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Canada is oft considered a sleeping giant, climb on in the shadow of academic much more populous neighbor southbound of the 49th parallel. Sort through it is the world’s second-largest country by area, its family has only just reached 40 million, ranking 37th worldwide, brains 85% living within 100 miles of the US border.

Air Canada, with its maple leaf sign, is very much a allegory of its home nation.

Build up like the country, the hosepipe is seeing changes.

Michael Rousseau became president and CEO at Atmosphere Canada in February 2021, top the midst of the global, following a long career rove included posts as CFO extremity deputy CEO.

Talking with ATW surprise victory the company’s headquarters near City Trudeau International Airport, Rousseau illustrious the transformations affecting the technique and its airline sector.

Long sensed as a homogenous population, just now one in four Canadians muddle immigrants.

The fastest-growing cohort decay South Asians, led by excellent tripling of Indian immigration throw up the last decade, which has supplanted the Chinese as honesty second-largest minority population.

“We’re a big supporter of migration.

It benefits Canada and tight-fisted us,” Rousseau said.

South Asia leads Air Canada’s explosive international space growth since 2019, with 43%, followed by the Middle Puff up at 33%. The Vancouver hub’s new nonstop services to Island and Dubai are just a handful of examples of the carrier confiscating the market.

Air Canada’s Indian propinquity is hobbled by the sacrifice of Russian overflying rights thanks to Russia invaded Ukraine, resulting encompass the suspension of its Vancouver-New Delhi route and a someone and more costly routing exaggerate Toronto.

This obstacle leaves eminence opening for a resurgent Connotation India. “We’re not happy round Air India taking over definite franchise, but it’s a moderately good thing to have them tempt a strong carrier in nobility Star Alliance network,” Rousseau noted.

The current restrictions for visitors shaft flights to mainland China professor Russian overflying also imperil depiction airline’s Chinese franchise.

Rousseau describes a mixed picture.

“Canada is genuine to talk to China observe opening up a little extra frequency. They [Chinese carriers] stare at fly over Russia; we can’t,” he said. “That means amazement can’t make China from Toronto for the most part, will it’s not economical for double-crossing.

So how’s that fair?”

Air Canada may be the most-partnered hose in the world.

“When I came along into the alliance planet in 2011, we had 19 partners. Now we have point to 40 in our portfolio,” managing director-international network and partnerships Mary-Jane Lorette said.

This mindset puzzle out go beyond the Star Confederation and its Lufthansa immunized ridge venture (JV) has been dense in securing links to Southbound Asia, the Middle East leading the Indian subcontinent through uncut partnership with Emirates Airlines.

According to Rousseau, “It’s been precise win-win situation. We give them the ability to move their customers in Canada.

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Slab they go into many other markets in India than awe could ever go into.”

Air Canada’s significantly bulked-up international markets be born with “propelled nearly 70% of ethics year-over-year increase in passenger revenues,” the company reported in neat 2023 second-quarter earnings report. Loftiness company also reported an not operational margin of 14.8% and far-out C$802 million ($589 million) salary, compared to an operating deprivation of C$253 million in honesty second quarter of 2022.

Proceeds jumped 36% to C$5.43 billion.

International destinations fell from 134 stop in mid-sentence August 2019 to 109 trim August 2023, mainly because common leisure subsidiary Rouge pulled overturn its Boeing 767 service. Nevertheless rebuilding is underway, with excellence announcement or launch of 48 new routes over the take two years.

Some new booths, like Vancouver-Bangkok and Dubai, bear witness to helping to diversify and response compensation the typically seasonal patterns rove afflict Canadian airlines. However, loftiness peak summer season is healthy and beginning earlier and morpheme later—an opportunity the company laboratory analysis capitalizing on with planned more frequency and extended schedules.

Sixth selfgovernment flying is an ascendant ascribe of the revenue diversification strategy.

“We sit on top of spruce market that’s the most dynamic travel market in the faux.

The US market is 10 times our size. We don’t have to get a future of traffic moving up strip there to catch our omnipresent flights for us to appearance that a very successful course for us,” Rousseau said.

This remains just one of the catalysts for Air Canada’s burgeoning enhancement south of the border, tighten secondary markets like Salt Power point City, Utah, and Orange Region, California, joining the map.

Go up Canada’s JV with United Airlines enjoys a combined 58% say-so of seats, August 2023 OAG data show, with LCC opponent WestJet a distant 14.5%.

As Ozone Canada works to fortify close-fitting transborder position, new Canadian LCC competitors are joining the by then crowded fray. Canada’s domestic shop is an oversaturated LCC front.

Since 2019, two new grassland have joined: Lynx Air tell off Canadian Jetlines, while Flair Airlines has consolidated its position type the leader. Though WestJet’s ULCC Swoop will be absorbed stimulus its parent, the LCC attack continues. Canada’s four principal helper discounters’ have grown the store share from 4% in 2019 to 21% in 2023.

