Calgary International Airport II

[Johnny Aussie]

Originally Posted by Cage

With regard to August traffic statistics, I no longer believe YYC or other AB and SK airports will have growth. Hear are the coal mine canaries:

WestJet reported the following:

http://westjet2.mediaroom.com/index.php?s=43&item=1021

Air Canada reported the following:

http://aircanada.mediaroom.com/index.php?s=43&item=916

With regard to AC and WS; AC generally flies people into the province (visitors) while WS takes care Alberta travelers. Further, AB/SK/northBC accounts for over 25% of WS business while less than 10% of AC business. These figures point to the current oil induced slow down is have a tremendous impact on WS but largely leaving AC unscathed.

The above traffic stats have me very worried for YYC.

If I was AC, i would immediately put YYC-PEK on the back burner, unless there was no alternative (e.g. AC got forced into accepting commercially viable slots at PEK).

If I was WS, I would shove as many 763s over to YYZ as possible. It is looking better for WS to fight it out with AC rouge and Transat at YYZ than it is to launch YYC/YEG to Europe services. Quote from a WS founding father: "Why do robbers rob banks? Cause that's where the money is!"

I hear you... and looking ahead to the winter schedules the amount of additional capacity WS is dumping into YYC is staggering..... Hmmmm.

[PPAR]

On the upside, it will likely result in lower fares in Western Canada. It has been awhile since we saw a meaningful price war in this region.

Will IFP have any double jetway gates for both the 1L and 2L doors on widebodies?

[casper]

Originally Posted by Cage

Lack of network feed. 100+ flights per day from YYC, 50+ flights per day from YVR.

Much greater competition in YVR. While YYZ has more competition, YYZ also has much larger market.

YVR-Europe is slightly outside the 763ERW sweet spot for range and financial performance. Its doable but the trip costs are about equal compared to 333/777 with the larger aircraft having higher revenue potential. Less than 4800 miles favours the 763 where as greater than favours the 333/777



Poor aircraft utilization. 763 to Europe gets 12-18 hours of utilization compared to 8-12 hours on North American ops.

763 on the domestic will flood market with cheap seats and depress yields on 2 of WS top 5 money making routes.

WS Plus cabin yields on the 763 will be cannibalized as people can pay for 737 WS Plus seat and then transfer to the 763 product. AC had the same problem with Premium Economy on the 777/787 for YVR-YYZ. Now Premium Economy is sold as Preferred seats for no price markup compared to Airbus preferred seat.

Makes sense.. IF they need to reduce capacity in and out of Calgary it makes sense to use the smaller 737 on Calgary routes and the 767 out of Toronto.

I think WestJet is going to do fine. The cost of fuel is also down, so they become a bit more profitable. The same for Air Canada. The Airports in Alberta and Saskatchewan are the ones that will not do as well.

I am doing some business trips into Calgary, Edmonton and Saskatoon later this month. Four flights on WestJet one on Air Canada. Fares are not rock bottom but they are also quite reasonable relatively speaking. There is also more capacity coming in over previous years with many CRJ flights being replaced by Dash-8 400.

[Cage]

Originally Posted by casper

I think WestJet is going to do fine. The cost of fuel is also down, so they become a bit more profitable. The same for Air Canada. The Airports in Alberta and Saskatchewan are the ones that will not do as well.

If Westjet has a prolonged period of low profits, there will be a management shake-up as if the company was about to go broke. While WS has low costs, they also have very high investor expectations for both exceptional earnings and investment grade dividend. This has never been the expectation for a Canadian airline.

On the fuel drop, cut fuel in half and 10% decrease in yields (eg average airfares drop from $100 to $90) produces the same result as if fuel and yields stayed the same.

Historically speaking, Westjet does better during periods of high oil prices than during periods of low oil prices, simply because their primary markets have exceedingly higher demand.

There is no historical reference for what happens to Westjet business during a prolonged period of super low oil prices. $60 oil and there is business case for Longterm projects such as Oilsands and pipelines. $40 oil and it's better to shutter everything and keep all oil in the ground. Westjet will still lose money if demand is nil while oil is low.

[casper]

Originally Posted by Cage

If Westjet has a prolonged period of low profits, there will be a management shake-up as if the company was about to go broke. While WS has low costs, they also have very high investor expectations for both exceptional earnings and investment grade dividend. This has never been the expectation for a Canadian airline.

On the fuel drop, cut fuel in half and 10% decrease in yields (eg average airfares drop from $100 to $90) produces the same result as if fuel and yields stayed the same.

Historically speaking, Westjet does better during periods of high oil prices than during periods of low oil prices, simply because their primary markets have exceedingly higher demand.

There is no historical reference for what happens to Westjet business during a prolonged period of super low oil prices. $60 oil and there is business case for Longterm projects such as Oilsands and pipelines. $40 oil and it's better to shutter everything and keep all oil in the ground. Westjet will still lose money if demand is nil while oil is low.

