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Airline Insider-July/August 07

Industry News.


September 26, 2007
By Brian Dunn

Topics






AIR CANADA DOMINATES NEWFOUNDLAND/LABRADOR MARKET

Air
Canada has launched twice daily nonstop service from St John’s to Deer
Lake. The Raytheon Beech 1900D service will be operated by
Newfoundland-based Exploits Valley Air Services (EVAS), which has flown
a single 18-seat turboprop between St John’s and Gander for Air Canada
since 2004. The new route shifted some capacity from the daily Gander
service when the Deer Lake route began on June 30.

Air Canada
and its commercial partners already have the most flights of any
carrier to and from Newfoundland and Labrador, an airline spokesperson
noted. The carrier has also launched a new daily non-stop service
between Gander and Halifax using 50-seat CRJs and 37-seat Dash 8
aircraft operated by Jazz Air.

COMPETITION BETWEEN CANADA’S TWO MAIN AIRLINES
Canada’s
two main airlines turned in some pretty impressive first-quarter
numbers both in terms of profit and better load factors. And industry
watchers expect more of the same for the rest of the year. And yet the
improved performances have not boosted the airlines’ stock.

Why?
Part
of the reason could be the arrival of a new competitor in the form of
Porter Airlines operating from Ottawa and Montreal to Toronto City
Centre Airport (with seasonal service to Halifax). Another concern
could be environmental in the guise of some sort of tax on the huge
amount of jet fuel burned by airlines.

And both are fighting
each other for market share, noted analyst Claude Proulx of BMO Nesbitt
Burns in Montreal. “Air Canada wants to keep its market share and
(WestJet’s) Clive Beddoe wants to take it away. We will continue to see
competition in the Canadian market and Air Canada will suffer the most.
WestJet will also suffer, but not as much because of its lower cost
structure.”

In addition, Air Canada parent ACE Aviation is in
the process of being dismantled and its ownership of 75% of Air
Canada’s shares will be transferred to the public and Proulx isn’t sure
the public has any appetite for more airline stock.

The analyst
is more upbeat on Canada’s largest charter and tour operator Transat
AT, which is becoming the largest tour operator in Ontario, making the
company extremely profitable. “There are also more barriers for
potential competitors to enter the tour market and I like their
management. And their main competition is other tour operators like
Sunquest and Signature, not Air Canada or WestJet.”

Proulx said
all three carriers are benefitting from the strong Loonie, but they’re
also facing higher fuel costs. “Unfortunately, the two are linked. The
reason why the dollar is so high is because oil prices are so high. If
oil prices come down, so will the dollar.”

WESTJET FILLS THE GAP
Following
the demise of Harmony Airways, WestJet planned to increase service from
Vancouver with new non-stop flights to Toronto and additional service
next winter to Hawaii, Las Vegas and Palm Springs, beginning in
November. Harmony ended its Vancouver-Toronto service on March 30 and
all other routes on April 9.

OASIS HONG KONG AIRLINES EXPANDING SERVICE TO CANADA
Low-cost
carrier Oasis Hong Kong Airlines was scheduled to launch service
between Hong Kong and Vancouver on June 28, its second route.

Oasis
says on its website that six-times-weekly services will be operated and
one-way tickets start at $299 in economy and $1,399 for business class.
Oasis says it has secured final Hong Kong Government approval but was
still awaiting final Canadian regulatory approvals, which means it
couldn’t sell tickets to Canadian residents.

Vancouver will be
its second route after Hong Kong and London/Gatwick, which it opened
late last year. The carrier currently operates two Boeing 747-400s and
recently purchased three more from Japan’s All Nippon Airways. It said
it plans to add services to more European destinations as well as to
Oakland and other cities in the US.

Oasis offers two classes of
service but tries to sell its tickets at rates well below established
carriers. It will be competing on the Hong Kong-Vancouver route with
Air Canada and Cathay Pacific Airways.

CATHAY PACIFIC SIMPLIFYING TRAVEL FOR CANADIANS TO CHINA
Cathay
Pacific Airways has added three flights per week to its schedule until
October 28, increasing the frequency from 14 to 17 flights weekly
nonstop from Vancouver to Hong Kong, more than any other airline.

“Summer
is one of the busiest seasons so we’re pleased to offer more
flexibility and convenience to our passengers travelling to Hong Kong
or beyond to our extensive network in Asia,” said Philippe Lacamp,
vice-president, Canada. “As demand grows, we will continue to increase
service on this important route.”

The carrier also plans to
introduce the new Boeing 777-300 ER to its Toronto- Hong Kong service
with three classes – first, business and economy. Cathay has ordered 18
777-300s with the first delivery expected in September. “Our new
economy class will offer fixed-back seats that recline internally, so
when passengers stretch out, they will not bother those sitting in the
row behind,” said Lacamp.

And with its recent purchase of
Dragonair shares it didn’t already own, Cathay Pacific will make life
easier for Canadian passengers travelling to China via Hong Kong. “We
will integrate the schedules of both airlines so overseas passengers
can reach their China destination faster.”

TRADEWINDS MAKES DEAL WITH SKYSERVICE
Florida-based
Tradewinds Aircraft and Engine Services has been contracted by
Skyservice Airlines to direct the charter operator’s Boeing 757
component management program. Under the two-year deal Tradewinds will
supply and maintain Skyservice’s rotable components at the carrier’s
main base in Ottawa. Terms of the agreement were not disclosed.

‘PASSENGER PROTECT’ READY TO TAKE FLIGHT
Canada
has launched its own version of the US no-fly list in an effort to
strengthen airline passenger security screening in this country.

The
so-called Passenger Protect program was first announced in August 2005,
but plans for its launch slipped from a 2006 target to 2007.

Passenger
Protect requires Ottawa to create a list of people who may pose “an
immediate threat to aviation security” should they attempt to board a
flight.

Airlines will be able to screen passengers against the
list through a secure online system. If a person is identified as a
possible match with an entry on the list, the carrier will contact
Transport Canada for confirmation of identity and a decision on whether
or not the individual will be allowed to board the flight.

“Canadians
want to fly secure, and Passenger Protect is a significant step
forward. We must remember that Canada is not immune to the threat of
terrorism and we must remain vigilant,” said Transport Minister
Lawrence Cannon.

“Passenger Protect will not only make Canada’s
aviation system more secure, it will also help keep the world’s skies
safe by reaching beyond Canadian borders to screen everyone getting on
a flight to Canada,” he added.

AIR TRANSAT FLIGHTS FOR UK LEISURE TRAVELER
Air
Transat is offering direct flights to London/Heathrow from
Toronto/Pearson on behalf of Transat Holidays in Canada and Canadian
Affair in the UK, both Transat subsidiaries.

The twice-weekly
flights are designed to suit the leaisure traveller and will operate
each Friday and Saturday. The UK remains the largest Europe-Canada
market for tourism and the second foreign market overall for Canada,
after the US. Each year, approximately 800,000 British tourists visit
Canada.

Flights will be operated by an Air Transat Airbus A310 aircraft with two passenger configurations, Economy Class and Club Class.

During
the summer Air Transat also flies from Canada to London/Gatwick,
Manchester, Birmingham, Exeter, Newcastle, Glasgow, Edinburgh and
Belfast.


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