Air Canada 2009 Annual Report Download - page 27

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2009 Management’s Discussion and Analysis
27
Pacifi c passenger revenues decreased 16.7% from 2008
Pacifi c passenger revenues of $829 million in 2009 decreased $166 million or 16.7% from 2008 due largely to an 11.7%
decrease in traffi c. In 2009, capacity was reduced by 12.5% from 2008 with reductions refl ected on all major Pacifi c services
with the exception of Hong Kong where capacity was increased year-over-year. Components of the year-over-year change
in Pacifi c passenger revenues included:
• A traffi c decrease of 11.7% on the capacity reduction of 12.5%, which resulted in passenger load factor
improvement of 0.8 percentage points from 2008. Air Canada increased its capacity to Hong Kong through the use
of a larger aircraft (from an Airbus A340 to a Boeing 777 aircraft), but reduced frequencies on Korea, including the
year-over-year suspension of the Toronto non-stop service, reduced frequencies on Vancouver – China, and suspended
Toronto – Narita service in the fi rst quarter of 2009, however, this was partially offset by the re-introduction
of Toronto – Narita non-stop service in the fourth quarter of 2009.
• A yield decline of 5.7% from 2008, which refl ected the continued weak economic environment, increased fare
discounting in an effort to stimulate traffi c, concerns over H1N1 predominantly impacting Japan and to a lesser
extent China and Korea, as well as reduced fuel surcharges year-over-year. The premium cabin refl ected a signifi cant
yield decrease as pricing actions were taken to offer additional discounted Executive First fares in an effort to
stimulate traffi c. Yield decreases were refl ected on all major Pacifi c services.
• A weaker Canadian dollar in 2009 versus 2008, which had a positive impact on foreign currency denominated
revenues of $46 million in 2009.
• A RASM decrease of 4.8% from 2008, which was due to the yield decline.
The table below describes year-over-year percentage changes in Pacifi c passenger revenues, capacity, traffi c, passenger load
factor, yield and RASM by quarter and for the full year.
2009 versus 2008 (% change)
Pacifi c Q1 Q2 Q3 Q4 Full Year
Passenger Revenue (12.3) (19.8) (21.9) (9.7) (16.7)
Capacity (ASMs) (26.0) (12.6) (14.8) 6.5 (12.5)
Traffi c (RPMs) (20.5) (15.7) (12.6) 4.2 (11.7)
Passenger Load Factor (pp Change) 6.2 (3.1) 2.1 (1.8) 0.8
Yield 10.2 (4.9) (10.6) (13.4) (5.7)
RASM 18.5 (8.3) (8.4) (15.2) (4.8)
Other passenger revenues decreased 15.8% from 2008
Other passenger revenues (comprised of South Pacifi c, Caribbean, Mexico and South America) of $717 million in 2009
decreased $134 million or 15.8% from 2008 due to a lower yield and, to a lesser extent, a decrease in traffi c. Components
of the year-over-year change in other passenger revenues included:
• A traffi c decrease of 2.3% on the capacity reduction of 1.7%, which resulted in a passenger load factor decrease of
0.5 percentage points compared to 2008.
• An overall yield decline of 13.8% from 2008, which refl ected a weak economic environment, increased fare
discounting to stimulate traffi c, competitive pricing actions, especially in South America, South Pacifi c and on
the Caribbean, the impact over H1N1 concerns on traffi c to and from Mexico and reduced fuel surcharges
year-over-year. Although both the economy and premium cabins refl ected yield declines, the premium cabin refl ected
a more pronounced decrease as pricing actions were taken to offer additional discounted Executive First fares in an
effort to stimulate traffi c.
• A weaker Canadian dollar in 2009 versus 2008, which had a positive impact on foreign currency denominated
revenues of $17 million in 2009.
• A RASM decrease of 14.4% from 2008, which was largely due to the yield decline.