Connect with us

Business

Delta And WestJet Ax Joint Venture Plans Over LaGuardia Slots

Published

 on

 

Delta Air Lines and WestJet have decided to scrap their plans for a joint venture (JV). This comes after the United States Department of Transportation (DOT) sought to have the airlines give up some slots at New York’s LaGuardia Airport (LGA), a move the two airlines called “draconian.” As a heavily slot-controlled airport, giving up slots at LaGuardia was an undesirable requirement from the DOT, leading the two carriers to drop their plans.

Delta LGA Getty
Giving up slots at LaGuardia just proved to be a little too much for Delta and WestJet to stomach. Photo: Getty Images

Delta and WestJet ax JV plans

Delta and WestJet withdrew their application for antitrust immunity on Friday, November 20th, after the DOT asked the two airlines to give up slots at New York’s LaGuardia Airport. In a harsh rebuke of the DOT, the two airlines outlined what they deemed as an unfair set of conditions to receive joint venture approval.

Delta and WestJet had pursued the joint venture in part because of the Air Canada and United Airlines tie-up. The Star Alliance carriers have a dominant position in the market, reaching over 8,100 US-Canada city pairs, which is far greater than the Delta/WestJet network.

WestJet Getty
WestJet and Delta have a much smaller transborder network than Air Canada. Photo: Getty Images

Delta and WestJet had also highlighted the strength of their complementary route networks. The two airlines did not compete on any route. The only way the two compete on any routes is if you consider all three New York City airports as one market, in which case Delta flies between New York and Toronto, but out of John F. Kennedy International Airport (JFK) and not LGA.

LaGuardia slots were the center of the dispute

The DOT previously stated it had wanted a divestiture of 100% of WestJet’s slot portfolio at LaGuardia. Either WestJet would have to give up all eight slot pairs, or Delta would have to go and get rid of another eight slot pairs from its portfolio. Both carriers were unhappy with this.

Delta and WestJet do not compete directly on any routes out of LaGuardia. WestJet flies to Toronto, and Delta does not. Delta and WestJet outlined concerns that the New York-Toronto route would see reduced capacity with either WestJet pulling out, or else WestJet continuing to serve the route while Delta would have to cut service to small and medium-sized communities out of LaGuardia. Neither of these options appealed to either carrier.

Advertisement:

WestJet LaGuardia Getty
WestJet and Delta viewed LaGuardia slots as too valuable to give up. Photo: Getty Images

Delta also took aim at the DOT’s statement that the lack of slot divestiture would “exacerbate Delta’s dominance at LGA.” Let alone the fact that Delta has no control over how WestJet uses the LGA routes, the airline only has a market share of 45% out of LGA– which is far below what many other airlines have at their respective hubs, including United at Newark Liberty (EWR), which is another New York-area airport.

Delta went out and provided statistics for other hubs. For example, United’s 49% share in San Francisco, 53% share in Denver, 82% share in Houston, and nearly 70% share of Newark operations. Meanwhile, American Airlines has a 57% share out of Washington-National, 86% share out of Dallas/Fort Worth, 90% share in Charlotte, and a 74% share in Miami. Meanwhile, Southwest has a 92% share at gate-restricted Dallas Love Field.


Delta LaGuardia
Delta Air Lines is the dominant carrier at New York-LGA. Photo: Getty Images

An OAG report cited by Delta found that, during the 12 months ending in October 2019, Delta only operated 28% of flights to and from the New York metropolitan area as a whole. All this is on top of Delta’s major multi-billion dollar investment in LaGuardia.

Delta also stated the following in its filing:

“The loss of these slots would deprive the Joint Applicants of critical operating rights at one of the most important strategic hubs in Delta’s global network at a time when Delta is investing billions of dollars of its own capital in a comprehensive facilities improvement project at this airport.”

Delta and WestJet’s other concern was that the sale of these slots could be far below their long-term economic value, given how they would be sold in the midst of an ongoing crisis. Also, decrying the requirement to divest these slots, the airlines noted that the slots would probably be used for domestic routes and not services between LaGuardia and Canada.

Removing LCC Swoop from the joint venture

Delta and WestJet aimed at the DOT considering Swoop to be separate from WestJet and out of the joint venture. The airlines were quick to point to Air Canada’s Rouge subsidiary being included in the United and Air Canada tie-up.

Delta and WestJet sought to use Swoop to target price-sensitive leisure travelers between the United States and Canada. Swoop would not be a major participant, but rather maximize synergies in the combined joint venture network to maximize Swoop’s success in transborder markets.

