Calgary International Airport II

[Cage]

Today's Chamber of Commerce Lunch featured Calin Rovenescu, Air Canada CEO as the keynote speaker. Highlights include:
- New International Terminal is a game changer with One Stop Security combined with the international connections center.
- Canadian traffic alone cannot sustain mega international airline, in order to expand into a global champion, Air Canada must transform into a global transportation airline. The example used was PDX-YYC-LHR; there is no PDX-LHR airline so all pax must connect somewhere. AC hubs are well position geographically and international connections centers make Canada attractive over USA hubs.

- American ports of entry have incredibly long lines for primary inspection line and to retrieve luggage, this makes Canadian ports of entry with preclearance very attractive to the majority of American pax who connect.
- Upadates to the customs and immigration regulations to allow for easier entry are a must have in order to get full benefit of new facilities.
- new aviation bilateral agreements must be reciprocal in reality and on legislation. Example, if foreign ownership restrictions are relaxed, then other country cannot have state owned airlines as this creates an uneven playing field. AC is ready to compete with anyone so long as there is reciprocal relationship.
- AC will not have a Maple Leaf Lounge in the new terminal. However the CEO talked up the common use Aspire Lounge quite a bit. Given the extensive and positive message given by the CEO, it is probable that AC passengers will have access to the Aspire Lounge. This news was greatly received by the audience as there were several questions regarding the MLL options in the new terminal.
- biggest news is that YYC-PEK on AC is still on the table. Negotiations with the Chinese govt and Air China are still ongoing. patience was the key recommendation from he CEO to the audience regarding negotiating with Chinese companies. Everything takes 3-4 times longer to accomplish in China because of government red tape. The AC China JV will come with new government rights for Landing at PEk and PVG, this will allow AC to launch YYc-PEK.

Originally Posted by cage

there is no pdx-lhr airline so all pax must connect somewhere.

What about PDX-AMS-LHR, or domestic US cnx like PDX-SEA-LHR or PDX-MSP-LHR? Just trying to fully understand AC on this one.

[CrossedTheTracks]

Originally Posted by Acey

What about PDX-AMS-LHR, or domestic US cnx like PDX-SEA-LHR or PDX-MSP-LHR? Just trying to fully understand AC on this one.

Of course those are options too. AC just thinks that PDX-YYC-LHR can be a new option...

[Cage]

Originally Posted by Acey

What about PDX-AMS-LHR, or domestic US cnx like PDX-SEA-LHR or PDX-MSP-LHR? Just trying to fully understand AC on this one.

If pax have to connect somewhere, there is no longer an advantageous pinpoint to nonstop service. Therefore efficiency and convenience of the connecting airport facilities becomes the key selling feature.

In the PDX example, the DL international expansion at SEA has made a the international arrival process a minimum 1 hour time allocation and pushed average connection time out to over 2 hours. Suddenly connecting in YYc with one stop security and immigration connections facility a very viable and convenient option.

[Bigtime]

Originally Posted by Cage

In the PDX example, the DL international expansion at SEA has made a the international arrival process a minimum 1 hour time allocation and pushed average connection time out to over 2 hours. Suddenly connecting in YYc with one stop security and immigration connections facility a very viable and convenient option.

Hmm, I'd hope that YYC and perhaps AC throw some advertising bucks into the PDX area once the IFP is open to attract folks to connect through that way and trumpet up the benefits of the new terminal to make it a painless process (with any connection purchases while here made with their stronger dollar too).

[Riise]

Originally Posted by Bigtime

Hmm, I'd hope that YYC and perhaps AC throw some advertising bucks into the PDX area once the IFP is open to attract folks to connect through that way and trumpet up the benefits of the new terminal to make it a painless process (with any connection purchases while here made with their stronger dollar too).

Definitely.

In addition to trumpeting the ease of connection, Air Canada can also advertise their flight experience. I find American-based airlines to be the Greyhounds of air travel. While Air Canada isn't a world beater, they are step above their American counterparts.

[hoboman27]

Originally Posted by Cage

Today's Chamber of Commerce Lunch featured Calin Rovenescu, Air Canada CEO as the keynote speaker. Highlights include:
...
- biggest news is that YYC-PEK on AC is still on the table. Negotiations with the Chinese govt and Air China are still ongoing. patience was the key recommendation from he CEO to the audience regarding negotiating with Chinese companies. Everything takes 3-4 times longer to accomplish in China because of government red tape. The AC China JV will come with new government rights for Landing at PEk and PVG, this will allow AC to launch YYc-PEK.

What? What's the YYC thinking getting Hainan and still working on AC? They must be paying millions of dollars trying to incentivize Hainan to fly here, and meanwhile the effort spent on AC and the potential that if such a service was to come, it will probably get similar incentives, seems like money going to waste.

[Bigtime]

I wonder if YYC could potentially handle both Hainan and AC if both don't go daily? Ending up with 7x weekly coverage between the two.

