Air Canada is betting less legroom for passengers will lift profit
Mar 18, 2014, 8:56 am
#1
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Air Canada is betting less legroom for passengers will lift profit
http://business.financialpost.com/20...stors-love-it/
Air Canada is betting less legroom for passengers translates into higher profit.
Canada’s largest carrier has done the math and figures that adding at least 22 seats on jets of its Rouge unit turns money-losing routes to destinations such as the Caribbean profitable. Air Canada’s main carrier has also begun flying five “high-density” Boeing Co. 777 jets with more than 100 additional seats than standard models.
“Densed-up” aircraft are a key part of a plan by Chief Executive Officer Calin Rovinescu to cut expenses for each seat flown a mile by 15% over five years — even as some customers lament the lack of legroom. Other cost saving measures include the addition of 37 fuel-efficient Boeing 787 Dreamliners starting this year and the full roll out of Rouge, Rovinescu said.
Air Canada is betting less legroom for passengers translates into higher profit.
Canada’s largest carrier has done the math and figures that adding at least 22 seats on jets of its Rouge unit turns money-losing routes to destinations such as the Caribbean profitable. Air Canada’s main carrier has also begun flying five “high-density” Boeing Co. 777 jets with more than 100 additional seats than standard models.
“Densed-up” aircraft are a key part of a plan by Chief Executive Officer Calin Rovinescu to cut expenses for each seat flown a mile by 15% over five years — even as some customers lament the lack of legroom. Other cost saving measures include the addition of 37 fuel-efficient Boeing 787 Dreamliners starting this year and the full roll out of Rouge, Rovinescu said.
Mar 18, 2014, 9:28 am
#2
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This really belongs in the Rouge thread ... Hard to argue with the bottom line.
So far it seems; branding fears, turning off high yielding AC customers, product continuity concerns are unfounded ... Who woulda thought :
While Air Canada doesn’t break out Rouge’s results, Rovinescu said the unit has met its cost-reduction goals “bang- on” since it started.
“The six-month indications were stellar,” he said. “Obviously the success is measured if we can manage the operation and keep the infrastructure costs down. We are keeping those low.”
So far it seems; branding fears, turning off high yielding AC customers, product continuity concerns are unfounded ... Who woulda thought :
While Air Canada doesn’t break out Rouge’s results, Rovinescu said the unit has met its cost-reduction goals “bang- on” since it started.
“The six-month indications were stellar,” he said. “Obviously the success is measured if we can manage the operation and keep the infrastructure costs down. We are keeping those low.”
Mar 18, 2014, 4:13 pm
#3
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I think adjusting the mileage/segment earnings on Rouge flights likely helped.
Mar 18, 2014, 6:43 pm
#4
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This really belongs in the Rouge thread ... Hard to argue with the bottom line.
So far it seems; branding fears, turning off high yielding AC customers, product continuity concerns are unfounded ... Who woulda thought :
While Air Canada doesn’t break out Rouge’s results, Rovinescu said the unit has met its cost-reduction goals “bang- on” since it started.
“The six-month indications were stellar,” he said. “Obviously the success is measured if we can manage the operation and keep the infrastructure costs down. We are keeping those low.”
So far it seems; branding fears, turning off high yielding AC customers, product continuity concerns are unfounded ... Who woulda thought :
While Air Canada doesn’t break out Rouge’s results, Rovinescu said the unit has met its cost-reduction goals “bang- on” since it started.
“The six-month indications were stellar,” he said. “Obviously the success is measured if we can manage the operation and keep the infrastructure costs down. We are keeping those low.”
I think AC management's strategy to rapidly take AC downmarket is probably correct - Canada is largely a low yield market for aviation unfortunately. However I think it is a huge mistake to do it through adding massive mounts of capacity as they are doing. Unless they can bankrupt Transat I don't see how it can possibly be sustainable.
At that point, the fight will become for Rogue to replace mainline capacity rather than supplement it.....which maybe was the plan all along.
Mar 18, 2014, 7:12 pm
#5
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I'm 6'4" tall. Nobody seems to care about me - I have to be a little bit careful when flying economy these days - 31" pitch is right on the edge for me. 30" isn't possible. 32" works OK. Sigh. At least some carriers offer Y+ type seating; am happy to pay a little (not a lot) more.
Mar 18, 2014, 7:31 pm
#6
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Way to go for AC shareholders. Why have they not they brought out the standing room only flights? It just makes so much more sense to squeeze 3 times more sardins, err, cargo, err, passengers, into the same space.
Mar 18, 2014, 8:23 pm
#7
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Mar 18, 2014, 8:34 pm
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Now look at the number of seats for sale in the two.
HINT. Don't count the J class seats in the A319 because no one pays money for those anyway.
Mar 18, 2014, 8:35 pm
#9
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This really belongs in the Rouge thread ... Hard to argue with the bottom line.
So far it seems; branding fears, turning off high yielding AC customers, product continuity concerns are unfounded ... Who woulda thought :
While Air Canada doesn’t break out Rouge’s results, Rovinescu said the unit has met its cost-reduction goals “bang- on” since it started.
“The six-month indications were stellar,” he said. “Obviously the success is measured if we can manage the operation and keep the infrastructure costs down. We are keeping those low.”
So far it seems; branding fears, turning off high yielding AC customers, product continuity concerns are unfounded ... Who woulda thought :
While Air Canada doesn’t break out Rouge’s results, Rovinescu said the unit has met its cost-reduction goals “bang- on” since it started.
“The six-month indications were stellar,” he said. “Obviously the success is measured if we can manage the operation and keep the infrastructure costs down. We are keeping those low.”
Mar 18, 2014, 8:39 pm
#11
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soon
Not particularly happy with this change.
Mar 18, 2014, 8:41 pm
#12
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Mar 18, 2014, 8:52 pm
#15
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To the Caribbean???
AC must be salivating at the prospect that they will be able to rogue more and more of the network as time goes on. Just wait, in 5 years, all NA operations will go rogue, because you know, customers asked for it.
AC must be salivating at the prospect that they will be able to rogue more and more of the network as time goes on. Just wait, in 5 years, all NA operations will go rogue, because you know, customers asked for it.