Air Canada Rouge announced a number of new sun destinations for the end-of-the-year holiday season, as it gradually ramps up competition with other discount carriers.
The 13 additional destinations include Orlando, Florida and Las Vegas, along with a number of other cities in Mexico and the Caribbean.
The question is whether the added competition brought on by Rouge will sharply lower airfares. Although the point of the new discount carrier is to turn unprofitable Air Canada routes into more lucrative flights by introducing the new lower-cost subsidiary Rouge, some of the routes may not see an aggressive markdown in fares.
“Pricing tends to be driven by available seats on the market. So as long as there is responsible capacity growth on the various markets, I don’t see there being a significant change to our pricing today,” said Michael Friisdahl, chief executive officer and president of Rouge and the Air Canada Leisure Group. “I would obviously see some markets that would be pressured as more capacity comes in. But in other markets, I don’t necessarily see a huge increase in capacity.”
In other words, the need to fill the extra flights and seats may bring down prices, but the idea isn’t for Rouge to go in and aggressively cut airfares to gain market share. “Our strategy is to fill our seats profitably. And to the extent that we need to lower our pricing to do that, we’ll do that,” Mr. Friisdahl added.