybe not for airports...my comment was flippant, I know.

In other more related news, Air Transat's in some trouble:

http://business.financialpost.com/2012/06/14/transat-troubles-deepen-as-loss-exceeds-estimates/

[deasine]

Hold on, I think it's worth looking into the purpose of Air Canada starting a LCC. As per the article, they've been toying with the idea of a LCC for a while. They've looked at Europe/TATL operations, but are now moving against it because there are some signs of a challenging operation. They've looked at the Caribbean, but again, there are questions of whether a business can be sustainable, and whether or not the North America<->Central America<->South America has enough traffic to warrant another carrier. And now they are looking at the TPAC routes?

AC isn't dumb: they know there are many challenges in operating a LCC. Their Tango project was a failure, and it ended being a booking class fare on legacy AC routes. Cost is a huge issue, and cost for long-haul flights are even more prevalent. Oasis' failure in YVR and LHR markets were due to fuel costs. AirAsia X's failure in the direct CDG and LGW routes from their KUL hub wasn't because there wasn't enough traffic, but it again came down to costs. Looking outside of LCCs, why aren't there any profitable routes between North America and India? Again, costs, not traffic. AA consistently had an 85% load factor between ORD and DEL but still had to cancel their route. There are methods of reducing costs, and reducing the labour costs is one of them, as well as plane innovations, simplification of cabin products, etc. But there is only so much you can do unfortunately.

I don't see this as an introduction of another carrier; I see this more as a method to dismantle the "legacies" of AC to allow a more cost-effective operation. Unfortunately, all legacy carriers are now struggling to operate and compete with newer and more efficient carriers (such as WS for example), all of which don't have the "legacies" of a legacy carrier. The article cites QF and Jetstar, and it's true, QF has been finding ways to dismantle the carrier into smaller ones: starting with Jetstar (which has become really successful, hence its expansion), toying the idea with a "premium carrier" based in SIN or KUL, and most recently, dividing its international and domestic operations into two businesses now. While many complain about AC paying executives top dollar while the unions are struggling to negotiate for a "fair" compensation, their bonuses don't really compare to the costs of business operation. And I think this is accurate with AC especially with the last quarterly results where the carrier still isn't making money despite having a high average load factor on its routes. In the longer term, the options are either the carrier dismantling the "legacies," or it folds.