Air Canada Launches Flights To Dubai, Opposes Competition

As we probably all know by now, there’s a huge battle between the “big three” US carriers and the “big three” Gulf carriers. For whatever reason I’m on the email list for press releases from the US airlines’ lobbying group. Most of the releases are entirely nonsensical. Like that time they shamed any company which does business with the Gulf carriers, conveniently omitting that American Airlines has codesharing agreements with both Etihad and Qatar.

Delta will be discontinuing their flights between Atlanta and Dubai next year, which has generated quite an interesting debate between Delta and Emirates.

It’s worth noting that while Delta is discontinuing their Atlanta to Dubai flight, Air Canada actually just launched flights between Toronto and Dubai this week, clearly seeing some demand for travel between North America and the UAE.

Air-Canada-787

Canada has long restricted routes between the UAE and Canada, as Emirates and Etihad are each just allowed to operate 3x weekly flights to Toronto. Obviously they’d like access to more frequencies and cities in Canada, like Vancouver.

Emirates-A380-First-Class-01

Gulf News has a story about how the UAE is lobbying for more access to Canada, while Air Canada plans to protest any liberalized air agreements between the two countries:

Air Canada will oppose any moves by Canada’s new Liberal government to grant more flights to Emirates and Etihad Airways, a senior Air Canada executive told Gulf News on Thursday, a day after the airline started flights to Dubai.

“There is enough capacity … between the two markets,” Duncan Bureau, Vice President of Global Sales at Air Canada said in an interview.

Canada’s October 19 election that saw the Justin Trudeau-led Liberal party voted into government has raised hopes the two countries will be able renegotiate the allocation. UAE General Civil Aviation Authority (GCAA) Director General, Saif Mohammad Al Suwaidi, told Gulf News on October 22 that he plans to discuss “the requirements of our carriers” with the new government.

But Bureau said Air Canada will “absolutely” make sure Canada’s new government knows it opposes any more flights for the UAE carriers. “The capacity that is currently being deployed is more than adequate to service the true demand,” he said.

It’s sort of interesting to claim “oh, there’s more than enough capacity in the market” the same week you launch service to a country. Surely if they didn’t think there was sufficient demand they wouldn’t have launched the route, no?

I suppose it’s obvious that Air Canada opposes more competition from the Gulf carriers. But at the same time, can they truly claim that travelers are best served when there’s not a single flight from West of Toronto to the Middle East?

Allowing Emirates or Etihad to launch flights out of Vancouver, Calgary, etc., would open up all kinds of new one-stop routings which weren’t previously possible.

Bottom line

I can appreciate in theory that an airline says “this market has enough capacity, we don’t need any more.” But that seems slightly too convenient when it’s the same week that the airline decides to add significant capacity to the market as well.

With service from just Toronto to the UAE, it seems tough to claim that Canadians are as well served as they could be.

Comments

  1. Well they are probably right that there is sufficient capacity, including the Canadian rights that AC will now exercise, permitted in the Air Services Agreement to satisfy O&D traffic between Canada and the UAE (the primary purpose of the ASA). Clearly AC has no interest in having more capacity on that route to allow EK and EY to poach further connecting traffic on to the subcontinent, the Middle East more broadly and Africa. Much of this would come at the expense of AC’s Europe flights and onward connections with LH.

  2. Of note is the fact that AC will be launching non-stop YYZ-DEL flights in the next few weeks. It is fair to assume they want to ensure the profitability of this new route.

  3. Either Emirates or Etihad could double their flights to Canada if the other stopped service. The bilateral does not restrict any carrier, but rather the total number of flights by airlines designated by each side. Of course, neither is willing to surrender a larger slice of the pie to their fiercest competitor.

    This is not Canada being unilaterally restrictive, but rather a bilateral agreement signed between Canada and the UAE. The restrictions apply to both sides. The UAE agreed to the agreement back in the day as well, long before either Emirates had any real interest in the Canada market and before Etihad was a gleam in anybody’s eye. Realities have changed since then, but a modification to a bilateral agreement needs consent of both parties to the agreement. All Air Canada is doing is exercising the Canadian rights under the agreement. Modifying the agreement to grant more rights to the other side, while the Canadian side is not utilizing their entire allocation would not be in the interest of Canadian carriers. Why should Air Canada support that?

  4. Sean M – of course Air Canada shouldn’t support that, its in their interests not to support. However the Canadian government needs to take into account what’s best for Canada, not just Air Canada.

    Lower costs & more competition to the travelling public usually results in a better economic outcome even taking into consideration the negative effects that would result to high cost legacy carriers like Air Canada.

