YEG - Edmonton Int Airport

[Coldrsx]

I can appreciate their comments about limited resources and opportunity cost, but the way this went down is very unfortunate.

[kcantor]

an "open letter" discussion continued (response below and my reply above):

Derek,

You are correct – I am “in business”. And yes, we are in business to make money, not lose money. From there however, it would appear that, despite your conclusion otherwise, that we are indeed very different.

You are apparently seeking individual contracts where you make money and obviously consider each seat sale to be separate contract. In my business we are seeking long-term business relationships with our customers where we make money. We are prepared to invest in those relationships, not just their individual pieces in isolation, in order to build them. The form of that investment is both short and long term and the return is not always achieved up front in order for the investment to be a good one.

We also recognize and acknowledge that we don’t generate the return on our investments – our customers generate that return when they purchase our product. When we purchase something – and that includes paying for permits and fees on the production or delivery of our product – we are not “the customer” on whom those fees are levied, it is our customers are those paying those fees. Air Canada is not the Edmonton Airport Authorities customer, those of us that use YEG are the customers that pay those fees.

The Edmonton Airport Authority is not funded through fees levied on the airlines that operate there unless you are trying to tell me those fees are not included in your ticket pricing. It is your customers that pay those fees, not Air Canada, and it those customers the Edmonton Airport Authority is supposed to serve, not the airlines in general and not any one airline in particular. Part of their service to those customers is – and should be - to generate as many destinations and carriers for us as can be achieved. It is part of your service to successfully compete in that market, not to attempt to monopolize it. In my business we compete in the market to attract and retain our customers, we don’t set up barriers or conditions meant to keep the market to ourselves. Our customers are our customers by choice, not by necessity.

You again mention “subsidies which serve to distort the market” as if Air Canada is somehow hard done by those subsidies. Again however, you are not responding to my earlier question as to what degree Air Canada has quite happily been on the receiving end of “subsidies which served to distort the market”.

You also again mention your investment in the YEG market. In fact you have no actual investment in the YEG market and it would appear you have no real commitment to the YEG market either. Air Canada’s investment is in hardware which you are, by your own admission and actions, quite prepared to reallocate elsewhere as soon as you perceive that “elsewhere” provides you with “a better allocation of your limited capital in a manner that maximizes revenue and profit”. Your commitment would demonstrably appear to be solely to Air Canada, not a commitment to the YEG market, so please don’t confuse the two. You can easily make the case that that is an obligation you have to your shareholders and you would get no argument from me.

I may not agree with your choice in how you are fulfilling the above obligation but the appropriateness of that direction and support for it is ultimately for your shareholders to determine.

My obligation is solely to determine who my “preferred vendor” will be when purchasing airline tickets. I have attempted to be as honest and forthright in communicating to you what is important to me in making that decision and why. In my business we place great value in knowing why we are unsuccessful in either attracting or maintaining a good customer. I apologize if my letting Air Canada know why they will be losing my preferred vendor status is somehow something that you and Air Canada would prefer to take offense to than truly respond to.

Regards,

Ken

"From: ......
Sent: Thursday, October 24, 2013 4:51 PM
To: Ken Cantor
Subject: Re: Edmonton to London... an "open letter"

Ken,

You are in business. I presume that your company doesn't seek contracts where you lose money. We are no different.

The Edmonton Airport Authority is funded through fees levied on its customers, the airlines that operate there. They choose how and if to offer subsidies which serve to distort the market.

Our investment in the YEG market is substantial and will remain so even without the winter LHR service. ‎

Derek"

[kcantor]

Originally Posted by Coldrsx

I can appreciate their comments about limited resources and opportunity cost, but the way this went down is very unfortunate.

per my last post, this isn't about "limited resources and opportunity cost" at all. this is about arrogance.

[dansk]

So some one from EIA should highlight that AC did receive financial benefits to launch YEG-LHR that were agreed to by both AC and the ERAA at the time. Sorry AC you're losing my attention and business along with my companies as well.

How does United and AC other partners here at AC feel about the business you could cost them as well?

[CMD UW]

Well done Ken. Shame on AC and their arrogant attitude on this. It's time they step up and serve our market the way it should be served considering its size, growth and healthy economy.

[ACT7]

Although I agree this was handled poorly by AC, the reality is that if the route was profitable during the winter, they would have kept it regardless of YEG's promotion of KF's new flights. Every airport authority promotes new flights to the fullest extent they can. AC has not pulled out of other markets just based on a new entrant being promoted. Who knows what was going on behind the scenes ahead of KF's route announcement. Maybe this route was in danger of being cut during the winter long before KF. Who knows. And maybe AC had already had discussions with YEG that the route was being pulled but that they needed some more incentive to keep it alive during the winter. No one on this forum will ever know. A large enough, and profitable enough market will comfortably be able to support multiple carriers all flying to the same destination or general geographic area.

Ultimately, this was still a business decision based on profitability, no more, no less. But like I said, it was still poorly handled. Although, I'm pretty sure that letter wasn't supposed to be leaked...

[YegFan]

^ The problem with this argument is the following:

AC has been saying for years, that no flight from YEG to the US can be profitable. So why has United ramped operations at YEG and now flies to 5 destinations?

How has Alaska Airlines been able to operate YEG for over 15 years now?

AC's comments never add up when it comes to YEG.

We always get the same old story...route not profitable. Fine...get out and let somebody else fill the void..

[ACT7]

Originally Posted by YegFan

^ The problem with this argument is the following:

AC has been saying for years, that no flight from YEG to the US can be profitable. So why has United ramped operations at YEG and now flies to 5 destinations?

