With Delta and WestJet forming closer ties, including a transborder joint venture, Air Canada is looking to strengthen its relationship with United Airlines.
Earlier this year, Delta and WestJet agreed to seek antitrust immunity from regulators, with the goal of commencing a joint venture by 2019 which will include trans border (US – Canada) routes. Such JV agreements allow multiple carriers to essentially operate as a single carrier in designated markets, sharing expenses and jointly coordinating schedules and fares.
United and Air Canada have been working together since 1997, the year Star Alliance was founded. The two carriers already have a transatlantic joint venture agreement–with Lufthansa–but do not currently have a transborder agreement in place. Since 2012, however, Air Canada and United have had the “ability” to form a JV partnership, with some exceptions. This authority was granted by Canada’s Commissioner of Competition, but excludes some key routes like Vancouver – San Francisco and Toronto – Washington, DC.
Michael Rousseau, Chief Financial Officer of Air Canada, told Flight Global:
At the time, many of our competitors, including for example WestJet, were not in some of the markets on the transborder that they are now in. The transborder market has become more competitive. We’ll have to go back and look at how we can strengthen our JV with United. We currently have certain routes that are carved out of that JV, and we’ll have to go back to the drawing board to see if there are some value we can add to both carriers by extending that JV.
United’s response is more non-committal:
We continuously look at opportunities to build our global route network.
CONCLUSION
Air Canada controls 49% of traffic between the USA and Canada, compared to a combined West Jet – Delta share of 28%. Together, Air Canada and United would control 59%. As WestJet reinvents itself as a more full-service carrier, I would not be surprised to see greater cooperation between United and Air Canada.
image: Tomás Del Coro / Flickr
While recognizing you were just quoting your source, “Michael Rovinescu” is an amusing portmanteau for Calvin Rovinescu, President & CEO of Air Canada, and Michael Rousseau, Executive VP & CFO of Air Canada. Who actually said? We’ll never know…
Great catch!