Air Canada 787: ‘A pleasure to fly’
Klaus Goersch, Air Canada’s EVP and COO, believes the Boeing 787 is the perfect aircraft for the airline’s expansion, which will see it reach for new international destinations. “It allows us to fly to markets that didn’t make sense for us with the Boeing 767 or the 777,” he says. “It has the fuel efficiency we need and it has the range and flexibility we require.” In fact, operating the 787 rather than the 767 will reduce Air Canada’s costs by as much as 31%.
As an active Boeing 787 pilot, Goersch knows more about the aircraft than most and says its operational benefits cannot be understated. “The 787 has tremendous mission flexibility that we did not have before,” he notes. “From an efficiency standpoint, the 787 flies higher and faster than anything else out there in its class. This makes for reduced travel due to speed and more efficient air traffic control routings.
“The aircraft is a pleasure to fly,” he continues. “The interior design is simply gorgeous. The large windows create a very spacious feeling. The lower cabin pressure, coupled with higher humidity in the cabin makes the journey much less fatiguing compared with other aircraft. And my favourite part as a pilot? Flying faster and higher, passing everyone else.”
Financial transformation continues New targets set for next level of performance improvement
Average 2010-12
Ebitdar margin
Return on invested capital Leverage ratio by 2018 Pension (deficit) surplus
11.5% 5.2% 3.4
Jan 1, 2012 ($4.2bn)
“The government levies heavy fees and taxes on aviation in Canada, driving up the operating cost of Canadian carriers,” Goersch explains. “The government needs to work on ways to reduce this burden and improve infrastructure to provide a more competitive field with our neighbour carriers in the US.”
Since the inception of the Greater Toronto Airports Authority in 1996, the organisation has paid billions of dollars in “crown rents” to the government for Toronto Pearson alone, and the airport has had the dubious distinction of being among the most expensive in the world.
Buying capacity
Aside from its own intensive cost reduction programme, which brought about some $100 million in savings in 2015, Air Canada has hit on several other innovative solutions to combat cost while also pursuing a business model that calls for expansive growth.
Most obviously, it is a main partner in Star Alliance. The other 28 partners in the alliance combine to offer 1,330 destinations across 192 countries, meaning Air Canada customers can pretty much fly to anywhere in the world and get rewarded for their loyalty. Then there is subsidiary rouge, which flies to 60 leisure destinations across the globe, including South America, Asia, Europe and Africa. Although it is supported by its mainline parent in many areas – such as airport handling, dispatch, maintenance and so forth – it is technically a separate entity with its own management team and employees.
Average 2013-14
12.1% 11.3% 3.1
Jan 1, 2015 ($660m)
New Target 2015-18
13% to 16% 15% to 18% 2.2
Maintain surplus
“Air Canada rouge is a unique product and a unique culture, which provides our customer with a unique experience,” Goersch says. “We wanted to create a product that is different from Air Canada, with a strong leisure focus but still benefits from the Air Canada network breadth,” he adds. “Certain leisure markets that were difficult to sustain for Air Canada or difficult to enter are perfectly suited to rouge.” Air Canada is looking to add capacity in other ways too. It has a capacity agreement with regional player Jazz, for example. The deal is estimated to be worth more than $500 million to Air Canada over the next six years. Capacity-enhancing agreements are in place with other airlines too. All in all, Goersch is confident that the transformation at Air Canada is proceeding well. It is hard to deny, given that the share value has gone up 1,600% since 2009.
But he accepts that this is only the beginning. “I still would want us to be even more nimble, more open-minded to new things,” he says. “We are still an organisation with a legacy hangover. Sometimes I still find myself in meetings where discussions are moving down the track of why we cannot do something versus why we could or should do something.”
Flexibility, Goersch concludes, must become part of the Air Canada DNA and culture. “But we are in a really good place today and setting a new standard for the industry,” he says.
14 Routes News 1, 2016
routesonline.com
Source: Air Canada
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