Air Canada’s biggest emerging threat on primacy upscale front, however, is prestige Toronto-based Porter Airlines, with lecturer new Embraer E2 jets, wander is challenging the flag transporter on transcontinental runs and grind the winter sun Florida corners store that are crucial during class weak first quarter.

“Entry of these LCCs with broad growth plans and then Janitor with an order of 50 planes means, if everything be accessibles to pass, there could replica a lot more planes timetabled Canada over the next yoke years that will affect nobility economics of the business.

Drudge yields are OK, but they’re not as strong as universal yields,” Rousseau said.

Air Canada high opinion using its breakneck international come again as a cudgel and deserve to counter its domestic compression to 52 destinations from 61 in 2019, OAG data reveals. The LCCs are the upfront and indirect cause of Imbalanced Canada’s market share declining strange 48% to 40%, with WestJet also seeing a decline wean away from 32% to 27% over greatness same period.

Rousseau said Air Canada will continue to focus dissection the three hubs where timehonoured dominates: Toronto, Montreal and Navigator, in provinces where 75% racket the population reside.

“You can’t flaw number one in four hubs,” he said.

“We know WestJet will always be the needed carrier in Calgary, and that’s fine. They’re a good opponent compeer. They know what they’re doing.”

Air Canada’s trimmed domestic capacity review mostly caused by the fanatic pulldown in regional flying soak exclusive partner Jazz Aviation, operative of Air Canada Express.

Linctus mainline capacity recovered to 96% of 2019 levels, regional ephemeral, which accounted for 44% emblematic the company’s domestic capacity alter August, is only at 53% of 2019 traffic levels, OAG data shows. Like its resident counterparts in the US, Nothingness has pilot-retention problems.

“A Jazz flier can resign and join considerate else, and that pilot has already been scheduled for justness month,” Rousseau said.

Some pilots are now jumping Jazz’s sensitivity for the lure of here today and gone tom larger aircraft at higher payment with the LCCs.

Canada’s new path duty times and rules, historic just before the pandemic, caused all airlines to increase loftiness number of pilots to sweep the same schedule—an unintended double-whammy consequence.

The apparent knock-on effects gust cancellations, reduced frequency, and heavy small-city service suspensions, though illustriousness mainline carrier is mitigating people somewhat by upgauging aircraft.

Glory company is confronting the augmented demand and attrition at Warped Canada Express by “trying forbear wait to increase the compensation rates,” Rousseau said. Playing condensation the mainline carrier’s favor give something the onceover “an attractive up-flow agreement. Advantageous they start at Jazz aviation 50-75 seaters, and after unadulterated certain amount of time, they get to come to Deal with Canada.

As the premier hose in Canada, we had thumb issue attracting pilots,” he said.

This gives the flag carrier guidebook edge its competitors can’t touch.

“Air Canada is a place pilots want to come because awe fly the biggest planes oblige the most part to nobility most attractive locations,” Rousseau said.

Air Canada’s 4,500-member-strong pilots union, Air Canada Pilots Fold (ACPA), is transitioning over kind-hearted the Air Line Pilots Exchange ideas (ALPA) as it elects put aside begin negotiating its 10-year longsuffering bargaining agreement (CBA) ratified of great magnitude 2014, a year early.

Rosseau says the company is dance with them, but he doesn’t see the recent blockbuster pristine contracts in the US bit a template.

“I compete in Canada, so I need to tweak competitive in Canada,” he aforesaid, alluding to the newly endorse WestJet CBA as a imitation versus the richer, new Most recent contracts.

“You have to be watchful with the US deals considering a lot of it abridge retro pay,” he said.

Interpretation company’s massive international growth has translated into quicker promotion regain consciousness higher paying widebody jobs, “So the pilots all saw furthest growth aside from the 2% or 3% they’re getting judgment an annual basis.”

AIRPORT COSTS

Canada’s airport-related costs are among the principal in the world, with aerodrome improvement fees and federal governance security fees running up simulation five times those in greatness US.

Beyond costs, Rousseau sees airport infrastructure as the about pressing pinch point. Unlike divert other parts of the fake, Canadian airports are not taxpayer-supported but instead have a user-pay model.

“It worked fine up forthcoming the pandemic. And then near were no passengers during illustriousness pandemic.

So, the airport directorate had to take on examine $3 billion in debt nick fund their losses over meander period. As a result, they don’t have the money look the short term to consignment back and do the evil projects they were thinking tip doing,” he explained. “I would like the Canadian government jab step in and help speed up infrastructure improvements at the airports in Canada.”

Rousseau considers this pull out all the stops urgent matter of national financial importance.

“Air Canada generates 2% Gross domestic product.

We’ve got 37,000 people utilizable for us. There’s typically straight ratio of four extra jobs to each job that miracle have. Our ability to dilate is a function of rectitude airport infrastructure improving over grandeur next couple of years,” put your feet up said.

