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| The Canada Day long weekend means that some of you may well be reading this at an airport. And the start of this year's peak summer travel season was preceded with an announcement that bodes ill for Canadian air travelers. |
Air Canada's purchase of Air Transat will enable it to dominate trans-Atlantic routes to and from Canada.
Hyungwon Kang/Reuters |
| After much speculation, money losing Air Transat agreed this week to be purchased by Air Canada for 520 million Canadian dollars. |
| For those of us who are airline travelers, not investors, there are two troubling figures in this news: Once joined, the companies will control about 60 percent of the trans-Atlantic air travel business to and from Canada, and about 45 percent of several winter routes to the Caribbean. The takeover also will further expand Air Canada's hold over travel at Montreal. |
| Air Canada promised to keep Air Transat's name on airplanes and a main office in Montreal. Both appeared to be measures intended to placate Quebec's premier, François Legault, a co-founder of Transat. |
| Conspicuously missing from the announcement, however, is any mention of what will happen to airfares after a lower price competitor loses its independence. That's something the federal competition bureau will investigate before it signs off on the deal. |
| But recently revised laws limit foreign ownership of Canadian airlines to 49 percent, restricting potential buyers for Transat. So there's a widespread expectation that the takeover will be approved. |
WestJet's new owner may give it the financial might it needs to take on Air Canada.
Ben Nelms/Reuters |
| Ultimately, another takeover may be Canadians' best hope for keeping up competition to keep down ticket prices. WestJet, the No. 2 carrier, is in the process of being sold to the Onex Group, a private equity fund in Toronto. (If you don't follow financial news closely, you may not know Gerry Schwartz, the founder of Onex. But most Canadians probably know his wife, Heather Reisman, the chief executive of Indigo Books and Music, if, for nothing else, than for her ubiquitous literary recommendations.) |
| After years of sticking mainly to domestic flights, with a focus on Western Canada, WestJet is slowly moving into the trans-Atlantic business. The financial muscle of Onex may allow it to accelerate that overseas expansion, which had been limited by the airline's comparative lack of planes that can fly across oceans. |
| The Transat deal could help Air Canada if the mess surrounding Boeing's 737 Max jet continues. |
| Along with WestJet and other airlines around the world, Air Canada has been fiddling with schedules to deal with the grounding of its two dozen Boeing 737 Max planes after two deadly crashes. And this week my colleagues Natalie Kitroeff and Tiffany Hsu reported that yet another problem has been uncovered in the software connected to the two crashes, which killed 346 people. |
| [Read: Boeing's 737 Max Suffers Setback in Flight Simulator Test] |
| The troubled airplane is supposed to be Air Canada's future workhorse; the airline is waiting for another 60 deliveries. |
| But Air Transat long ago agreed to lease 15 of Airbus's equivalent to the 737 Max, a particularly fuel-efficient plane. Airbus can't make enough of its planes, so anyone now looking at them as a Boeing alternative gets put at the bottom of a very long waiting list. The Air Transat purchase will allow Air Canada to jump that queue, if necessary. |
The Air Transat name will live on after its takeover by Air Canada.
Daniel Slim/Agence France-Presse — Getty Images |
| Air Canada's purchase of Air Transat was big news in Quebec, where I was this week on an unrelated assignment. Air Transat is one of a group of companies founded by French speaking Quebecers — known as "Quebec Inc." — and has huge symbolic status in the province. To some, its fate brings up memories of Bombardier, arguably the most important member of that group of companies. |
| Bombardier ended its involvement in making commercial planes by selling its regional jet airliner business to Mitsubishi this week. |
| After its initial flight in 1991, Bombardier's CRJ aircraft became Canada's first successful jet airliner, and its production marked a major step in Bombardier's transformation from a maker of snowmobiles into a global transportation company. Anyone who flies out of a smaller airport in Canada knows the planes perhaps all too well. |
Once a proud symbol of Canadian technology, production of the Bombardier CRJ airliners will end next year.
Charles Krupa/Associated Press |
| Now after almost being ruined by an effort to take on Boeing and Airbus in the market for larger airliners, Bombardier is retrenching to its railway business, with private jets its only remaining stake in aviation. |
| For something so pivotal to Canadian aviation, the CRJ is coming in an ignominious end. |
| Airbus is continuing to build the airliner that proved to be a project too far for Bombardier, and the company sold its propeller-driven airliner business to a small Canadian firm that intends to keep making them. But after the current CJR back-orders are fulfilled, likely next year, that will be the end of the jets. Mitsubishi, in effect, bought a spare parts-and-service business. |
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