It looks like travel agents are being taken along for Air Canada’s record-setting revenue and profit ride since sales and distribution was one of only two major cost areas – along with fuel – that rose in the second quarter, report Montreal editor, Mike Dunbar in this week’s digital edition of Canadian Travel Press.
And the record-setting is continuing, with CEO Calin Rovinescu announcing that the carrier delivered its best Q2 financial performance in the company’s history, turning in a net profit of $139 million – up 21% from last year – on revenues of $2.965 billion – up 7.5%.
Apart from hedging, the cost of fuel is largely beyond the control of management but commissions are eminently controllable, so it appears that Air Canada has opted to continue rewarding the travel trade for its sales support.
And the fact that distribution costs went up is likely due to the fact that the travel trade maintained its share of market but benefited from an Air Canada traffic rise that hit 9.9% in the quarter.
In a conference call with financial analysts Rovinescu vowed to keep the pressure on the competition, stating that Air Canada has decided to compete aggressively in both the premium and leisure markets.
His vow followed the launch of WestJet’s Encore product and came amid reports that upstart operators and at least one US low-cost carrier are eyeing Canada.
The Montreal-based chief exec stated that the initial success of Encore was not a surprise, adding, “Suffice to say that our regional operation has to be on a more competitive level.”
For the full story in this week’s digital edition of Canadian Travel Press, click here.