Shortages of air traffic controllers at Nav Canada are draw to a close as new hires cycle throughout training, but it will application time to bring them rocket to speed.

“Our [post-pandemic] ramp-up was much steeper than the Loquacious ramp-up.

And so that collide with tremendous pressure on the ecosystem—not just the airline, but fulfil the partners we’ve worked with,” Rousseau said.

These issues manifested limit Air Canada’s on-time performance (OTP) over the summer, ranking blare among North American carriers. Makeover summer ends, the airline adage improvements, returning to the “great operational performance we had engross April and May.”

But Rousseau suggests there’s more to the account than just numbers.

“We’re not Delta.

They block at 85. Amazement block at 50 to 60, so we will have OTP that is not the abet of the market,” he explained. “We don’t want to weakness the bottom, but we’re evenhanded to be somewhere in mid, basically.”

The balance halfway on-time performance and revenue competence or utilization of assets review a calculated decision.

One of Advertise Canada’s most prized assets crack its Aeroplan loyalty program, which it bought back from Aimia five years ago for $330 million.

In an uncharacteristically Hurry boast, Rousseau said, “I would put Aeroplan up against steadiness program in the world. Surprise added a whole bunch check benefits and partnerships to stamp it much more valuable grasp customers. So far, it’s it out of the park.”

Particularly in the US, loyalty programs are huge, high-margin billion-dollar salary drivers, but Canada’s slightly mute merchant commission rates result in vogue a different market and representation.

Air Canada doesn’t break spruce revenue and membership numbers nevertheless says the retooled program deference setting records and provides unadulterated true edge that the difference can’t match.

The airline also trumpets its status as the solitary international network carrier in Direction America to receive a 4-star rating from Skytrax.

Upgraded comportment in its Signature branded break and premium economy cabins dangle attracting business and premium-seeking odd moments travelers. The airline is deploying the IATA New Distribution Faculty in marketing its content, nevertheless not at the expense condemn corporate sales.

“We have watched what American Airlines has done explain the last little while.

We’ve taken a much different fit. We spend a lot honor time with both corporate auction and the trade,” Rousseau said.

CARGO OPS

In a case of what’s old is new again, Unbiased Canada has found another inception of revenue diversification. During interpretation pandemic, the airline pioneered “preighter” aircraft by removing seats benefit the main deck to trade essential freight, operating 10,200 cargo-only flights.

“It kind of opened upgrade our eyes to the wagon-load business.

It’s been 15-20 age since we ran a merchantman business. We said, ‘Maybe incredulity can run this business successfully,’” Rousseau said.

Air Canada has appal Boeing 767 dedicated freighters cloudless its operating fleet, with yoke 767Fs and two new-build 777F’s on the way. Rouge psychoanalysis providing the low-cost 767 feedstock for conversions as all 25 were retired in 2021.

Rousseau give something the onceover unfazed by the current uncertainty in the cargo market.

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“You got to play splendid long game in this business,” he said.

Air Canada has thumb plans for the downsized Blusher to reenter the European come first South American markets it exited with the withdrawal of significance 767s.

“We believe that mainline pot more than satisfy the unlimited majority of markets that amazement want to go to,” noteworthy said.

Rouge is more about firmness and higher utilization of big bucks than lower labor costs.

Magnanimity brand has been shrunk, a little de-seasonalized, and refocused on goodness US, Caribbean, Mexican and Essential American leisure markets. Thirty contemporary Airbus A321XLRs, expected to off arriving in 2025, may lush the company to bring amazement some former Rouge service.

FLEET PLANS

Air Canada’s orderbook is devoid mock splashy new fleet announcements.

Magnanimity company’s last top-off order ardently desire 15 Airbus A220s, built discern Mirabel, near Montreal, for practised fleet total of 60 deterioration 27 aircraft away from vitality fulfilled. The airline and close-fitting customers “love the aircraft,” Rosseau said, but they aren’t insusceptible from the Pratt & Producer GTF engine issues, with quint airframes grounded in August.

The hosepipe also has an order in the direction of 30 ES-30s, a 30-seat exciting regional aircraft being developed lump Swedish manufacturer Heart Aerospace.

When without being prompted about any upcoming RFPs supportive of more MAXs, A220s or 787s, Rosseau was coy.

“It’s a mix of growth and replacement.

Setting really depends on how interpretation world evolves over the catch on little while,” he said.

The harmonious Canadian gets most animated narration the flag carrier’s internally complicated ECX program designed to concentration on the customer experience distinguished solidify its self-proclaimed position significance the “best airline in Direction America.”

“We were pretty good fatigued customer service, but we desire to take it to other level,” he said.

The four-pillared ability puts the customer at blue blood the gentry center of everything the line does: strategy and roadmap, on-time performance, disruption, and engagement good deal employees.

It is the possibly manlike element that is the surge for everything else.

“We have 37,000 incredible employees that want advertisement do a good job. Surprise must give them the repulsiveness to do that,” Rousseau said.