Caribbean Tourism Organization (CTO) State of the Industry Conference Vijay Bathija Senior Director Network Planning September 16-17, 2011
Welcome to Air Canada s World! 2
Air Canada is North America s premier international airline Air Canada has an extensive global network, with hubs in three Canadian cities Toronto, Montreal and Vancouver Voted Skytrax 2011 Best International Airline in North America AC serves 178 cities around the world AC and its regional partners operate up to 1,500 flights daily Air Canada is building an International Powerhouse Well positioned for Trans-Atlantic growth through the A++ JV with United and Lufthansa (now including LH affiliates) Strong network to Asia with year-round daily service to Hong Kong, Tokyo, Beijing and Shanghai from Toronto and Vancouver, Seoul from Vancouver, and seasonal service between Calgary and Tokyo 3
AC operates a varied fleet to serve a variety of markets Boeing 777 represents the flagship long-haul aircraft, while 767 is the backbone of the fleet: 12 777-300ER 349 seats 6 777-200LR 270 seats 8 330-300 265 seats 30 767-300ER 191 to 260 seats On order: 37 787-8/9 Variety of narrowbody aircraft allows AC to serve a variety of markets effectively: 86 319/320/321 120 to 174 seats 60 E75/E90 73 to 93 seats 15 CRJ-705 75 seats 20 Q400 70-74 seats (by Aug 2012) 44 CRJ 50 seats 60 DH8-100/300 37-50 seats 17 Beech 1900 18 seats Operated by Air Canada Express carriers under various capacity purchase agreements 4
AC offers a premium inflight experience that matches and exceeds most legacy carriers International fleet operates with Executive First Suites with fully flat beds best in class product North America mainline fleet features touch-screen TV at every seat unique among legacy carriers However, limited planned fleet growth until 787 arrival in 2014 Growth prior to 2014 requires increased aircraft utilization or reduction of flying elsewhere 5
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Air Canada New Markets/New Horizons 7
Air Canada s Growing International Route Network NEW DESTINATIONS SINCE 2009: Geneva Brussels Copenhagen Barcelona Athens 8
AC is building an International Powerhouse at YYZ Canada s largest city and financial powerhouse with a population of 5.5 million in the Greater Toronto Area Ranked as the most multi-cultural city in the world by UNESCO World Class facility to support the goal of World Class Hub Terminal 1 all Star Alliance carriers under one roof Superior experience vs US gateways and legacy carriers Large local demand to all continents Strong VFR traffic to Europe, Asia and Latin America Excellent geographical position for connection traffic between South America Asia and North America Asia/Europe 9
Air Canada offers the most extensive network from Canada to the Caribbean and Mexico 30 destinations 140 flights a week in Peak Winter 10
New Routes / Increased Frequency (W11/12) Focus on Sun Markets for the Winter 11
Strong Sun Growth in Winter 2011/2012 Three new sun markets with weekly service from YYZ hub Continued growth in capacity to many more markets New Destinations: YYZ-St. Thomas1x weekly 319 D6 24Dec-14Apr YYZ-St. Kitts 1x weekly 319 D5 23Dec-13Apr YYZ-Curacao 1x weekly 319 D6 24Dec14Apr New Routes*: YOW-Holguin 1x weekly E90 D4 24Dec-14Apr YUL-Ixtapa 1x weekly 319 D5 23Dec-13Apr YHZ- Turks (PLS) 1x weekly 319 D4 16Feb-03May Capacity Increases: YYZ- West Palm Beach #2 daily second flight YYZ-Orlando Upguage to 321 YYZ-Liberia +1/7 on D1 to 3x weekly on D147 YUL-Punta Cana now daily from 5/7 YUL-Nassau +1/7 to 2x weekly on d67 YYZ-PLS +1/7 on D5 to 5x weekly on D13567 YYZ-San Juan + 1/7 on D6 to 3x weekly YYC-Hawaii Increases * Subject to government approval 12
The Planning Process 13
The Airline Industry is a Dynamic Business Canadian GDP Growth vs. Air Travel Demand Real GDP Traffic Cyclical Economic Environment 15% 5% -5% -15% 1975 1980 1985 1990 1995 2000 2005 High Fixed Costs Market Dynamics Government Regulations Rising Oil Prices Global Competition 14
Volatility in the price of oil continues to be a major concern to all airlines 15
Air Canada is Always Looking for New Opportunities Air Canada is interested in the following: International markets with year-round demand, with good corporate demand to both Canada and beyond Markets with low market share penetration for AC and its Star Alliance partners are of particular interest Transborder and domestic routes that help drive the international powerhouse strategy Summer seasonal, high-volume European leisure routes from Eastern Canada (high-density 767 aircraft) Leisure Winter Sun opportunities from all points in Canada (highdensity A319 aircraft) 16
The Network Planning Process 1 Year and beyond Strategic Long Term Conduct market research, focus on broad regional growth opportunities and determine priorities for upcoming seasons Includes longer term fleet planning 8 Months 1 Year Strategic Medium Term Focus on specific markets, conduct financial evaluations, finalize deployments and route network for upcoming season 4 Months 8 Months Tactical Medium Term Optimize capacity, adjust frequency and gauge according to demand, pursue opportunistic growth Day of Departure 2 Weeks 4 Months Tactical Short Term Adjust fleet allocation and schedule based on current booking patterns and demand 17
Partnering with Airports and Communities to Grow Service Airport Interest Long term strategy of the airport for sustainable service Establishing an economic driver in the community Competition - What is my USP What does Air Canada have to offer that will attract customers Why attracts customer to your destination Community Links Local economy stimulated by new service Offers new business opportunities (cargo, tourism, business) North Bound Traffic VFR Visiting Friends and Relatives 18
New Market: Martinique Airport Interest Martinique Promotion Bureau highlighted the opportunity Promotion Bureau and the airport met with us to present details of the opportunity Competition - What is my USP Air Canada is largest carrier in Canada and to sun spots For Canadians: new Sun destination spot French connection Community Links Hotels and tourism stimulated by added flight North Bound Traffic Potential VFR traffic and connecting traffic from Montreal New FDF flights started in July 2009 and now operate year round. Win-Win for All 19
Thank you for your support! Vijay Bathija Senior Director, Network Planning vijay.bathija@aircanada.ca Privileged & Confidential 20