Air Canada 2012 Annual Report Download - page 19

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2012 Management’s Discussion and Analysis
19
Atlantic passenger revenues increased 4.0% from 2011
In 2012, Atlantic passenger revenues of $2,114 million increased $81 million or 4.0% from 2011 due to yield growth of 2.1%
and a traffic increase of 2.0%. Atlantic capacity was unchanged from 2011. Capacity increases on the airline’s service from
Western Canada to Germany and on services to Switzerland, Spain and Scandinavia were offset by capacity reductions on the
airline’s service from Eastern Canada to Germany and on services to the U.K. and France.
Components of the year-over-year change in Atlantic passenger revenues included:
The 2.0% traffic increase which reflected traffic growth on all major Atlantic services.
The 2.1% yield increase which was due to an improvement in the proportion of higher-yielding passengers in the
economy and premium cabins, gains in premium cabin traffic, and increased fares and fuel surcharges to partly offset
higher fuel prices. Partly offsetting the yield improvement was an unfavourable currency impact of $7 million.
The 4.2% RASM increase was due to the higher yield and a 1.6 percentage point improvement in passenger load factor.
Pacific passenger revenues increased 15.6% from 2011
In 2012, Pacific passenger revenues of $1,361 million increased $184 million or 15.6% from 2011 due to yield growth of
11.9% and a traffic increase of 3.2%. The 1.7% Pacific capacity increase reflected capacity growth on services to Japan largely
offset by capacity decreases on services to China and Hong Kong. Air Canada had estimated that the impact of the Japan
earthquake and its aftermath reduced passenger revenues by $28 million in 2011.
Components of the year-over-year change in Pacific passenger revenues included:
The 3.2% traffic increase which reflected traffic growth on all major Pacific services with the exception of services to
Hong Kong.
The 11.9% yield increase which reflected yield growth on all major Pacific services. The yield improvement was due to
higher fuel surcharges to partly offset higher fuel prices, fare increases, and the introduction of Tango® fares on all Asian
routes, with reduced Aeroplan® Miles offered which, in turn, produced strong buy-up to higher-yielding Tango® Plus fares.
A significant yield increase in the premium cabin, changes to the airline’s fare structure, and a favourable currency impact
of $21 million were also factors in the overall yield improvement year-over-year.
The 13.5% RASM increase was due to the yield growth and, to a lesser extent, a 1.2 percentage point improvement in
passenger load factor.
Other passenger revenues increased 3.8% from 2011
In 2012, Other passenger revenues (comprised of Australia, Caribbean, Mexico and Central and South America) of
$954 million increased $35 million or 3.8% from 2011 due to a traffic increase of 2.2% and yield growth of 1.1%. The 1.4%
capacity increase in “Other markets” was due to capacity growth on services to South America and to an increase in
frequencies on Air Canada’s route to Sydney, Australia, partly offset by a capacity decrease on services to traditional leisure
destinations.
Components of the year-over-year increase in Other passenger revenues included:
The overall 2.2% traffic increase which reflected traffic growth on services to South America and to Sydney, Australia.
The overall 1.1% yield improvement which reflected yield growth on services to South America and to Sydney, Australia,
on stronger passenger demand, particularly in the first half of 2012. The overall yield improvement was due to increased
fares and fuel surcharges to partly offset higher fuel prices, as well as gains in premium cabin traffic. A favourable
currency impact of $5 million was also a factor in the yield improvement year-over-year. In 2012, services to traditional
leisure destinations were negatively impacted by increased industry capacity and competitive pricing activities.
The 1.9% RASM increase was due to the yield growth and, to a lesser extent, a 0.6 percentage point improvement in
passenger load factor.