Air Canada 2010 Annual Report Download - page 29

2010 Management’s Discussion and Analysis
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Ownership costs increased 3% from 2009
Ownership costs, comprised of depreciation and amortization, and aircraft rent expense, of $1,025 million in 2010 increased
$30 million or 3% from 2009. Factors contributing to the year-over-year change in ownership costs included:
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July 2009 to Air Canada’s operating fleet, which together accounted for an increase of $27 million.
The above-noted increases were partially offset by the following:
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aircraft rent expense.
Aircraft maintenance expense decreased 11% from 2009
In 2010, aircraft maintenance expense of $677 million decreased $82 million or 11% from 2009. Factors contributing to
the year-over-year change in aircraft maintenance expense included:
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events on Airbus A320 aircraft. Air Canada expects to complete this airframe maintenance activity in the next 12
months.
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expenses, mainly engine and component maintenance, which accounted for a decrease of $48 million to aircraft
maintenance expense compared to 2009.
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parties.
The above-noted decreases were partially offset by the following:
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and the expiration of certain component warranties.
Commission expense increased 39% from 2009
On passenger and cargo revenue growth of 12%, commission expense of $259 million increased $73 million or 39% from
2009. This increase was largely driven by the introduction of a 7% commission for Canadian travel agents to sell Tango fares
for flights within Canada and Air Canada’s international expansion strategy as a higher proportion of sales to international
destinations are made through travel agencies which increased Air Canada’s cost of sale. A higher proportion of premium
cabin revenue, which typically generates a higher commission rate, was also a contributing factor to the year-over-year
increase.
Other operating expenses increased 3% from 2009
Other operating expenses amounted to $1,436 million in 2010, an increase of $48 million or 3% from 2009. The increase
in Other operating expenses included the impact of the capacity growth, an increase in credit card fees resulting from higher
passenger volumes, and an increase in expenses related to a greater volume of ground packages at Air Canada Vacations.
Additionally, in 2010, Air Canada recorded a favourable translation rate adjustment on foreign currency transactions of $13
million compared to a favourable translation rate adjustment on foreign currency transactions of $30 million in 2009. These
amounts are reflected in “remaining other expenses” in the table below. Other operating expenses increases were partly
offset by the favourable impact of CTP initiatives.