Canadian Airport Thread II

[Dominion301]

Originally Posted by JakeLRS

Flair Lynx merger has been speculated for several weeks now. It gained traction last week and today, TheStar is reporting a deal could be announced as early as tomorrow.

Link to article in question: https://www.thestar.com/business/dis...d7489ee49.html

[craner]

Originally Posted by MonctonRad

Flynx???

Lyair ?

[thenoflyzone]

Canadian aviation industry consolidation continues. People are calling it a merger, but in reality, its one ULCC calling it quits. Proof that 99$ fares between YYC and YYZ aren't sustainable. Or else this wouldn't have happened. It also means when Flair goes under, so will Lynx, because let's face it, the buyer is not in too good of a shape either.

The next big merger in Canada should involve PD. Let's see what happens.

Originally Posted by craner

Lyair ?

Liar is better! Because that's all the buyer has been doing !

[Dominion301]

Originally Posted by thenoflyzone

Canadian aviation industry consolidation continues. People are calling it a merger, but in reality, its one ULCC calling it quits. Proof that 99$ fares between YYC and YYZ aren't sustainable. Or else this wouldn't have happened. It also means when Flair goes under, so will Lynx, because let's face it, the buyer is not in too good of a shape either.

The next big merger in Canada should involve PD. Let's see what happens.



Liar is better! Because that's all the buyer has been doing !

But PD's not going to merge with anyone though. A JV with TS with separate brands makes far more sense than a merger. This is one case where the sum of the parts is greater than the whole, especially for the TS "chez nous" element.

This is surely step 1 of PD's airline industry consolidation and undoubtedly part of their business plan to pave the way for them to be the sole #3 to AC & WS. Canada's big enough now population wise to have 1 national carrier and two strong regional dominant players. Evidently PD have the capital to bankroll several hundreds of millions in jet startup and capital expenditure costs to weather the storm in their breakneck speed expansion. Seems like the OMERS municipal employees pension plan likes what they're seeing (i.e., losses in line with projections), otherwise I doubt they would have authorized bankrolling the purchase of 25 additional E95s.

A PD insider posted on the YOW forum that the plan for the eventual E95 bases is staffing for the equivalent of:

-35 YYZ-based aircraft
-25 YOW-based aircraft
-25 YVR-based aircraft
-15 YUL/YHU-based aircraft

That adds up to 100, so if everything goes according to plan, the remaining 25 options will be exercised. Deluce did say they got "a once in a lifetime" deal on the Embraers. I wonder if that means for around $15 million apiece and that Embraer and the Brazilian government are essentially subsidized PD's order? We'll obviously never know, but it wouldn't surprise me.

[Ozabald]

Originally Posted by Dominion301

PD's not going to merge with anyone though. A JV with TS with separate brands makes far more sense than a merger.

This is surely step 1 of PD's airline industry consolidation and undoubtedly part of their business plan to pave the way for them to be the sole #3 to AC & WS. Canada's big enough now population wise to have 1 national carrier and two strong regional dominant players.

It seems history is repeating itself. We had that in Canada in the 1970's/early 1980's with Air Canada as the dominant national carrier with CP and Pacific Western dominant in the west and Eastern Provincial dominant in Eastern Canada.

[Dominion301]

PD have loaded YYZ-YXE as their next route and destination. Starting May 16th, the same day at YWG-YOW starts.

PD451 YYZ-YXE 1430-1604
PD452 YXE-YYZ 1655-2209

Arrives late so at startup will only connect to YOW in both directions...at least initially.

I would imagine YYZ-YQR won't be far behind.

[Atrial78]

Originally Posted by Dominion301

This is surely step 1 of PD's airline industry consolidation and undoubtedly part of their business plan to pave the way for them to be the sole #3 to AC & WS. Canada's big enough now population wise to have 1 national carrier and two strong regional dominant players.

Canada will have a healthy airline marketplace if we end up with Air Canada, Westjet, Porter, and 1 ULCC.

