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Analysis: Air Canada’s Major expansion to India, North Asia, Africa and Europe

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Analysis: Air Canada’s Major expansion to India, North Asia, Africa and Europe

Analysis: Air Canada’s Major expansion to India, North Asia, Africa and Europe
October 03
11:44 2016

MIAMI — Canadian flag carrier Air Canada is continuing to deliver on the network growth promises it made during its June 2015 Investor Day presentation by adding new long-haul routes from multiple hubs.

Among key updates that President and CEO Calin Rovinescu spoke to, ranging from lowered cost structure, strengthened balance sheets, improved liquidity targets and restructured pension plans, sustainable long-term growth was isolated as a key talking point.

Air Canada has increased its long-haul and international network by approximately 50%, measured by seats, since 2009. Major additions to its network include Toronto – Tokyo Haneda, Seoul, Istanbul, Dubai and Delhi, Vancouver to Brisbane, Osaka and Delhi, Calgary to Tokyo Narita and Montreal to Shanghai.

Its Air Canada Rouge subsidiary, enabling a cost reduction of up to 30% on 767-300 aircraft, have permitted the carrier to enter into multiple leisure markets such as Casablanca, Warsaw and Prague to viably serve ethnic and tourism markets and compete against lower-cost rivals such as Air Transat.

Air Canada Rouge will launch services from Toronto to Berlin and from Montreal to Marseille and Algiers starting in June 2017. All of these services will be sub-daily.

The carrier had also isolated a series of additional long-haul markets, presently unserved on its metal, that provide incremental revenue opportunities afforded by fleet flexibility gained via 787-8 and 787-9 deliveries on order, as well as the transition of some routes to Rouge that has freed up capital expenditure to promote the expansion.

Opportunities identified included Toronto to Mumbai, Vancouver to Taipei, Calgary to Beijing and Montreal to Dakar, among others.

Air Canada will continue push into India and Japan by adding Mumbai and Nagoya from Toronto and Vancouver, respectively.

Air Canada will add its third route to India with a new nonstop service to Mumbai, following its plans to launch Vancouver – Delhi this fall and existing service from Toronto to Delhi.

The success of its Indian routes has been a long-time coming for Air Canada. The Canada – India market, while exceptionally large, has proven difficult for both Canadian and Indian carriers over the years due to volatile traffic and yield patterns.

The cost capabilities enabled by the 787-9, as well as the induction of Air India into Star Alliance, has noticeably improved revenue figures for Air Canada’s Indian routes. It also provides a major advantage for Air Canada to offer nonstop from Toronto and Vancouver to primary Indian markets versus spilling traffic to the Gulf Coast carriers.

Passenger per Day, Each Way (PDEW) data shows that the largest city pairs between Canada and India are indeed Toronto – Delhi, Toronto – Mumbai and Vancouver – Delhi. Patterns have shown that a vast number of the Vancouver – Delhi passengers are transported on one of Emirates’ twice daily flights into Seattle, requiring a trip across the border to fly from SeaTac to India through Dubai.

Travel times between Toronto and Mumbai will be decreased significantly with a nonstop service. Current scheduling data in OAG shows that the fastest routings between the two cities entail stop-overs in London Heathrow (British Airways), Amsterdam (Jet Airways), Abu Dhabi (Etihad), Dubai (Emirates), Paris (Air France), Newark (United).

Assuming an elapsed flying time of approximately 900 minutes (roughly 15 hours in each direction) this will cut down on travel time between the two cities from anywhere between 2 and 5 hours.

AC046 YYZ2135 – 2130+1BOM 789 246
AC047 BOM2355 – 0535+1YYZ 789 357

Service is expected to commence on July 1, 2017 on a thrice-weekly basis. Air Canada last served Mumbai in January 1991, which was offered as a fifth-freedom service from London to Singapore via Mumbai.

Vancouver to Nagoya will commence on June 1 and be served thrice weekly on Air Canada Rouge, with an increase to 4 weekly services during August and September. Currently, Nagoya is not offered nonstop from any Canadian city, and from North America, Delta is the only carrier that offers a link from its Detroit hub.

