Ground crew workers load baggage into an Air Canada flight bound for Shanghai, China in this file photo. Air Canada’s international traffic has soared in the past decade, representing 49 per cent of passenger revenue last year, compared with 39 per cent in 2005.Fred Lum/The Globe and Mail
Growth in international markets is one of the pillars of Air Canada's plan to break with history and become profitable on a sustainable basis, chief executive officer Calin Rovinescu says.
"Our aspirations are well beyond the borders of Canada and our mindset is not a parochial mindset," Mr. Rovinescu says in an interview in the new Air Canada museum at the airline's head office complex in Montreal, which sits between runways 06L/24R and 06R/24L at Trudeau International Airport.
Air Canada's international traffic has soared in the past decade, representing 49 per cent of passenger revenue last year, compared with 39 per cent in 2005.
Even a jump of 5 per cent "is a pretty huge change when you think of a carrier the size of Air Canada," notes airline industry consultant Robert Kokonis, who heads AirTrav Inc.
Flights to Amsterdam, New Delhi and Dubai from Toronto last year were among the international services added, while the airline's low-cost Rouge service began flying between Montreal and Venice and Vancouver and Osaka.
About 90 per cent of the capacity Air Canada will add to the market in 2016 will come on international routes and about one-third of those will be new destinations, some of them made profitable by the use of Boeing 787 aircraft, nine of which are scheduled to be added to the fleet this year. The 787s are more fuel efficient and less costly to operate than the Boeing 767s.
Mr. Rovinescu will not reveal the names of those destinations, but says the major targets for growth will be the Middle East and Asia, notably China beyond Beijing, Shanghai and Hong Kong.
Another focus is increasing what is known as Sixth Freedom traffic, which involves picking up passengers in mainly U.S. cities and taking them to international destinations via Air Canada flights from its hubs in Vancouver, Toronto and Montreal.
There are, for example, no direct flights between Boston and some other large U.S. eastern seaboard cities to Shanghai, so Air Canada has increased its marketing and sales presence to encourage U.S. travellers to fly Boston-Toronto-Shanghai.
Such passengers tend to travel business class, which yields more revenue to Air Canada.
"If the ease of connection with respect to Canada Customs on the way out or U.S. Customs on the way in with baggage, if all of that can be simplified, Toronto becomes as good a connecting point as New York or Chicago," AirTrav's Mr. Kokonis says. "If it's less of a helter-skelter chaos airport like JFK [New York] maybe it's even a better connecting point."
Building up such traffic takes time, Mr. Rovinescu points out, which is one reason why he stressed on the airline's financial results conference call last month that investors should be thinking about the long term.
"This is not an overnight kind of thing … You're not doing that from one quarter to the next."
But as Air Canada's focus on international markets grows, so does that of its major domestic competitor, WestJet Airlines Ltd., which extended its seasonal service to London to year-round flying, added flights from several Canadian cities to London's Gatwick Airport and is eyeing other European destinations.
That's good news for transatlantic travellers, National Bank Financial analyst Cameron Doerksen says in a report, noting that fares between Toronto and London this summer are 11 per cent lower than last year.