Air Canada targets new leisure destinations with low-cost carrier Rouge

TORONTO — Air Canada unveiled its new low-cost leisure airline, Rouge, Tuesday with high hopes it will help restore its balance sheet to the black.

But questions remain about how much the new subsidiary airline will add to Air Canada’s bottom line in the years ahead.

It will have a more casual feel to it

Ben Smith, Air Canada’s chief commercial officer, who led the team that developed Rouge, said his goal was to create a new airline geared toward leisure markets in Europe and the Caribbean with a more casual feel than the mainline carrier.

“Right now, you’ll see we have a very professional, formal-type uniform at Air Canada, everything is done in a very professional business-type way, and that’s what our business-class customers are looking for,” Mr. Smith said. “Obviously, [Rouge] is still part of Air Canada as a wholly owned subsidiary. But it will have a more casual feel to it.”

Air Canada renames Tango Plus to Flex fare class

Airlines are hoping to have Flex appeal.

This week, Air Canada renamed its Tango Plus category Flex, saying it better reflects the flexibility and economy value of this category.

But it will continue to use existing names, including Tango, which is the cheapest fare class, and Latitude and Executive, for the premium classes.

Meanwhile, WestJet Airlines, which is moving away from its one-fare pricing structure, is introducing Econo, Flex and Plus this spring.

“We’ve had these names for a number of years. People have gotten used to it,” said Air Canada spokesman Peter Fitzpatrick. “Everybody knows Tango is the cheapest fare.”

Tango was the name of Air Canada’s previous failed effort into a no-frills airline. The company is returning to the discount airline business this summer, with Rouge, which will fly to cities in Europe and the Caribbean. It will offer three classes of service — Tango, Flex and Latitude.

WestJet spokesman Richard Bartrem said Flex is meant to describe what passengers will receive, noting many airlines around the world use Flex to describe a fare-level offering.

The move is part of WestJet’s plan to attract more business travellers, who are willing to pay more, be it for a slightly bigger seat, or for the flexibility to change or cancel flights.

Depending on the fare class, passengers receive different levels of service from Air Canada, anything from advanced seat selection to waiving change fees and even how many frequent flyer points are given.

With more than that, Wong said it’s hard for consumers to boil down differences.

“WestJet’s labels are good, better and best,” he said. “If the concept is if you pay a little more, you get a little more, or hopefully get a lot more, then the name of fare class should reinforce that.”

While Air Canada’s names wouldn’t have been Wong’s first choice, he argues that because they have been in use for so long, changing to something else would have invited confusion.

“Sometimes, even if it’s not perfect, the public is used to it,” he said. “Everybody knows Executive is better than Latitude, which is better than Tango. Flex just makes it clear there’s a distinction between Tango and Tango Plus.”

Wong compared the different fare structures to credit card offerings.

“Regular, gold, platinum and now titanium,” he said, referring to American Express’s super-exclusive Centurion card. “It’s by invitation-only — a $5,000 initiation fee and $2,500 a year.”

Air Georgian and Air Canada announce an airline pilot hiring and training program partnership

Air Georgian and Air Canada have announced the creation of a unique cadet pilot hiring program for high-achieving Canadian youth. The program is designed to encourage young men and women to consider careers in commercial aviation by assisting them with pilot training and offering them a clearer path to rewarding employment opportunities. Candidates must be high school graduates with a strong academic record and have demonstrated leadership ability at school and in their community.

Eligible candidates will be selected by Air Georgian with the assistance of Air Canada. They will then receive two conditional offers of employment: The first offer, from Air Georgian, will be conditional upon successful completion of both a 50-week, student-funded, pilot training program at Flight Safety Academy in Vero Beach, Fla., culminating in obtaining a commercial pilot licence and a multi-engine instrument rating from Flight Safety Academy and Air Georgian-funded training at Flight Safety International in Toronto. The second offer of employment, from Air Canada, is contingent upon successful training and employment as a pilot with Air Georgian for a minimum of four years as well as on meeting certain employment standards at Air Canada.

"We are very excited about our Cadet Program partnership with Air Canada," said Eric Edmondson, president of Air Georgian. "This program will help both Air Georgian and Air Canada attract, train and employ the best and the brightest youth in Canada in a very challenging and rewarding career. This is an innovative program designed to address our need for highly skilled labour, while offering some bright and enthusiastic young Canadians a clear school-to-work transition option. This partnership with Air Canada is the result of a number of years of working closely together transitioning pilots and specifically Captains from their first airline job at Air Georgian into a career position at Air Canada. This partnership represents a single stream of recruitment and retention programs offered under Air Georgian's "One Regional" program. Other streams include a highly successful mentorship program through a partnership with Seneca College, as well as other retention programs."

"Air Canada is pleased to partner with Air Georgian on this innovative program. This program gives high achieving young Canadians an opportunity to develop their skills and find fulfilling careers in the challenging world of commercial aviation," said Captain Rick Allen, senior director of flight operations at Air Canada. "Both carriers will benefit from the ability to attract top talent while customers will gain assurance from the knowledge our pilots are selected from among the best candidates who will receive intensive preparation through the program's carefully-guided training regime with its emphasis on safety."