[Cage]

Originally Posted by hoboman27

What? What's the YYC thinking getting Hainan and still working on AC? They must be paying millions of dollars trying to incentivize Hainan to fly here, and meanwhile the effort spent on AC and the potential that if such a service was to come, it will probably get similar incentives, seems like money going to waste.

The key is commercially viable slots at PEK. If AC got more slots from CAAC (Chinese civil aviation authority), the slots would be free but worth millions of dollars. Rather than spend dollars acquiring the slots (which cannot be purchased anyways), AC is willing to take loss on daily flights just for the future potential of dollars.

This is an old school regulated airline slot play. Take a loss today and tomorrow and the next day because the gov't is offering a one time only deal. The alternative is to wait for the slots to become available for sale (and the big risk is that gov't generally ban these types of slot sales between airlines) and pay millions of dollars for a single slot pair. Example, the slots CP got in 40s at Kai Tak (old Hong Kong) had years of losses. In 1993 AC paid 8.5 million USD for a single Kai Tak slot pair.

So the short story is that yes If AC got commercially viable slot pair from CAAC, they would start YYC-PEK the next day. The flight would be marketed as YYZ-YYC-PEK (much like the early days of AC9/10). Any losses would be underwritten by future profits from the slot pair at PEK.

UA is doing the same thing with their route rights to China. Xian, Hangzhou, Guangzhou, and the other secondary cities are barely profitable right now, but the future profits are worth sitting on the route rights.

China is the number three international market from Canada, behind USA and Britain. Within the next 2 years, China will overtake Britain for the number 2 spot. The return on invested capital on AC starting YYC-PEK is measured in 18-24 months, assuming they started flights today with pax or marketing.

[hoboman27]

Originally Posted by Cage

The key is commercially viable slots at PEK. If AC got more slots from CAAC (Chinese civil aviation authority), the slots would be free but worth millions of dollars. Rather than spend dollars acquiring the slots (which cannot be purchased anyways), AC is willing to take loss on daily flights just for the future potential of dollars.

This is an old school regulated airline slot play. Take a loss today and tomorrow and the next day because the gov't is offering a one time only deal. The alternative is to wait for the slots to become available for sale (and the big risk is that gov't generally ban these types of slot sales between airlines) and pay millions of dollars for a single slot pair. Example, the slots CP got in 40s at Kai Tak (old Hong Kong) had years of losses. In 1993 AC paid 8.5 million USD for a single Kai Tak slot pair.

So the short story is that yes If AC got commercially viable slot pair from CAAC, they would start YYC-PEK the next day. The flight would be marketed as YYZ-YYC-PEK (much like the early days of AC9/10). Any losses would be underwritten by future profits from the slot pair at PEK.

UA is doing the same thing with their route rights to China. Xian, Hangzhou, Guangzhou, and the other secondary cities are barely profitable right now, but the future profits are worth sitting on the route rights.

China is the number three international market from Canada, behind USA and Britain. Within the next 2 years, China will overtake Britain for the number 2 spot. The return on invested capital on AC starting YYC-PEK is measured in 18-24 months, assuming they started flights today with pax or marketing.

Good response. AC's definitely got the legs to go for the long run, Hainan on the other hand probably not.

[evolv]

Originally Posted by hoboman27

What? What's the YYC thinking getting Hainan and still working on AC? They must be paying millions of dollars trying to incentivize Hainan to fly here, and meanwhile the effort spent on AC and the potential that if such a service was to come, it will probably get similar incentives, seems like money going to waste.

I doubt the airport authority spends any money subsidizing routes. They'd spend money to try and lure an airline and route offering but that would just be a minimal business development expense. Subsidization may come from tourism boards but then again I doubt it

[Bokimon]

^^ Good info, I remember when NRT was first started and the prognosis was based on longer term returns as the first few years was a bit rough including the tsunami disaster.

So AC for international growth has the right thinking securing these airports ahead of time even before our city matures enough to confidently handle a nice daily load. Well for YYC as well as other Canadian cities in general.
If PEK is holding well by Hainan at a best case scenario of 7x/wk, perhaps an AC to PVG could be worth a slot shot if there are enough connecting demand going to China's financial hub?

Love the idea of luring PDX to transit thru our airport's new facility enroute to europe. All the latte sipping hipsters with beards and skinny jeans would fill our new terminal creating a nice youth and hip atmosphere. It would be like little Portlandia at our very own airport. Hopefully that would mean that Moonstruck Chocolatiers will set up a damn shop in Canada for once. With A catchment of several million people around the PDX area, I think more aggressive marketing to lure them to us as well as for us to be lured to their fine city would do us good. An O/D sector I would happily contribute with my vacation time!

[yyc_engineer]

With YEG losing United to SFO and ORD and YQR losing Delta to MSP I wonder what affect that will have on YYC's Transborder numbers.

Originally Posted by Cage

In the PDX example, the DL international expansion at SEA has made a the international arrival process a minimum 1 hour time allocation and pushed average connection time out to over 2 hours. Suddenly connecting in YYC with one stop security and immigration connections facility a very viable and convenient option.