Swoop
Swoop is WestJet’s ultra-low-cost arm. Photo: Swoop

Swoop does not even offer connections, so its only role in the Delta and WestJet joint venture would be to take advantage of the data and synergies the two mainline airlines see and let Swoop cover the price-sensitive leisure market.

Requiring WestJet to interline with other US airlines

Aside from United Airlines, the DOT further proposed that WestJet would interline upon request for any US airline. Essentially, WestJet would be open for interlining, that is, through-ticketing and baggage handling, for any other airline in the United States looking for a transborder partner.

WestJet and Delta argued that this would come at a huge cost to WestJet, which would have to set up and maintain the interlining relationships when there may be systems incompatibility and other complexities.

The two carriers argue that forcing interlining agreements on WestJet adds an undue cost burden on WestJet. Photo: Getty Images

So, what comes next?

For now, Delta and WestJet have called off their joint venture plans. However, that does not mean the end of the airlines cooperating through codeshare and reciprocal frequent flier agreements. However, this cooperation is on a far less intense scale than a joint venture and would not get close to what United and Air Canada have in the transborder market.

Delta and WestJet can apply again later and hope that the DOT might be a little more lenient and accept the joint venture without requiring some of these conditions. This, however, could take a few years. Which means, for now, Air Canada and United will continue to remain the dominant force on the US transborder market.

It also shows that, for Delta and WestJet, these LaGuardia slots are a lot more important for the carriers than the overall joint venture.

 

 

Source: – Simple Flying

Source link

Continue Reading

Business

Asian shares open higher following stellar month of gains – Reuters

Published

 on


(Corrects to China’s index, not futures, in paragraph 3)

SYDNEY/NEW YORK, Dec 1 (Reuters) – Asian share markets opened slightly higher on Tuesday buoyed by the prospect of a COVID-19 vaccine, reversing the previous day’s dips as investors took profits at the end of a record-breaking month.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.26% on Tuesday after closing the month 9% higher, the best November since 2001. Japan’s Nikkei and Australia’s S&P/ASX 200 were each 0.9% higher, while South Korea was up 1.4%.

China’s blue-chip CSI300 index was 0.72% higher on Tuesday, after data on Monday that pointed to a continued recovery in the world’s second-largest economy against the backdrop of the COVID-19 pandemic.

“We’ve seen clearly a huge wave of liquidity coming to equities in response to the vaccine news and in response to U.S. election news,” said Hamish Tadgell, a portfolio manager at SG Hiscock & Company.

“But there are still risks, and as a result we could see the market pull back, I think, particularly as we come into sort of the Christmas period.”

Wall Street was weaker on Monday, partly driven by a rebalancing of portfolios, as investors cashed in on gains after a strong month punctuated by updates of COVID-19 vaccines progressing and hopes of a swift economic rebound next year.

“There was profit taking around the world so we ended a record month with a whimper not a bang, and you know, taking a little bit of a breather,” said Interactive Brokers Chief Strategist Steve Sosnick.

“I think that markets are pricing in, if not fully pricing a recovery, they are pricing in the vast majority of it (and) it’s very hard to meet these elevated expectations.”

MSCI’s gauge of stocks across the globe was roughly flat. Hong Kong’s Hang Seng index futures were down 0.36%, while China’s CSI 300 futures were 0.36% higher.

In the United States the Dow Jones Industrial Average fell 0.91% on Monday while the S&P 500 lost 0.46%. The tech-heavy Nasdaq Composite ended down 0.06%.

Moderna Inc applied for U.S. emergency authorization for its COVID-19 vaccine after full results from a late-stage study showed it was 94.1% effective with no serious safety concerns.

“U.S. markets were a little bit lower, that’s what was holding us back a little bit,” said Chris Weston, head of research at Melbourne brokerage Pepperstone. “People are pretty optimistic for a good 2021.”

The dollar was under pressure on Tuesday, after closing out its worst month since July with a little bounce and as investors reckon on even more U.S. monetary easing.

Oil prices were slightly lower on uncertainty about whether the world’s major oil producers would agree to extend deep output cuts at talks this week.

U.S. crude eased back 11 cents to $45.23 a barrel on Tuesday, while Brent crude futures were largely unchanged at $47.86.