Flight Safety International was chosen by Air Canada and Air Georgian to provide the initial training because it is the world's leading aviation training company. The Flight Safety Academy at Vero Beach is a world class facility where the instruction and equipment used are second to none.

"We are very confident that the Flight Safety Academy will provide the highest calibre training to our future pilots. Flying conditions are excellent at Vero Beach with clear weather most of the year and their staff is highly professional," said Captain Daniel Bockner, Air Georgian's vice-president, flight operations.

Air Canada CEO says airport fees make airline tickets in Canada more expensive

 

MONTREAL - Air Canada's chief executive took aim at Canadian airport fees Tuesday, likening them to "sin" taxes that add to ticket costs and contribute to driving almost five million Canadians to use U.S. border airports.

"Airport improvement fees, airport rent, security surcharges, navigation fees and the list goes on, all serve to make airline tickets in Canada more expensive," Calin Rovinescu said in a speech to the Metropolitan Montreal Board of Trade.

As a result, Quebec's fastest growing airport is located in Plattsburgh, N.Y., just over an hour by car from Montreal, Rovinescu told his audience. Montreal is served by Pierre Elliott Trudeau International Airport.

Rovinescu said higher taxes and fees in Canada represent about $1 billion more than if his Montreal-based airline operated as a U.S. carrier with the same volume of traffic.

The Canadian Airports Council has estimated that the leak of passengers to U.S. border airports in 2010 meant a loss of $1.1 billion to gross domestic product as well as 9,000 jobs and more than $500 million in employment income.

And Rovinescu noted that the World Economic Forum ranked Canada 125th out of 139 countries for ticket taxes and airport charges in 2011.

Reports by the Senate and the Conference Board of Canada have also found that Canadian fees and taxes are uncompetitive, Rovinescu said in his speech.

Meanwhile, Rovinescu said he was confident that battery problems plaguing the new Boeing 787 Dreamliner will be resolved quickly.

Air Canada (TSX:AC.A) still expects to begin taking delivery of the first of 37 Dreamliners it has ordered starting in 2014.

"The attention that the 787 has received in the past few weeks as a result of a number of technical problems, for me, just reconfirms the wisdom of avoiding the 'first mover' step and waiting to take delivery of a new aircraft model only after the initial problems are fixed."

Currently all 50 of the Dreamliners that Boeing has delivered to airlines so far have been grounded as authorities probe overheating problems with the plane's lithium ion batteries.

In addition to the grounding, Boeing has halted deliveries of new planes until it can address the electrical problems.

The 787 uses composite materials instead of metals and Rovinescu says the aircraft will provide "cost efficiencies" of more than 35 per cent.

Rovinescu also said he expects Air Canada's new low-cost carrier Rouge to eventually grow to up to 50 aircraft.

Rouge will start by taking over some existing routes from Air Canada as well as adding its own new routes to destinations such as Venice and Edinburgh.

Rovinescu said over the next year that Air Canada will hire about 1,100 new employees in different positions across the airline.

Vigneault's squad switches airlines

The Vancouver Canucks have cut ties with Air Canada and signed on with a new airline for their charter travel.

When the Canucks departed the South Terminal at Vancouver International Airport on Thursday afternoon, it was on a plane operated by Kelowna-based Flair Air.

The Canucks made the change after only recently learning that Air Canada had reconfigured most of its Jetz charter fleet during the lockout and only one of the planes would have first-class seating throughout the cabin.

Flair Air operates three Boeing 737-400 aircraft. The aircraft that took the Canucks to Los Angeles on Thursday has a 76-seat VIP (business class) configuration.

Earlier this week, Canuck assistant general manager Laurence Gilman indicated the team was exploring its options with regards to its contract with Air Canada.

"It is a private agreement that our company has executed with Air Canada," Gilman said. "We are in discussion with them about how they will fulfil their obligations to us. At the same time we are exploring our options. That's really all I want to say about it."

Air Canada has refused to comment on the matter. It had charter contracts with all seven Canadian NHL teams, as well a few U.S.-based NHL teams and the NBA's Toronto Raptors.

Air Canada does remain a corporate partner of the Canucks.

MAX MISSING: Centre Maxim Lapierre missed Thursday's practice with what coach Alain Vigneault said was a minor groin issue.

"He tweaked his groin a little bit during the game," Vigneault said Thursday "He'll skate tomorrow morning and they think he'll be fine for (Ducks' game) tomorrow night."

The Canucks start a three-game road trip Friday in Anaheim for the Ducks' home opener. Vigneault said Cory Schneider will start in Anaheim. With games Sunday night in San Jose and Monday in Los Angeles, it is likely that Roberto Luongo will start one of those final two games.

SO LONG SIMON: Alex Burrows is a huge CFL fan and knows how many B.C. Lions fans are feeling about the trade that sent wide receiver Geroy Simon to the Saskatchewan Roughriders.

"I feel bad for the B.C. Lions fans, that's for sure," Burrows said. "I still remember when (former Montreal Alouette) Ben Cahoun left and he only retired. So now that he is going to Saskatchewan it is a big loss. It's tough because he has been so good for many years."