    Why should shareholders and management of Air Canada be protected at the expense of the public ? Let them compete, if the public has any concerns about Emirates or Etihad then they will choose Air Canada anyway.

  5. Also should note both EK and EY can choose to serve any city they choose (YVR, YYC, YUL, etc.), not just YYZ – their ‘disappointment’ about wanting to serve (eg) YVR is likely nothing more than lip service to garner support; without doubt they would choose to serve YYZ daily first and foremost!

  6. @DB It’s also in the public interest for Canada to have non-stop connections to the rest of the world, instead of traffic being routed through MEA airports. Maybe more relevant for Germany and a few other European countries, but there is a huge benefit that from FRA or MUC you can fly non-stop to a wide range of major airports in Asia and North America. The ME3 are less of a threat to Air Canada, but still, it’s the same trade-off.

  7. I have to agree with @Sean M.

    This is not about convenience to passengers (especially Western Canada) but about the capacity of the market, and amount of travellers starting or ending in the Middle East, specifically in those airports. Adding 7 or 14 more weekly flights to UAE wont magically generate that more amount of traffic – most would be taken from existing routes, rendering those routes (largely operated by AC and Star Alliance partners) possibly unprofitable and unsustainable.

    Plus, YVR is handsomely connected to Asia through several carriers, alliances, etc. There are very few one-stop destinations from YVR via DXB or AUX (or DOH for that matter) that are not already accessible one-stop via NRT, HKG, PEK, and so on.

  8. Canada really needs to stop protecting Air Canada like a baby, because all they do us whine. I remember back in the day Air Canada cried foul when Singapore Airlines began service to Toronto, and promptly made SQ cancel the service after serving it for a while.

  9. AC needs to pull up it’s diaper and stop boo-hooing! AC knows it cannot compete with MEA service and onboard amenities. AC has no problem poaching US pax and flying them all over the world via YYZ!

  10. Air Canada doesn’t make public policy. The Canadian Government can evaluate the arguments of Air Canada, Emirates and whoever else they wish when they decide the course of action they will take with regards to air transport policy. Air Canada speaks for itself, but to this point (and it should be noted, this policy has been the same since time immemorial – not just something that the Harper Conservatives implemented) the Canadian Government has largely agreed with Air Canada’s position.

    The big difference between the Canada-UAE situation and the US-UAE situation is that the US chose to sign an Open Skies deal, which some US carriers are now regretting. Canada never did sign an Open Skies deal, and the Canadian carriers seem to prefer that they don’t. That is their prerogative as a sovereign state, regardless of what others may think about capitalism, market forces or anything else.

  11. The unnatural/distorted part of this scenario is the fact that Canada has only one carrier. So discussions of Canadian “public policy” and international agreements between governments mean something different in Canada. There is no prospect for any company other than Air Canada to benefit from, or suffer from, such agreements. In USA, UAE, Europe multiple airlines are affected and they compete over the crumbs placed on the table. In Canada, there is a giant sucking sound as Air Canada collects everything. This is a distortion because they can discard any unprofitable route (“we’re a business”, exercising our fiduciary responsibility to our shareholders) but when a route is profitable, their lapdog (sorry, I meant the Ministry of Transport) protects it for them, since Air Canada’s profitability is a vital National priority.

    If you live in a country where multiple viable airlines actually sometimes sort-of compete, enjoy the warm fuzzy feeling that someone, somewhere envies you.

  12. @Christian If it was genuinely in the publics interest then they wouldn’t need laws effectively forcing many travellers to use those direct routes…

    If more people would prefer cheaper connections over a direct flight then you can’t claim it’s in the publics interest. Its a minority interest that can only be protected by damaging the interests of the majority. I see no reasonable justification for that.

  13. EY and EK flights are full of people from India.
    All say they are Canadians!
    Flights go from India to DXB or AUH then to Toronto.
    They are all full.
    So maybe Air Canada should look at flight to India not the Middle East

  14. Would be good if they had daily flights to Toronto, plus service to YVR (Vancouver) and YUL (Montreal), but Air Canada would rather people connect through them in Toronto than go nonstop. Though, there are Canadians who connect in the U.S. since they don’t need transit visas.

  15. AC’s service doesn’t reach the level of Emirates’, Qatar’s or Etihad’s. It is simple as that. They are afraid of competition. Once that is acknowledged they should consider public’s interest. Western Canada is almost stuck with AC whether people there like it or not. I guess they should open up with some sort of trade negotiated.

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