Australia, with a smaller population but similarly large land mass is able to support four carriers (Qantas, Virgin, Rex, and Jetstar (ULCC)).

[Justanothermember]

Originally Posted by Atrial78

Australia, with a smaller population but similarly large land mass is able to support four carriers (Qantas, Virgin, Rex, and Jetstar (ULCC)).

Five.......including Bonza.

[thenoflyzone]

Not a fair comparison. What works in Australia doesn't automatically mean it could work in Canada. For a variety of reasons. Here's a sampling.

1. Canada is larger, and has a proper winter season. That latter point especially, makes it very difficult for airlines to survive in this country, especially on domestic flights alone, when domestic demand drops off a cliff between Oct-Mar.

2. The Australian government sold most major airports in Australia in the 90s and early 2000s, so they are all private for profit companies. That's not the case in Canada, where the government still owns the airport lands, and charges rent to the airport authorities, who simply manage the airports and are not for profit companies. In turn, the airport authorities try to recuperate that expense through increased passenger fees. This in turn, increases ticket prices in Canada, making it hard for airlines, especially ULCCs, to compete.

3. Quebec. Australia doesn't have a Quebec equivalent. A province of over 8 million people that doesn't care much to travel domestically outside of Quebec. Just look at YUL's domestic passenger numbers, and then look at YYZ, YVR, YYC, YEG, YOW, etc.

4. We can leave Canada by car and go to major US markets within a day, depending on where you live (NY, Boston, Washington, Philly, Seattle, Portland, Chicago, Detroit etc.) Australians can't do that. This aspect reduces the revenue potential of airlines, especially in such a high cost market that is Canada. Also, the drive between Canada's two largest cities can be done in less than 5-6 hours. In Australia, it's closer to 8-9 hours.

So the assumption that if Australia can have 4-5 healthy carriers, so can Canada, is inaccurate.

[Atrial78]

Of course it's not a direct comparison, but it's a reasonable one to make.

1) The Australian market is also cyclical. In fact, some leased planes transfer between Canada and Australia due to this. No one is relying solely on domestic travel, all carriers have trans border flights. Canada is large, but the population is concentrated in urban areas.

2) Airport fees definitely add to the cost of flights in Canada. However, flights from a ULCC don't have to be as cheap as their counterparts in the US or Europe. An airline focused on denser flights, less services, and more ancillary fees may be able to still provide value to customers rather than mainline carriers. They could also consider alternative airports like Abbotsford and Hamilton.

3) That sounds like an opportunity if anything. Clearly Porter sees an opportunity with the development of St. Hubert. Regardless, Canada also has 14 million more people than Australia and is faster growing.

4) The point about driving is fair, however on the other hand carriers have an immense opportunity given the proximity to the US, the largest economy in the world. The US is the largest source of tourists to Canada. Australia also receives significant tourism, but a lot more of it is on foreign carriers where American carriers have resigned a lot more of transborder traffic to Canadian carriers.

Regardless, having a third player (Porter) would be an improvement from the status quo. Having a fourth player (ULCC) would be a competitive market.

[Zmonkey]

Originally Posted by thenoflyzone

Not a fair comparison. What works in Australia doesn't automatically mean it could work in Canada. For a variety of reasons. Here's a sampling.

1. Canada is larger, and has a proper winter season. That latter point especially, makes it very difficult for airlines to survive in this country, especially on domestic flights alone, when domestic demand drops off a cliff between Oct-Mar.

2. The Australian government sold most major airports in Australia in the 90s and early 2000s, so they are all private for profit companies. That's not the case in Canada, where the government still owns the airport lands, and charges rent to the airport authorities, who simply manage the airports and are not for profit companies. In turn, the airport authorities try to recuperate that expense through increased passenger fees. This in turn, increases ticket prices in Canada, making it hard for airlines, especially ULCCs, to compete.

