Air Canada 2007 Annual Report Download - page 26

2007 Air Canada Annual Report
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US transborder passenger revenues increased 3.2% from 2006
US transborder passenger revenues were $1,884 million in 2007, an increase of $59 million or 3.2% from 2006 mainly due
to yield and traffi c growth. The following factors contributed to the year-over-year change in US transborder passenger
revenues:
■ Traffi c and capacity growth of 1.5% resulting in a passenger load factor unchanged from 2006. In the early
part of 2007, Air Canada shifted capacity from the US transborder market to the Canadian domestic market.
■ A yield improvement of 1.7% refl ecting stronger market demand and the inclusion of certain ancillary
passenger fees effective January 1, 2007.
■ RASM growth of 1.7% due to the yield improvement.
Atlantic passenger revenues increased 0.6% from 2006
Atlantic passenger revenues of $1,806 million in 2007 increased $11 million or 0.6% from 2006 due to traffi c growth.
The following factors contributed to the year-over-year change in Atlantic passenger revenues:
■ Traffi c growth of 3.1% on a capacity increase of 3.6% resulting in a decrease in passenger load factor of 0.4
percentage points. The traffi c growth was largely refl ected in the United Kingdom market as a result of increased
capacity on the Vancouver – London route, the newly launched Edmonton – London service and additional
capacity from Atlantic Canada to London. Traffi c also grew in the German market due to capacity increases
refl ecting the addition of the larger Boeing 777 aircraft. Expanded services on the seasonal Montreal – Rome route
was also a factor in the traffi c growth over 2006.
■ A yield decline of 2.4% due to increased competition, particularly in the second and third quarters of 2007, as a
result of the new service on British Airways from Calgary to London as well as a substantial increase in competitive
fare actions due to a signifi cant capacity increase by low-cost carriers in the Canada – London market.
■ A RASM decrease of 2.9% as a result of the decline in yield and, to a much lesser extent,
the decrease in passenger load factor.
Pacifi c passenger revenues increased 2.1% from 2006
Pacifi c passenger revenues of $967 million in 2007 increased $21 million or 2.1% from 2006 due to both yield and traffi c
growth. The following factors contributed to the year-over-year change in Pacifi c passenger revenues:
■ Traffi c growth of 0.7% on a capacity increase of 0.8% resulting in a decline in passenger load factor
of 0.1 percentage points. A 28.6% increase in Canada – China capacity was largely offset by the impact
of capacity decreases in the Japan and Korea markets and the cancellation of service to India.
■ A yield improvement of 1.4% primarily refl ecting growth in the Hong Kong and Japan markets.
■ A RASM increase of 1.3% refl ecting the yield growth.
Other passenger revenues increased 9.6% from 2006
Other passenger revenues (comprised of South Pacifi c, Caribbean, Mexico and South America) of $702 million in 2007
increased $61 million or 9.6% from 2006 due to traffi c growth and a yield improvement. The following factors contributed
to the year-over-year change in other passenger revenues:
■ Traffi c growth of 6.0% on a capacity increase of 4.8% resulting in a passenger load factor improvement of
0.9 percentage points. Traffi c growth in these markets mainly refl ected higher capacity to traditional leisure
destinations and, to a lesser extent, to South America.
■ A yield improvement of 3.4% largely refl ecting growth in South America, the South Pacifi c and the Caribbean.
Increased capacity in the Spanish Caribbean markets resulted in traffi c and revenue growth in these markets.
However, the highly competitive environment in these markets had a negative impact on the yield.
■ A RASM increase of 4.6% due primarily to the yield growth but also to the passenger load factor improvement.