Air Canada
agreements will allow us to focus on running the business without labour distractions,” he says. “It also allows us to accurately forecast portions of our cost structure and build a business model around that.”
Expanding the fleet That business model calls for significant fleet expansion. By 2018, Air Canada will operate 34 Boeing 787s. These will be used for new routes and to replace the airline’s Boeing 767s, many of which will be pushed to leisure subsidiary, rouge. Thanks to a different financial set up, rouge can operate Boeing 767s at 30% less cost than the parent company. A couple of new Boeing 777s will also join the fleet and Air Canada will reconfigure the composition of its regional aircraft too.
The revamp of the fleet will affect Air Canada in several ways. For a start, the aircraft utilisation rate will increase from 11.5 hours per day today to 12.5 hours by 2018. Combined with a redesign of aircraft interiors to allow more seats, this will greatly reduce the seat unit cost. Moreover, the extra aircraft will help Air Canada to serve some 3-5 million extra customers by 2018.
The carrier’s network is undergoing a similar paradigm shift – from a US focus, where Air Canada is the largest foreign carrier – to the global arena. “We are focusing on growing our sixth freedom
Network composition to shift from North America to international
2009 9% 17% 25% 33% 16%
n Canada n US n Atlantic n Pacific n Latin America/Caribbean
traffic both to and from Asia and Europe with a lot of focus on Toronto,” says Goersch. “Our wide-body fleet expansion is the backbone of our global powerhouse strategy.” In Asia, China is likely to be a key market. Air Canada has entered into a joint venture with Air China that has already brought extra services between the two countries and will likely be exploited further as new aircraft arrive.
Three hubs
Air Canada is additionally making the most of the unique characteristics of its three hubs to define its international strategy. Toronto Pearson remains the
2014 8% 19% 27% 29% 17% 2018 9% 22% 24% 29% 16%
Source: Air Canada
main global hub and will continue to leverage the opportunities provided by its extensive US connections to drive transfer traffic to destinations worldwide. Montreal Trudeau will also connect globally, but with an emphasis on French-speaking destinations. The aim is to avoid duplicating the Toronto network as much as possible, although some crossover is inevitable – even desirable – given the enormous appeal of some major cities, such as Paris. Vancouver International, on Canada’s west coast, will meanwhile utilise its geographical position to the full. As Canada’s closest point to Asia, transpacific routes are an obvious focus. All three hubs offer something different
and in general perform quite well. The fact that international connecting traffic grew 23% in 2014 and final numbers look set to confirm a similar increase in 2015 bear testimony to this.
Air Canada’s Maple Leaf lounge, Toronto Pearson
Goersch is adamant, however, that Canadian infrastructure “could be improved”. He notes that Canada has one of the most expensive aviation systems in the world and the cost of this system is ultimately borne by its end user, the customer. It is a head-on conflict with Air Canada’s aim to become a global brand, as well as its customer-focused strategy and drive to reduce costs.
routesonline.com
Routes News 1, 2016
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