3. Quebec. Australia doesn't have a Quebec equivalent. A province of over 8 million people that doesn't care much to travel domestically outside of Quebec. Just look at YUL's domestic passenger numbers, and then look at YYZ, YVR, YYC, YEG, YOW, etc.

4. We can leave Canada by car and go to major US markets within a day, depending on where you live (NY, Boston, Washington, Philly, Seattle, Portland, Chicago, Detroit etc.) Australians can't do that. This aspect reduces the revenue potential of airlines, especially in such a high cost market that is Canada. Also, the drive between Canada's two largest cities can be done in less than 5-6 hours. In Australia, it's closer to 8-9 hours.

So the assumption that if Australia can have 4-5 healthy carriers, so can Canada, is inaccurate.

Australia also fully allows foreign ownership of airlines. Capped at 49% in Canada. This ensures low prices to keep other people out.

[Dominion301]

Originally Posted by thenoflyzone

4. We can leave Canada by car and go to major US markets within a day, depending on where you live (NY, Boston, Washington, Philly, Seattle, Portland, Chicago, Detroit etc.) Australians can't do that. This aspect reduces the revenue potential of airlines, especially in such a high cost market that is Canada. Also, the drive between Canada's two largest cities can be done in less than 5-6 hours. In Australia, it's closer to 8-9 hours.

So the assumption that if Australia can have 4-5 healthy carriers, so can Canada, is inaccurate.

Indeed. When 3 out Canada's 4 largest cities are within a day's drive of 75 million people, that's a big difference vs Australia.

While SYD is within a day's drive of Brisbane, Gold Coast, Sunshine Coast, Melbourne, Canberra and small Albury (I've briefly been there!), all but Canberra is a long drive when flying is often preferred. However, the same can't be said of Melbourne that is really only drivable from Adelaide, Sydney and Canberra. Brisbane on the other hand, is close to the Gold and Sunshine coasts, but beyond that and Sydney, is really only a day's drive from Newcastle, which is only the size of Saskatoon and Rockhampton, which is half the size of Kingston. The next closest civilizations of any significant size in Queensland is Townsville, which is only 100 km shorter than Ottawa to Thunder Bay, followed by Cairns and that's just slightly shorter than driving from Ottawa to Dryden within Ontario.

[hehehe]

Originally Posted by Dominion301

Indeed. When 3 out Canada's 4 largest cities are within a day's drive of 75 million people, that's a big difference vs Australia.

While SYD is within a day's drive of Brisbane, Gold Coast, Sunshine Coast, Melbourne, Canberra and small Albury (I've briefly been there!), all but Canberra is a long drive when flying is often preferred. However, the same can't be said of Melbourne that is really only drivable from Adelaide, Sydney and Canberra. Brisbane on the other hand, is close to the Gold and Sunshine coasts, but beyond that and Sydney, is really only a day's drive from Newcastle, which is only the size of Saskatoon and Rockhampton, which is half the size of Kingston. The next closest civilizations of any significant size in Queensland is Townsville, which is only 100 km shorter than Ottawa to Thunder Bay, followed by Cairns and that's just slightly shorter than driving from Ottawa to Dryden within Ontario.

One thing I can say for sure (at least in Brisbane) is that most people here will prefer not to drive to SYD/MEL/anywhere outside of South East QLD, Central QLD, or North Eastern NSW really. Driving between cities here is not nearly as feasible as it is in eastern Canada for sure. As for the Gold and Sunny coasts they're basically part of the greater Brisbane area, both are only an hour or so drive from me without traffic.

So compared to YYZ/YUL-YOW, YYZ-YUL, YYZ/YUL-YQB etc, BNE-MEL/SYD/ADL etc have higher O&D and fewer connecting passengers, so flight demand is naturally higher. Similar countries but I think you're right that there's definitely differences in the aviation markets.

[thenoflyzone]

Originally Posted by Dominion301

Evidently PD have the capital to bankroll several hundreds of millions in jet startup and capital expenditure costs to weather the storm in their breakneck speed expansion. Seems like the OMERS municipal employees pension plan likes what they're seeing (i.e., losses in line with projections), otherwise I doubt they would have authorized bankrolling the purchase of 25 additional E95s.

