3 Links I Love: Low Cost Canada, Virgin No Votes, Marketing United

Links I Love, United, Virgin America

This week’s featured link:
Can These New Airlines Bring Canada’s Sky-High Fares Back to Earth?Bloomberg
And the answer is, yes. It’s easy to bring low fares into a market. But can they actually make money doing it? Canada’s problems are many, high costs, small population, etc. But you’d think that the right ultra low cost carrier could succeed in some way. There’s no way all of these will work, however.

Links I Love

Two for the road:
Voting Results on the Transitional AgreementVirgin America TWU
There was an interesting vote that took place with Virgin America’s flight attendants this week. After unionizing, they had the chance to vote on their first contract before the Alaska merger, and they shot it down. On the surface, it’s a bit of a head-scratcher to me. With this, they would have had at least some protections to help with the merger. And there were some pay bumps too. Now they just have to wait until they get on the Alaska contract down the line since I can’t imagine a new agreement being negotiated before then. Here’s one take that seems to support the no-vote.

Remaking Marketing Organizations for a Data-Driven WorldKelloggInsight
Tom O’Toole is out at United as Chief Marketing Officer, but he recently did a sit-down with Kellogg to talk about United and marketing. It’s an interesting read, whether you believe that United is doing a good job or not. (Thanks to Jon for the link.)

Get Cranky in Your Inbox!

The airline industry moves fast. Sign up and get every Cranky post in your inbox for free.

8 comments on “3 Links I Love: Low Cost Canada, Virgin No Votes, Marketing United

  1. As usual, the media gets it wrong. Flights from Canada to the USA are not expensive because of US taxes, not Canadian ones. I drive to BLI when flying to the States to avoid the $40 the US charges for immigration/agriculture/intl flight segment fees.

    1. CZBB – There are a whole bunch of Canadian taxes too. Just looking at a roundtrip from Vancouver to LA on Air Canada.

      US taxes/fees:
      7.5% of fare (amount varies)
      Segment tax ($4 each way)
      Customs fee ($5.50)
      Fed Inspection Fee ($7.00)
      APHIS User Fee ($3.96)
      9/11 Security Fee ($5.60)
      Passenger Facility Charge ($4.50)

      Total is $34.56 plus the 7.5% of fare, whatever that may be.

      Canadian taxes/fees (converted to USD):
      Air security charge ($9.20)
      Airport improvement fee ($15.20, varies by Canadian airport)
      GST ($19.70)

      Total is $44.10

      Canadians have fewer taxes for sure, but they add up.

    2. I’m not sure how much sense that makes.

      Assuming you live in Vancouver and drive to BIA you are looking at:

      2-3 hours round trip (on a good day at the border crossing). Assuming you work for minimum wage at $15/hour your value of time would be around $45.

      100 miles round trip, assuming your car gets 30 mpg and you buy gas at Costco for 2.49/gallon it would be an additional $8. Average maintenance and depreciation of the vehicle would add another $2.

      And then you have parking at $9 per day (cheap lot).

      So it seems like you are avoiding a $40 fee by wasting more time in a car and spending more money on fuel, maintenance, and parking?

      My guess is you are flying out of BLI because the fares are much cheaper not because of a $40 fee.

      1. You guys still don’t get it.

        1) slide $5 of that AIF from a Canadian tax to an America tax. One .. that’s the cost of the USA immigration pre-clearance. Second if you’re a business, the GST is completely refundable.

        2) BLI is 25 min further than YVR for me,and for 3/4 million prople, it’s probably closer. By the time I park and grab a shuttle to the terminal, BLI is a wash for total time. Last time I stepped off a plane there it was an hour flat from getting up from my seat to parking my car at home, I doubt I could do that out of YVR.

  2. Many Virgin teammates felt that rejecting the TA was the only way to fight for relative seniority integration rather than straight DOH. This is a hopeless and dumb position.

    I’m sure it probably feels nice to think it will help, but this is not a battle they’re going to win. They’ll end up DOH just like everyone else, but they’ll get there without the pay increases for the interim. Big mistake.

    I know VX FAs tend to think of themselves as special little flowers, but they don’t stand a chance against a well-honed labor team and an airline with a decades-long history of labor relations. There are more people working as Alaska FAs who have been there 10+ years than Virgin has in its entire workgroup.

    Welcome back to reserve. Deal with it.

    1. Well this is a rather ineffective attitude to have towards one’s coworkers, if not your fellow union members. I am making an assumption that you are a Alaska FA? If so, you should be ashamed of your attitude. It is the sort of internecine labor fighting that ends up playing into the hands of management. It is also clear from objective reporting, as Cranky himself linked to, that the bigger issue appears to be the fear that Virgin FA’s would be locked into a subpar contract, as opposed to being merged into the Alaska contract. It is a risky move certainly, considering the length of time that mergers can take, but it appears to be a sound one.

  3. A challenge that domestic low-cost operators will face here in Canada is that domestic tourism is difficult to stimulate with low fares, for three reasons:

    1. Domestic tourism (at least in English-speaking Canada) isn’t sexy. The mountains and the coasts are beautiful, but few will go every year or even more than once or twice a decade. Montreal and Quebec City are great cities, but NewLeaf doesn’t fly to Quebec at all and Jetlines, so far, is proposing only one route to Montreal. Toronto and Niagara Falls are worth seeing at least once, but have already been visited more than once by many Canadians. (We Canadians also often have a love-hate relationship with both places.) The other inland cities largely have little worth making the effort to see unless friends or family live there.

    2. Canadian domestic tourism is a three-month-a-year industry: during the school holidays in July and August, the Christmas break and a bit of skiing in the winter. During the rest of the year, domestic travel is almost entirely done on a “need-to-do” basis.

    3. The growing popularity of international tourism poses a competitive challenge to Canadian (and North American) destinations. For decades, only a minority of Canadians possessed passports, and obtaining one was subject to rules that looked as though they had been written in 1894, such as requiring a guarantor who knew you personally from among a limited list of occupations, such as a university professor or a minister of religion. Once a passport was needed to fly to the U.S., the application process was modernized and passport ownership rates soared. This, plus affordable long-haul fares and even competitively cheap accommodations in places like Lisbon, Berlin and Prague, led to a boom in international long-haul tourism. In July and August 2015, Canadians took trips to countries other than the U.S. at a rate of about 55 trips per 1,000 residents — or about double the number of trips we took in 2002. (For comparative purposes, the U.S. figure is about 20 trips per thousand to countries other than Canada and Mexico.)

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Cranky Flier