While Vancouver to Nagoya is not a large local market, owing to the fact that the vast majority of the Vancouver’s Asian diaspora hails from China, Hong Kong and Taiwan, the route will open up a variety of 1-stop connecting opportunities between the U.S. and Western Canada to Nagoya, as well as feed into JV partner All Nippon Airways’ secondary hub at Chubu Centrair airport. Air Canada last served Nagoya in December 2001.

AC1955 YVR1245 – 1515+1 NGO 763 246
AC1956 NGO1640 – 0955 YVR 763 357

Expansion into Taipei may open up further coordination efforts with Star Alliance partner EVA Air

Air Canada will launch service to Taipei, Taiwan on June 8, 2017, operated on a 787-9 on a daily basis. The carrier will compete against China Airlines and EVA Air, both of which operate five weekly flights each, both on 747-400s. Although Air Canada has not loaded the timings for its Taipei services into the GDS, presumably the Taipei flights will need to adhere to the early morning departure times (which leave Vancouver at approximately 2 AM and arrive into Taipei the following morning at 5 am) due to the slot constraints and runway closures at Taoyuan airport.

Significant opportunities exist in Taipei despite it being well-served from Vancouver. Firstly, a daily service on Air Canada is appealing over the sub-daily frequencies offered by both China Airlines and EVA.

Secondly, the growth potential at Taipei is attractive for foreign carriers – particularly ones that are able to link Taiwain to large diaspora communities – with a new terminal arriving in 2021 and liberalized air service agreements in the pipeline to allow more cross-straits flights to China.

Although in an ideal world, Vancouver International would like to grow its nonstop roster of secondary Chinese cities, Taipei would offer an overall greater aggregate of markets as well as additional cities in Southeast Asia. Air Canada also last served Taipei in October 2002.


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A Global Review of Commercial Flight since 1994: the leading Commercial Aviation publication in North America and 35 nations worldwide. Based in Miami, Florida.

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1 Comment

  1. Phoenix
    Phoenix October 03, 20:01

    Good stuff as usual Rohan. Glad to see your breakdown of my country’s flag carrier blockbuster announcement.

    It’s great you brought up Air Transat, as they’ve had near-monopolies on many nonstop European and clear monopolies on North African leisure routes, yet I find them overlooked on many Canadians’ radars who aren’t into all-inclusive vacation packages.

    Vancouver does have a small Japanese diaspora, albeit one with a rich 100 year history, along with an even smaller smattering of post-secondary foreign students. It feels to me like YVR-NGO is a ‘throw spaghetti at the wall and see if it sticks’ type of experiment, maybe it will appeal to the aforementioned students who prefer not to transfer through NRT or HND, maybe it picks up enough tourist traffic to stick? I’m really not sure…. I won’t be surprised if AC decides to either move the route to CTS or promote KIX to year-round.

    As for YVR-TPE, I don’t see this as an access point to mainland China for AC, especially with the election of Tsai Ing-Wen (who is less friendly to Beijing than her predecessor) and the existence of Air China, who is also a Star Alliance partner, plus AC’s other daily nonstops to Beijing and Shanghai from YVR and YYZ, plus the announced YUL route. What that route does carry, however, is the highly prized O&D/VFR and business traffic airlines so value. Competition will be fierce going forward though, as CI will likely put their A350 on the route once they acquire enough, and BR has 787-9/10s on order.

    I’ve always viewed any Canada-India route as a license to print money, but given travellers’ willingness to two-stop (or more) their way over, hey what do I know….

    Back to mainland China though, Xiamen Air, Beijing Capital, and Sichuan Airlines are either currently operating or have announced routes from YVR to secondary Chinese cities, along with the big 3 (Air China, China Eastern, China Southern) currently serving the 3 main hubs (Shanghai, Beijing, Shenzen respectively), so from the airport’s perspective the strategy seems to be courting the mainland Chinese airlines aggressively. I would also love to see an analysis of Chinese-North American routes in a broader sense.

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