InterVISTAS Consulting Update

Transcript

Kenneith Currie:So, in the United States, you know, we went— we've been through a lot since deregulation in 1978, and, you know, we sort of had a bunch of different airlines all trying to do the same thing. And now we've got an industry where the airlines are all doing what they're really good at. So we have 3 network carriers, we've got 3 low-cost carriers, we've got 3 ultra-low-cost carriers, or, you know, Something along those lines. I'm oversimplifying, of course. But what we've seen is the unbundling of the product. So everybody is selling both bundled and unbundled products, and the unbundled products are very, very inexpensive, especially at the opening price, with additional services that you can add on later. And I would say that's a permanent change in the industry for the better, because people can actually choose what they want and pay for what they want and not pay for what they don't want? I would say there could be. You know, we don't— unlike sort of the low-cost carriers and the network carriers, the ultra-low-cost carriers are a little bit earlier in their growth period, so they're not necessarily covering the entire nation the way the other carriers are. And so I think to the extent that consolidation would facilitate a national footprint, we will see consolidation. What do you think about that? Well, I mean, I think the ultra-low-cost carrier is a key component to, you know, air travel anywhere. I think it will be successful in Canada. Canada is a little bit different than other markets because it is more of a linear market rather than a hub-and-spoke market that we might see in the United States or other countries. So the competition that they face is different, but there are always of people who want to travel. It's just a matter of what price they're able to pay, and having somebody at the ultra-low-cost level is key. Certainly in the United States, you know, several airlines including Delta and United have done what's called airline within an airline and had a low-cost subsidiary. Unfortunately, I don't think it's worked because those airlines really haven't lowered their costs. They were just not allocating some of their costs to certain ones of their airplanes allocated to the low-cost facility— subsidiary, rather. I think that the way pricing is done right now, where the network carriers offer a basic economy fare and experience, that's kind of like having an ultra-low-cost series of seats in your existing cabin, in your existing aircraft, that replace the need to have a dedicated fleet allocated to ultra-low-cost activity. Kenneith,

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