THIS. Something I have been advocating for a while. It's time to get creative. We have the world's largest air market at our doorstep, and while the majority of it is inter-state, a lot of it is still international. Connecting in YYC with the new terminal and its new connections processes will be easier and more pleasant (IMO) than trying to connect in a large US hub airport (LAX, SEA, etc.), especially for non-USA/Canada passport holders. If a tourist or business person has a visa for the States, letting them transfer visa free in Canada is very low risk and has the potential to bring in more money for the airlines and airports. How do airports like DXB, AMS and LHR get so big? Yes O&D but also the fact that many (most) of the passengers flying through them never leave the airport.

PDX-YYC-LHR
GEG-YYC-FRA
SEA-YYC-ZRH
PSP-YYC-LGW
LAS-YYC-CDG (once WS starts flying to Paris )

[Johnny Aussie]

Originally Posted by yyc_engineer

With YEG losing United to SFO and ORD and YQR losing Delta to MSP I wonder what affect that will have on YYC's Transborder numbers.

I think it will only help boost YYC numbers. People still need to travel and YYC is well positioned geographically to funnel some of these pax.

I am really surprised YEG has lost so much to be honest. 12 daily to: SEA (5), MSP (2), LAS (2) and single daily flights to LAX, DEN and IAH.

YQR has been just decimated with no direct Transborder flights except Westjet's leisure routes.

[yyc_engineer]

Originally Posted by Johnny Aussie

I am really surprised YEG has lost so much to be honest. 12 daily to: SEA (5), MSP (2), LAS (2) and single daily flights to LAX, DEN and IAH.

This makes Delta the largest Transborder carrier out of YEG this summer.

Breaks down to:
Delta (4) - SEA (2) and MSP (2)
WestJet (3) - LAS (2) and LAX
Alaska (3) - SEA (3)
United (2) - DEN and IAH

With not a single flight to the USA or Europe, YEG is relegated to domestic only for Air Canada. Putting it behind Ottawa, Haifax and St. Johns. Quite abysmal service tbh. Hope things get better for our neighbor to the North.

[The Chemist]

Originally Posted by Bokimon

^^ Good info, I remember when NRT was first started and the prognosis was based on longer term returns as the first few years was a bit rough including the tsunami disaster.

So AC for international growth has the right thinking securing these airports ahead of time even before our city matures enough to confidently handle a nice daily load. Well for YYC as well as other Canadian cities in general.
If PEK is holding well by Hainan at a best case scenario of 7x/wk, perhaps an AC to PVG could be worth a slot shot if there are enough connecting demand going to China's financial hub?
!

I'd love to see a PVG-YYC flight. But I'll try to support the PEK-YYC flight the next time I go back to Canada.

[PPAR]

Originally Posted by yyc_engineer

This makes Delta the largest Transborder carrier out of YEG this summer.

Breaks down to:
Delta (4) - SEA (2) and MSP (2)
WestJet (3) - LAS (2) and LAX
Alaska (3) - SEA (3)
United (2) - DEN and IAH

With not a single flight to the USA or Europe, YEG is relegated to domestic only for Air Canada. Putting it behind Ottawa, Haifax and St. Johns. Quite abysmal service tbh. Hope things get better for our neighbor to the North.

Edmonton is an interesting, if sad, case study in an interventionist approach to air service. They shut down a highly coveted airport in the central city to concentrate services at YEG, ran public campaigns to discourage use of YYC for transfer (even if that meant a worsened travel experience) and offered incentives to airlines willing to serve YEG (Iceland air). However, the biggest mistake was initiating a very public spat with the country's largest air carrier when they perceived that they were being slighted in service commitments. What they have forgotten is to ask what is best for the individual traveller, not what best serves the collective ego.

What you are seeing is a market that is contracting due to a poor economy served by an airport authority that the industry does not trust.

Originally Posted by yyc_engineer

This makes Delta the largest Transborder carrier out of YEG this summer.

Nah. LAX is a 168 seater + LAS mix of equipment averaging to 287 seats per day in June (300+ in July)... versus MSP 2x 76 seats and SEA 2x 70 seats (best case)?

DL transborder operation ~%40 smaller than WS in my view.

[MacLac]

Originally Posted by yyc_engineer

This makes Delta the largest Transborder carrier out of YEG this summer.

Breaks down to:
Delta (4) - SEA (2) and MSP (2)
WestJet (3) - LAS (2) and LAX
Alaska (3) - SEA (3)
United (2) - DEN and IAH

With not a single flight to the USA or Europe, YEG is relegated to domestic only for Air Canada. Putting it behind Ottawa, Haifax and St. Johns. Quite abysmal service tbh. Hope things get better for our neighbor to the North.

Westjet to Palm Springs and American to Phoenix are still going. 2-3 daily to Denver as well.

Originally Posted by MacLac

Westjet to Palm Springs and American to Phoenix are still going. 2-3 daily to Denver as well.

Nope. He said summer... PSP and PHX are not flying this summer. And oh yeah, Denver is only 1 daily until 10/6 when it becomes 2. Never 3.