Air CanadaTimothy Stake
Air Canada is forging a joint venture with United Continental Holdings Inc. to co-ordinate scheduling, sales and pricing on transborder routes between Canada and the United States.
The revenue-sharing partnership comes after the Oct. 1 closing of the merger between United Airlines Inc. and Continental Airlines Corp.
"This is a very big step for us to solidify our position on transborder," Air Canada chief commercial officer Ben Smith said in an interview Thursday. "It's going to bring some enhanced revenue-generating opportunities for us, which we think is really exciting, especially in this very competitive business."
Last year, Air Canada held an estimated 35 per cent of Canada's transborder market into the United States, followed by Chicago-based United's 14-per-cent share. Houston-based Continental held about a 6-per-cent share, meaning the partnership would have controlled 55 per cent of the transborder market in 2009. The joint venture plans announced Thursday are slated to take effect in early 2011, subject to regulatory approvals.
Notable rivals on Canada-U.S. routes include Calgary-based WestJet Airlines Ltd. at an estimated 13 per cent and American Airlines Inc. at roughly 10 per cent. Delta Air Lines Inc. and US Airways Group Inc. have smaller slices of the market.
"We have entered into this joint venture with United, which will allow us to basically act as one carrier in the areas of schedules, pricing and sales," Mr. Smith said.
Despite economic weakness south of the border, the United States remains one of Air Canada's most important markets, Mr. Smith said. "We also derive a lot of business that originates in the United States that flies onto our international markets via Canada," he said.
Jeff Smisek, United's chief executive officer, said he's looking forward to creating "a more streamlined travel experience for customers travelling between the United States and Canada, providing more travel options and benefits while reducing travel times."
Air Canada's transborder network covers 59 U.S. cities while the bulked-up United has service at 210 U.S. airports. In Canada, Air Canada serves 59 destinations and United has flights to 16 cities.
"As founding members of Star Alliance, Air Canada and United have benefited from a close relationship, as have our customers through a simplified travel experience and loyalty rewards," Air Canada CEO Calin Rovinescu said in a statement.
In the third quarter of this year, Air Canada's transborder load factor, or the proportion of seats filled by paying customers, slipped to 76.4 per cent, compared with 76.7 per cent in the same period last year. Still, the Montreal-based carrier's transborder traffic rose 12.8 per cent to almost two billion revenue passenger miles while its Canada-U.S. seat capacity climbed 13.3 per cent to 2.6 billion available seat miles.
Brent Jang