Bankrolling the acquisition of heavily discounted E2s is one thing, but sustaining the operation of 75 to 100 of them for several years (at most likely a loss) is another. They might be able to weather the former, but it's still way too soon to say if they can weather the latter. Hence why I think if an attractive offer comes along, they might sell themselves to the highest bidder. (And it won't be TS, that's for sure.)

Originally Posted by Dominion301

A PD insider posted on the YOW forum that the plan for the eventual E95 bases is staffing for the equivalent of:

-35 YYZ-based aircraft
-25 YOW-based aircraft
-25 YVR-based aircraft
-15 YUL/YHU-based aircraft

That adds up to 100, so if everything goes according to plan, the remaining 25 options will be exercised. Deluce did say they got "a once in a lifetime" deal on the Embraers. I wonder if that means for around $15 million apiece and that Embraer and the Brazilian government are essentially subsidized PD's order? We'll obviously never know, but it wouldn't surprise me.

They don't have nearly enough pilots for 100 E2s. Heck they don't have enough for 50 E2s at the moment. If we use the ratio of 8-10 pilots to 1 Ejet, then for the Ejets alone, they would need 800 to 1000 pilots. They currently only have 650, and that includes the Dash 8 pilots as well.

The press release clearly shows they don't have enough pilots for all these bases.

https://canadianaviationnews.ca/port...eal-vancouver/

They are saying 150 crew at YOW, and 100 each at YUL and YVR. Those numbers include flight attendants. So they won't be able to base more than a handful of aircraft at each at the moment.

PD is burning cash at a breakneck speed at the moment. Not sure how sustainable all of this is, with still 45 to 70 Ejets yet to come, in a tough Canadian market. How many routes can they launch and make money on? They are already scraping the bottom of the barrel with routes like YYZ-YXE. I guess YQR is next. And then?

[whatnext]

Originally Posted by Dominion301

But PD's not going to merge with anyone though. A JV with TS with separate brands makes far more sense than a merger. This is one case where the sum of the parts is greater than the whole, especially for the TS "chez nous" element.

This is surely step 1 of PD's airline industry consolidation and undoubtedly part of their business plan to pave the way for them to be the sole #3 to AC & WS. Canada's big enough now population wise to have 1 national carrier and two strong regional dominant players. Evidently PD have the capital to bankroll several hundreds of millions in jet startup and capital expenditure costs to weather the storm in their breakneck speed expansion. Seems like the OMERS municipal employees pension plan likes what they're seeing (i.e., losses in line with projections), otherwise I doubt they would have authorized bankrolling the purchase of 25 additional E95s.

A PD insider posted on the YOW forum that the plan for the eventual E95 bases is staffing for the equivalent of:

-35 YYZ-based aircraft
-25 YOW-based aircraft
-25 YVR-based aircraft
-15 YUL/YHU-based aircraft

That adds up to 100, so if everything goes according to plan, the remaining 25 options will be exercised. Deluce did say they got "a once in a lifetime" deal on the Embraers. I wonder if that means for around $15 million apiece and that Embraer and the Brazilian government are essentially subsidized PD's order? We'll obviously never know, but it wouldn't surprise me.

Just because you get a great deal on a/c doesn’t mean it makes sense to fly them willy nilly. How much did Porter get for YTZ (minus the settlement with buyer? How far does that go?

[Dominion301]

Originally Posted by whatnext

Just because you get a great deal on a/c doesn’t mean it makes sense to fly them willy nilly. How much did Porter get for YTZ (minus the settlement with buyer? How far does that go?

Minus the settlement (I'd assume that was around $50 million as it's not public info), the terminal would have netted PD around $600-650 million.