Burrows, meanwhile, seems to be settling in to his new role of second-line centre. After losing his first two faceoffs in Wednesday's 3-2 shootout win over Calgary, Burrows won his final five draws.

"Well, I got some help from my wingers," Burrows said. "I think Jannik (Hansen) won one for me when it was 50-50. It's just about timing and making sure I get in there and battle and be strong. As long as I keep working on it, I think I will be all right."

DUCK CALL: The Ducks head into Friday night's game with a 2-0 record. After beating the Canucks 7-3 in Saturday's opener for both teams, Anaheim went into Calgary and beat the Flames 5-4.

"I saw a team that jumped on the other team's mistake and made them pay," Vigneault said of the Ducks. "Obviously, we need to do a good job against their skill players. Their skill players can find the back of the net; we need to be on top of that and we'll be ready for tomorrow night."

bziemer@vancouversun.com Twitter.com/bradziemer

Call Air Canada, Maybe?

Can there be anything more awkward than a band of flight attendants taking a break from their onboard duties to lip-sync to an over-played pop song? We thought we had heard the last of this song, maybe? But Air Canada has revived the Carly Rae Jepsen hit, Call Me, Maybe?

After some initial cringing for the first 30 seconds, our lips started curling into a cheesy grin. That's the power of the music, we guess. By the end of the song, we looked past the grainy video and bad lip-syncing and actually liked it.

The cabin crews are not the only stars of the video as we do see some shots from ground staff, pilots and even passengers. It all just proves that the folks over at Air Canada truly know how to have a little fun while paying homage to one of their own. We just hope that the inappropriate use of the drink trolly doesn't get anyone in trouble.

http://www.youtube.com/watch?v=go33Roh28BE

 

Global airline profits expected to grow in 2013: IATA

Global aviation is on the runway to earn higher profits from a further increase in passengers in 2013 after demand grew by 5.3 per cent last year and planes flew with near record level of seats filled, an industry association said Thursday.

The International Air Transport Association (IATA) also said cargo demand fell for a second consecutive year, dropping 1.5 per cent amid a weak global economy.

Passenger demand was below the 5.9 per cent increase set in 2011, but above the 20-year average of five per cent, while load factors for the year were near record levels of 79.1 per cent.

"We are entering 2013 with some guarded optimism," stated IATA chief executive Tony Tyler, noting a more stable Eurozone and the U.S. avoiding the so-called fiscal cliff.

Fuel prices are expected to continue rising and GDP growth is forecast at just 2.3 per cent, but improved business confidence should help cargo markets to recover lost ground from 2012.

"2013 will not be a banner year for profitability, but we should see some improvement on 2012," he added.

IATA expects global airline profits will increase to US$8.4 billion this year, from an estimated US$6.7 billion in 2012. However, net profit margins are low at around one per cent.

Canadian carriers Air Canada (TSX:AC.B) and WestJet Airlines (TSX:WJA) are expected to enjoy improved profits, say industry analysts.

Chris Murray of PI Financial says Air Canada's pre-tax operating income (EBITDAR) should surge 48 per cent to $240 million in the fourth quarter. He expects the Montreal-based airline will earn $22 million in fiscal 2012, rising to $172 million in 2013 and $198 million in 2014.

"We expect fiscal 2013 should continue to see ongoing improvements in earnings with strong traffic demand and stable fuel prices," he wrote in a report.

Calgary-based WestJet is expected to see its earnings increase to 43 cents per share in the fourth quarter and $1.75 per share for the year, up from 26 cents and $1.06 per share respectively, said Jacques Kavafian of Toll Cross Securities.

"The big story at WestJet will be 2013 and 2014 with the introduction of premium economy and fare bundling, both initiatives, we expect to make significant earnings contribution," he wrote.

IATA said global demand for international flights grew six per cent in 2012 while domestic travel increased four per cent, both driven mainly by emerging markets.

The Middle East led with 15.4 per cent growth in international passenger traffic, followed by Latin America (8.4 per cent) and Africa (7.5 per cent).

North American carriers reported the slowest international passenger growth of any region at 1.3 per cent, down from 4.1 per cent in 2011. Growth in domestic air travel was strongest in China (9.5 per cent) and Brazil (8.6 per cent), while U.S. traffic expanded 0.8 per cent.

India was weakest, falling 2.1 per cent from 2011.

Airline restructuring, consolidations and a 0.3 per cent decrease in capacity helped North America to deliver the highest load factor of 82 per cent, contributing to an estimated US$2.4 billion profit.

IATA said the slowdown in domestic U.S. traffic reflected subdued economic growth in a market that accounts for about half of all domestic travel.

Tyler said the air cargo industry suffered a "one-two punch" last year.

"World trade declined sharply. And the goods that were traded shifted towards bulk commodities more suited for sea shipping," he said.

The bright spot was development of trade between Asia and Africa, which supported strong growth for airlines based in the Middle East and Africa.

In December, total passenger demand grew 4.2 per cent on a 2.7 increase in capacity. International demand increased by five per cent while domestic demand was up 2.9 per cent.