How has Alaska Airlines been able to operate YEG for over 15 years now?

AC's comments never add up when it comes to YEG.

We always get the same old story...route not profitable. Fine...get out and let somebody else fill the void..

Depends on feeder routes that United can achieve vs AC. Yes AC is *A but United still has an advantage flying it's own metal from YEG to it's U.S. hubs. Alaskan has established a foothold in YEG to SEA-TAC (their hub) which is great and AC would likely never want that route from YEG.

The reality is that, rightly or wrongly, AC has chosen YYC as its Alberta focus city. I personally don't believe that YYC and YEG can sustain an equal amount of international or transborder traffic. If AC went hard after the U.S. market in Edmonton, YYC would suffer or YEG would potentially lose some service from UA. I don't believe AC has it in for YEG, although it may come across that way from time to time.

If the LHR market is strong enough, you'll likely see BA pick up the route. My feeling is that AC was already on the verge of dropping the route in the winter and this just gave them more of a reason to do it.

[tuffyy]

Another small bump by Sunwing this winter adding a second weekly YEG-MBJ flight.

The new Thursday flight will operate with the existing Monday flight.

[thegx]

Originally Posted by ACT7

Depends on feeder routes that United can achieve vs AC. Yes AC is *A but United still has an advantage flying it's own metal from YEG to it's U.S. hubs. Alaskan has established a foothold in YEG to SEA-TAC (their hub) which is great and AC would likely never want that route from YEG.

The reality is that, rightly or wrongly, AC has chosen YYC as its Alberta focus city. I personally don't believe that YYC and YEG can sustain an equal amount of international or transborder traffic. If AC went hard after the U.S. market in Edmonton, YYC would suffer or YEG would potentially lose some service from UA. I don't believe AC has it in for YEG, although it may come across that way from time to time.

If the LHR market is strong enough, you'll likely see BA pick up the route. My feeling is that AC was already on the verge of dropping the route in the winter and this just gave them more of a reason to do it.

Yet WestJet is able to bypass their main base and offer YEG-LAS/LAX/PHX/PSP/MCO/OGG

[LO 044]

^Here is what i don't understand. Why doesn't WJ start a YEG-ORD or YEG-JFK route. This would compete directly with United and we would see if WestJet in fact could compete with Air Canada head to head (and i believe WestJet could BTW). I am assuming of course that the AC/UA tie-up includes sharing profits and losses on routes like YEG-ORD and YEG-EWR.

It is fine for WestJet to fly to Las Vegas and Phoenix but what about some substantial non-sun/leisure destinations where one could continue on via American Airlines. This is something i would like to see. I will be very curious to see if WJ codeshares on the supposed YEG-DFW route. I hope they do and i hope they feed YMM and YQU passengers.

I do believe that one of the routes you mention (YEG-LAX) was previously run by AC Jazz and WestJet won so to speak. I am hoping for more of this to continue but i see little evidence of it. WestJet flies to ORD, DFW, MIA and EWR from YYC. Just sayin.

[thegx]

Originally Posted by LO 044

WestJet flies to ORD, DFW, MIA and EWR from YYC. Just sayin.

And I would assume these routes haven't been as successful as WestJet would have hoped. ORD, DFW, EWR and SFO shouldn't be seasonal destinations, they should be strong enough to last year-round. Perhaps if these routes were more successful out of YYC or YVR, YEG would have a shot. MIA starts this week and we'll see if it is continued in the summer.

[ACT7]

Originally Posted by thegx

Yet WestJet is able to bypass their main base and offer YEG-LAS/LAX/PHX/PSP/MCO/OGG

Simple - these are low yield leisure destinations that AC mainline is begin to drop in favour of Rouge - from its largest hub at that.

WJ has a bit of different business model than AC to begin with, going after mainly O&D leisure traffic. They've started changing that in the past couple of years, but the truth is that no matter how pissed people are with AC, the business traveler will still continue to fly with them more so than they do with WJ, because of Aeroplan, business class, MLL's, and schedule.

[itom 987]

I think it's time for EIA to put a cap on the number of flights heading towards Calgary. If weakening the spoke to Calgary's hub is what it takes to gain direct international flights, then so be it.

[Policy Wonk]

That would backfire very, very badly.

There is another project much more ambitious than Parkland Airport that isn't yet public.

[cyeg66]

Originally Posted by Policy Wonk

That would backfire very, very badly.

Agree 110%. Unworkable, anti-business, probably not legal, unfathomable.

Originally Posted by Policy Wonk

There is another project much more ambitious than Parkland Airport that isn't yet public.

Oh brother. Yay, another aspiring (or existing, expanded) satellite airfield. I'm smelling Strathcona county...
On a somewhat related note, how is it Calgary gets by with just a few airports and Edmonton has a ton of runways (and apparently needs more) in its vicinity? Rhetorical, no answer req'd...

[Hallsy's Toupee]

Weren't the Enochs looking into building their own airport near the River Cree?

[MalcolmTucker]

Almost every town near Calgary has an airport from the 2nd world war.

[Policy Wonk]

Originally Posted by Hallsy's Toupee

Weren't the Enochs looking into building their own airport near the River Cree?

Air Mikisew, which shutdown in 2010 proposed building an airport at Enoch.

[Policy Wonk]

Originally Posted by cyeg66

Oh brother. Yay, another aspiring (or existing, expanded) satellite airfield. I'm smelling Strathcona county...

They have two possible sites in mind, but the land owner of the preferred one wants to see Parkland up and running unmolested for a couple of years and a strong signal that the federal government will meat puppet the locals if they were to try to shut them down by expropriation.