Canada Competition Tribunal released (28-Jun-2011) a notice to specify why it is attempting to stop the Air Canada/Continental United venture. The bureau felt compelled to block the partnership because the carriers have opportunity to remove new competition on important Canada-US routes. It focussed on United Continental Holdings Inc’s strength at terminals including Chicago O’Hare, Denver International, Houston’s George Bush Intercontinental, Cleveland Hopkins International, Los Angeles International and Washington Dulles. In the documents, the bureau suggested that the venture will increase costs for consumers because it will be difficult, if not impossible, for other carriers to compete on those routes. [more]
Competition Tribunal gives reasons for Air Canada/Continental United rejection
You may also be interested in the following articles...
United Airlines Part 1: New management declares ambitions to usher in a new competitive era
For years United Airlines has operated at a competitive disadvantage to its large US network peers. The challenges that United never seemed to overcome were largely self-inflicted, and ranged from widespread employee discontent to consistent revenue shortfalls.
Now United finally appears to be charting a course to level the competitive playing field with its large global US network competitors, to close the long-standing revenue gap it has held with its rivals. The elements of United’s plan to shore up revenues include bolstering connections at its hubs, improved revenue management, and product segmentation that entails a new basic economy fare structure whose restrictions are more stringent than those of its peers.
United’s revenue transformation will not occur overnight, but for the first time since its 2010 merger with Continental the company seems laser-focused on shrinking the competitive challenges that have hindered its performance. It projects billions in improvement – to pre-tax profits by 2020 – as a result of its doubling down on efforts to shore up revenue. Obviously the measure of United’s success lies in its execution and its ability to navigate competitive responses to its revenue-generating strategies.
This is part one of a two part series examining United’s strategies to compete more effectively with its peers on revenue and costs.
Canada’s government paves the way for ULCCs Enerjet and Jetlines to jump into the marketplace
Two of Canada’s aspiring ultra-low cost airlines made a major breakthrough in Nov-2016 after they were granted exemptions from foreign ownerships restrictions, which allow foreign entities to hold up to 49% of Enerjet and Jetlines. Now Enerjet has taken on some heft by partnering with the global ultra-low cost airline investor Indigo Partners, which was instrumental in Spirit Airlines’ ULCC transition and now owns the ULCC Frontier Airlines. Another new Canadian ULCC, NewLeaf Travel, boasts former Spirit Airlines CEO as chairman of the board.
It is tough to predict how those influential backers will affect the outcome of efforts by the new crop of ULCCs to successfully execute the model in Canada. Although Canada is one of the few mature aviation markets without a true ultra-low cost competitor, the nuances of the Canadian domestic market could create challenges for the long-term viability of NewLeaf, Enerjet and Jetlines in the marketplace.
Jetlines and Enerjet, operating as FlyToo, aim to debut in Canada’s market during 2017. Unsurprisingly the country’s two airlines Air Canada and WestJet plan to compete vigorously with the start-ups, with WestJet vowing to defend its franchise and match the fares of its new competitors.