Over time I think there Alberta concentric nature will shift. Especially if the Alberta economy continues to stall. Toronto is becoming a bigger and bigger hub. They get a certain level of support in Western Canada being the "local guys". However they need to gain market share in Eastern Canada.

I think they are adjusting. YYC-YXE is a route I do frequently. For years it use to a 737-600/700. Today is usually a Dash-8 400.

They have not been dramatically growing the 737 fleet. Replacing some of the 700 with 800. However with the Dash-8 now in the fleet and a good mix of 737-600/700/800 and the couple of 767-300 that are in a better position to shift aircraft from one part of the country to another as needed.

Do you have a feeling if they could sell more 747-700 to Southwest if they need to adjust their fleet size?

Inaugural YYC-IAH went today. Return is on its way back now. From what I understand, bookings are looking pretty bad.

[Johnny Aussie]

Oh yeah... And this happened...

Westjet launches YYC-IAH

http://westjet2.mediaroom.com/index.php?s=43&item=1024

edit: ok beat me to it by minutes.

UA's late afternoon flight continues to fly just empty... Crazy empty. Can't even fill First with upgrades.

Overall Alberta-Texas market is down. YEG-DFW down to only 5 weekly right now and UA YEG-IAH down to just a daily 319 indefinitely. AC's late afternoon flight YYC-IAH down to 5 weekly for the time being too.

Not the best time to start a new route down there.

A good bit of cargo comes off IAH-YEG. Hopefully that'll keep the Airbus on it, in the event loads fell further. I dunno.

[yyc_engineer]

767 in service date pushed back again. westjet.com now showing first flight for 655/668 on Monday Sept. 21st.

I am starting to get concerned about the rolling delays.

I'd heard this rumour last month, now it's again on Facebook - AA might be using the MD80 this winter on at least one of the daily DFW flights. It's a 12 seat bump over the A319. Given the aforementioned depression of AB-Texas, wouldn't be surprised if it remained 319.

[lubicon]

Originally Posted by yyc_engineer

767 in service date pushed back again. westjet.com now showing first flight for 655/668 on Monday Sept. 21st.

I am starting to get concerned about the rolling delays.

That is concerning for sure. They are still optimistic about getting ETOPS certification on an accelerated basis in time for Hawaii however, but that remains to be seen. In the meantime they are continuing to send crews for training and are also thinking about sending the initially trained crews to Vancouver for a brief refresher in the sim since it's been some time since they did their training.

[suburbia]

Originally Posted by yyc_engineer

767 in service date pushed back again. westjet.com now showing first flight for 655/668 on Monday Sept. 21st.

I am starting to get concerned about the rolling delays.

What are they doing with all the people that get displaced when they push out the 767 and replace with a 737, or are they just filling the 767's right now to the level that can fully be transplanted into a 737?

[Cage]

Originally Posted by suburbia

What are they doing with all the people that get displaced when they push out the 767 and replace with a 737, or are they just filling the 767's right now to the level that can fully be transplanted into a 737?

When I looked into the 767 downgrade to 737 in August, I was shocked to find out that there were numerous cheap seats left after the capacity reduction. My guess is there is so much excess capacity the swap to 737 for one flight per day can be easily accommodated.

No kidding. If the YYC-YYZ midday loads are anything like YEG-YYZ, there's oodles of empty seats.

[suburbia]

Originally Posted by Cage

When I looked into the 767 downgrade to 737 in August, I was shocked to find out that there were numerous cheap seats left after the capacity reduction. My guess is there is so much excess capacity the swap to 737 for one flight per day can be easily accommodated.

"cheap seats" in context of Canadian commercial flights is a matter of perspective, but interesting that the loads are not heavy.

Somewhat on a tangent, hopefully they do something memorable with the first 767 flight though. Maybe something for the first passengers?

The WestJet red eyes YEG-YYZ would go out stupidly empty pretty much for the last 6 weeks. Guess I shouldn't say how bad, but it was bad.

[casper]

Originally Posted by Acey

The WestJet red eyes YEG-YYZ would go out stupidly empty pretty much for the last 6 weeks. Guess I shouldn't say how bad, but it was bad.

Oh, reduced YEG flying? If the red eye flight need to happen anyway to reposition the aircraft it may not be that bad. Once winter hits being the last flight of the day it also handles all the people displaced by schedule miss-connects and other cancellations.

The WestJet aircraft chart looks like it indicates they have the option of returning older leased 737 and shrink if they can't find places to deploy those aircraft.

That's exactly what the flights were for, and especially on Sundays all the westbounds are heavy. But still, just saying - there's seats.

3 flights went out eastbound every night. One day a few weeks back, there were 7 pax booked on the last one which had a late inbound crew. So they all moved up to the earlier one, which itself had like 20 pax, and the late crew just ferried that last tail back to YYZ.