Air Canada announced more flights to Europe and new destinations scheduled to start next year, enabled by the growth of the company's discount carrier, Air Canada Rouge.
Air Canada said it is adding Milan, Lisbon, Nice and Manchester to its roster of European destinations in Summer 2014, while making other changes such as more flights from Toronto to Istanbul and non-stop flights on Rouge, from both Toronto and Montreal to Barcelona.
"The growth of Air Canada's international network, within forecasts previously announced, is possible due to our ability to deploy capacity and continue growing at significantly lower incremental cost," said the airline's executive vice-president and chief commercial officer Ben Smith.
Moving certain European routes from flagship Air Canada service to Rouge has helped lower costs. An Airbus A319 operated by Rouge is 21-per-cent cheaper per seat to fly than one flown with under the Air Canada brand because of Rouge's cheaper labour costs and the fact that Rouge's aircraft have more seats. The Boeing 767 is 29-per-cent cheaper to fly when operated under Rouge.Meanwhile, new Boeing 777-300ERs long-haul planes being added to Air Canada's mainline fleet have 307 seats in economy class, compared with 228 in older Boeing 777-200s. That also helps bring costs down while adding capacity.
The 787s, made with lighter composite material and therefore costing less to fly longer distances are due to begin arriving at Air Canada in the first quarter of next year. By the end of 2014, Air Canada expects to have six 787s.
"So we knew the capacity targets were there. Now this is the details of that capacity," said RBC Capital Markets analyst Walter Spracklin. "The beauty of that new growth is that it's coming from higher density aircraft [the 777s] and lower cost aircraft [the 787s]."
Air Canada has telegraphed for months its strategy of expanding internationally since that's where it sees its best profit growth. "They dominate market share on international routes. That's where their highest margins are, and that's where they are putting all this capacity," RBC's Mr. Spracklin said.