Air Canada targets new leisure destinations with low-cost carrier Rouge
Air Canada will unveil its new low-cost carrier and leisure group Tuesday under a new brand, Rouge, targeting several new leisure destinations in Europe and the Caribbean starting in July, sources familiar with the plan have said.
The initial details about Rouge were the first to emerge in what is a key part of Air Canada’s strategy to lower its costs and expand in the years ahead. The low-cost carrier, coupled with the airline’s new 787 Dreamliners, is expected to have a dramatic impact on the competitiveness of the airline’s fleet.
While not all the details were known ahead of the launch of the new brand Tuesday at an event in Toronto, Air Canada is said to be targeting several new destinations in Italy, Scotland, Greece, Cuba, the Dominican Republic, Costa Rica and Jamaica.
It is believed the carrier will launch in the East, flying from Toronto and Montreal, and that only one of the destinations in those countries will be an existing one, sources said.
The low-cost carrier’s (LCC) planes will also be the first in Air Canada’s fleet to use a new wireless in-flight entertainment system, the same sources say. Jets in Rouge’s fleet will stream stored content to personal laptops and other electronic devices.
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WestJet Airlines Ltd. is expected to launch a similar wireless in-flight entertainment system in the new year, streaming both stored content and live TV.
Air Canada had considered several names for the new LCC.
Those names included Accent, Duo, Avenue and Destinations, all of which were suggested in a Facebook contest to name the new carrier and leisure group. But the airline ultimately determined Rouge was a better fit.
Air Canada plans to have Rouge in the air in July using an initial fleet of two Boeing 767s and two Airbus A319s before adding more planes to its fleet.
The plan calls for the new subsidiary airline to serve leisure destinations in Europe and the Caribbean the current cost structure of the mainline makes prohibitive.
Rouge will also have its own management team under Michael Friisdahl, the former chief executive of Thomas Cook North America.
Air Canada has said it expects half of the cost savings of the LCC to be derived from the lower wages and benefits for its staff. The rest will come from the high-density configuration of its planes. For example, the mainline’s 767s currently have 225 seats. The LCC’s 767s, however, would have 50 more seats to improve the LCC’s economics.
Combined, management hopes this will enable the new carrier to turn a profit, something it was unable to do with its previous attempts in the segment with Tango and Zip, which failed to adopt a truly low-cost structure.
It will also allow it to compete more aggressively in the highly competitive leisure travel market with lower-cost competitors like Transat A.T., Sunwing and WestJet Vacations.
Eventually, Air Canada aims to expand Rouge’s fleet to 50 aircraft as it phases out some of its older planes when its new 787 Dreamliners start to be delivered in 2014.
Walter Spracklin, an RBC Capital Markets analyst, said he expects the new LCC might be able to contribute a modest profit of roughly $952,000 in its first year to Air Canada’s operations and potentially as much as $12-million annually by 2018 as it matures. By then, he said he expects it will be serving other destinations across the Pacific as well.
http://business.financialpost.com/2...ure-destinations-with-low-cost-carrier-rouge/
Air Canada will unveil its new low-cost carrier and leisure group Tuesday under a new brand, Rouge, targeting several new leisure destinations in Europe and the Caribbean starting in July, sources familiar with the plan have said.
The initial details about Rouge were the first to emerge in what is a key part of Air Canada’s strategy to lower its costs and expand in the years ahead. The low-cost carrier, coupled with the airline’s new 787 Dreamliners, is expected to have a dramatic impact on the competitiveness of the airline’s fleet.
While not all the details were known ahead of the launch of the new brand Tuesday at an event in Toronto, Air Canada is said to be targeting several new destinations in Italy, Scotland, Greece, Cuba, the Dominican Republic, Costa Rica and Jamaica.
It is believed the carrier will launch in the East, flying from Toronto and Montreal, and that only one of the destinations in those countries will be an existing one, sources said.
The low-cost carrier’s (LCC) planes will also be the first in Air Canada’s fleet to use a new wireless in-flight entertainment system, the same sources say. Jets in Rouge’s fleet will stream stored content to personal laptops and other electronic devices.
Advertisement
WestJet Airlines Ltd. is expected to launch a similar wireless in-flight entertainment system in the new year, streaming both stored content and live TV.
Air Canada had considered several names for the new LCC.
Those names included Accent, Duo, Avenue and Destinations, all of which were suggested in a Facebook contest to name the new carrier and leisure group. But the airline ultimately determined Rouge was a better fit.
Air Canada plans to have Rouge in the air in July using an initial fleet of two Boeing 767s and two Airbus A319s before adding more planes to its fleet.
The plan calls for the new subsidiary airline to serve leisure destinations in Europe and the Caribbean the current cost structure of the mainline makes prohibitive.
Rouge will also have its own management team under Michael Friisdahl, the former chief executive of Thomas Cook North America.
Air Canada has said it expects half of the cost savings of the LCC to be derived from the lower wages and benefits for its staff. The rest will come from the high-density configuration of its planes. For example, the mainline’s 767s currently have 225 seats. The LCC’s 767s, however, would have 50 more seats to improve the LCC’s economics.
Combined, management hopes this will enable the new carrier to turn a profit, something it was unable to do with its previous attempts in the segment with Tango and Zip, which failed to adopt a truly low-cost structure.
It will also allow it to compete more aggressively in the highly competitive leisure travel market with lower-cost competitors like Transat A.T., Sunwing and WestJet Vacations.
Eventually, Air Canada aims to expand Rouge’s fleet to 50 aircraft as it phases out some of its older planes when its new 787 Dreamliners start to be delivered in 2014.
Walter Spracklin, an RBC Capital Markets analyst, said he expects the new LCC might be able to contribute a modest profit of roughly $952,000 in its first year to Air Canada’s operations and potentially as much as $12-million annually by 2018 as it matures. By then, he said he expects it will be serving other destinations across the Pacific as well.
http://business.financialpost.com/2...ure-destinations-with-low-cost-carrier-rouge/
