2017 – The Big Surprise
A viewpoint from Air Canada's Virgilio Russi
Embracing the future
For Air Canada, 2017 was defined by the strong results of our ongoing international expansion strategy. These exceeded all expectations and set records, including for traffic and financial performance. The effect was felt throughout the year, particularly in the third quarter. We ran with an 85.3% load factor during the summer, and our one-day record was more than 170,000 customers system-wide.
Keeping all these customers and aircraft moving presented challenges.
These included setting up in new airports literally around the world – Algiers, Marseille, Keflavik, Taipei, and Mumbai – integrating nine more 787-9 Dreamliners into our fleet, and hiring more than 5,000 new employees during the year.
With our capacity up more than 12% in the first nine months of the year alone, we also worked aggressively to sell seats to fill our planes, and our travel agency partners were invaluable in assisting us.
An important aspect of coping with this growth was further honing our sixth freedom strategy to channel international connecting traffic through our major hubs, so we put considerable effort into airport processes.
We added approximately 20 transborder and international routes in 2017, which followed on previous years of similarly aggressive expansion. Fifty new destinations in two years! Essential to managing through this growth was keeping our employees engaged and customer-focused. We invested a lot of energy in culture change at Air Canada, and a clear indicator of our success was being named the Best Airline in North America by Skytrax this summer.
It is an interesting twist. We decided a few years ago to change Air Canada by focusing on international growth, but today the runaway success of that strategy means international growth is now transforming us, making us a better airline.
2018 – The Next Big Thing
Ready for anything
While Air Canada’s goal of becoming a top global carrier will not change, we also know we cannot be complacent with respect to the domestic market, where we expect to see change this year. In particular, we anticipate at least one new low-cost entrant.
We are not planning to enter the ultra-low-cost market ourselves, but it is a development we will be monitoring closely. Already, we have taken some measures that will allow us to respond if necessary.
For example, with our recently renewed agreement with the Air Canada Pilots Association, we have greater flexibility to grow and deploy our lower-cost, Air Canada Rouge leisure carrier on domestic routes. Where Rouge had reached its contractual fleet limit of 50 aircraft, the new agreement has provisions to let us grow beyond that using narrow-body aircraft.
Additionally, we have been rolling out our new Branded Fares.
Although not directly related to new ULCC entrants, this new fare structure, which is driven by fare-basis code rather than booking class, allows us to market many more price points, including very-low, basic fares if necessary to compete.
Overall, Branded Fares should simplify things for our travel agency partners in terms of articulating the value of the product and the selling of the ancillaries bundled with each brand.
Finally, we firmly believe you compete most effectively by offering the best product. This is why we are excited to be introducing the new Boeing 737MAX in 2018. We’ll have 18 of these in the fleet by year-end, and they will be flying primarily North American routes.
Customers are going to love this aircraft, with its new amenities and overall comfort. Sure, other airlines also have the 737MAX, but I think our team did an incredible job with the cabin interiors. I like to call it our smaller 787!
All this to say, while our overarching ambition is to be a top global carrier, we certainly do not intend to neglect the domestic market, and people will see significant, positive changes here in 2018 from Air Canada.
There have never been more exciting times in our 80-year history, and I am thrilled to be a part of it.