Originally Posted by thenoflyzone

Bankrolling the acquisition of heavily discounted E2s is one thing, but sustaining the operation of 75 to 100 of them for several years (at most likely a loss) is another. They might be able to weather the former, but it's still way too soon to say if they can weather the latter. Hence why I think if an attractive offer comes along, they might sell themselves to the highest bidder. (And it won't be TS, that's for sure.)



They don't have nearly enough pilots for 100 E2s. Heck they don't have enough for 50 E2s at the moment. If we use the ratio of 8-10 pilots to 1 Ejet, then for the Ejets alone, they would need 800 to 1000 pilots. They currently only have 650, and that includes the Dash 8 pilots as well.

The press release clearly shows they don't have enough pilots for all these bases.

https://canadianaviationnews.ca/port...eal-vancouver/

They are saying 150 crew at YOW, and 100 each at YUL and YVR. Those numbers include flight attendants. So they won't be able to base more than a handful of aircraft at each at the moment.

PD is burning cash at a breakneck speed at the moment. Not sure how sustainable all of this is, with still 45 to 70 Ejets yet to come, in a tough Canadian market. How many routes can they launch and make money on? They are already scraping the bottom of the barrel with routes like YYZ-YXE. I guess YQR is next. And then?

Should have clarified. PD employee on another board said an internal memo circulated and that those E95 numbers by base are the long-term plans, so that'd be out to about 2030. They need about 35 aircraft for their current peak summer schedule.

While none of us know PD's finances, they have stated the Dash 8 operation is now solidly profitable (you can only believe what they're saying without evidence, but if you look at the DH4's network now vs pre-pandemic, it would be hard to lose money on that) and that their liquidity is in the high hundreds of millions.

Even at current burn rates, which will slow significantly once all the capital investments are made (i.e., YOW hangars, YHU terminal), they seem to have reserves that will last several years before needing the jet operation to turn profitable. Beyond the Deluce family, the OMERS (Ontario municipal employees) pension plan are one of the airline's big investors. For such a massive pension plan, providing PD with 1/2 billion in liquidity is a drop in the bucket for them. Why they invested in PD, who knows, but I highly doubt OMERS would have blessed exercising the 25 options a few weeks ago if PD weren't tracking to their business plan. It's not as if losing a bucket load of money in the first 3 years on the jet ops at this rate of ambition would come as a surprise to anyone. I also wouldn't be surprised if PD's YOW jet ops aren't already profitable or at least close to breakeven. AC and WS are a shadow of their former selves at YOW and F8 are closing their YOW base at the end of the winter season and Y9 are only entering YOW this spring and with a token presence at that.

I wouldn't say YXE is scraping the barrel, but rather the next spoke in the system in building out the network...otherwise AC & WS have long been scraping the barrel.

I fully admit I want PD to succeed in the long-term and fly with them whenever I can, but only time will tell whether they're still around 5 years from now. I'm confident they will given their track record the past 18 years.

[Coldrsx]

YEG 2048 Masterplan
https://flyeia.com/corporate/wp-cont...t_FINAL_EN.pdf

[casper]

Originally Posted by Dominion301

I wouldn't say YXE is scraping the barrel, but rather the next spoke in the system in building out the network...otherwise AC & WS have long been scraping the barrel.

Having lived in YXE for a number of years, I would agree with that statement.

YXE fares are high relative to other markets. Some days through the year you can have every seat on YXE-YYZ sold out and have to make connections.

It is not bottom of the barrel in any way.

What it is a small market with limited potential for growth. With only 1-2 flights a day and onward connections onto AirTransact they should be ok.

[Justanothermember]

I keep hearing that as soon as three airlines are flying on a route, that prices for that route will fall by half. Has anyone else ever heard of this before?

[Djeffery]

Originally Posted by Justanothermember

I keep hearing that as soon as three airlines are flying on a route, that prices for that route will fall by half. Has anyone else ever heard of this before?

Sure, and when that happens, one or 2 of them say "Well, this isn't worthwhile anymore" and leave the market and prices go back up to higher than they were before the third came along.