Reporting by Paulina Duran in Sydney and Jessica DiNapoli in New York; Editing by Lincoln Feast and Stephen Coates

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Braid: Moderna boss won't push Canada aside in rush for COVID-19 vaccine – Calgary Herald

Published

 on


Article content continued

Minister of Health Patty Hajdu responds to a question during Question Period in the House of Commons Thursday October 8, 2020 in Ottawa. Photo by Adrian Wyld/The Canadian Press/File

COVID-19 vaccines are a far more complex problem. The feds both purchase and distribute. They must work out timing and systems with each province and territory. Some vaccines require very complex shipping.

And first, federal regulators must also approve the vaccines.

“We will never interfere with the regulators’ work,” Hajdu said.

“They have to be independent so that they can make those decisions free of political influence. That can give Canadians comfort that whatever we approve will be safe.”

The Liberal record on political interference is not exactly stellar, so we will hold her to that.

But Hajdu, who has been pilloried as clueless and incompetent, strikes me as able, well meaning and fully attuned to the enormous challenges she faces.

She says she can’t pinpoint “an exact date” for distribution.

“It’s not all going to happen at once,” she notes. “In every country in the world this planning is going on right now, figuring out who the priority populations are to get these first vaccines.”

Maybe Canada failed to plan early enough to distribute something that did not yet exist. Surely there will be inefficiencies.

But we are in a silent war. As in all times of war, vast systems have to be re-shaped to effectively attack the enemy.

It’s difficult work but Canadians have long since proven we are very good at it.

Although Alberta’s pandemic is escalating daily – a record 1,733 new cases announced Monday – there’s also far more hopeful news than we could have imagined only a month ago.

Don Braid’s column appears regularly in the Herald

The original column has been altered to reflect Nov. 30 case count.

dbraid@postmedia.com

Twitter: @DonBraid

Facebook: Don Braid Politics

Let’s block ads! (Why?)



Source link

Continue Reading

Business

Asian shares open higher following stellar month of gains – Reuters

Published

 on


Healthcare

Paulina Duran
Jessica DiNapoli

(Corrects to China’s index, not futures, in paragraph 3)

SYDNEY/NEW YORK, Dec 1 (Reuters) – Asian share markets opened slightly higher on Tuesday buoyed by the prospect of a COVID-19 vaccine, reversing the previous day’s dips as investors took profits at the end of a record-breaking month.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.26% on Tuesday after closing the month 9% higher, the best November since 2001. Japan’s Nikkei and Australia’s S&P/ASX 200 were each 0.9% higher, while South Korea was up 1.4%.

China’s blue-chip CSI300 index was 0.72% higher on Tuesday, after data on Monday that pointed to a continued recovery in the world’s second-largest economy against the backdrop of the COVID-19 pandemic.

“We’ve seen clearly a huge wave of liquidity coming to equities in response to the vaccine news and in response to U.S. election news,” said Hamish Tadgell, a portfolio manager at SG Hiscock & Company.

“But there are still risks, and as a result we could see the market pull back, I think, particularly as we come into sort of the Christmas period.”

Wall Street was weaker on Monday, partly driven by a rebalancing of portfolios, as investors cashed in on gains after a strong month punctuated by updates of COVID-19 vaccines progressing and hopes of a swift economic rebound next year.

“There was profit taking around the world so we ended a record month with a whimper not a bang, and you know, taking a little bit of a breather,” said Interactive Brokers Chief Strategist Steve Sosnick.

“I think that markets are pricing in, if not fully pricing a recovery, they are pricing in the vast majority of it (and) it’s very hard to meet these elevated expectations.”

MSCI’s gauge of stocks across the globe was roughly flat. Hong Kong’s Hang Seng index futures were down 0.36%, while China’s CSI 300 futures were 0.36% higher.

In the United States the Dow Jones Industrial Average fell 0.91% on Monday while the S&P 500 lost 0.46%. The tech-heavy Nasdaq Composite ended down 0.06%.

Moderna Inc applied for U.S. emergency authorization for its COVID-19 vaccine after full results from a late-stage study showed it was 94.1% effective with no serious safety concerns.

“U.S. markets were a little bit lower, that’s what was holding us back a little bit,” said Chris Weston, head of research at Melbourne brokerage Pepperstone. “People are pretty optimistic for a good 2021.”

The dollar was under pressure on Tuesday, after closing out its worst month since July with a little bounce and as investors reckon on even more U.S. monetary easing.

Oil prices were slightly lower on uncertainty about whether the world’s major oil producers would agree to extend deep output cuts at talks this week.

U.S. crude eased back 11 cents to $45.23 a barrel on Tuesday, while Brent crude futures were largely unchanged at $47.86.


© 2020 Reuters. All Rights Reserved.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending