Air Canada 2010 Annual Report Download - page 9

2010 Management’s Discussion and Analysis
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Leveraging new opportunities for revenue growth and cost transformation
Air Canada recognizes that the long term success of the airline is dependent on sustaining a competitive cost structure,
and Air Canada is committed to making cost containment and reduction a permanent part of its corporate culture without
compromising the customer experience. In 2011, Air Canada is focused on building on the progress it achieved in 2010
to improve unit revenue and cost productivity. The airline will continue to focus on improving business processes and
leveraging technology to improve the quality of its products and services and reduce costs.
One of Air Canada’s objectives is to achieve annualized revenue improvements and cost savings of $530 million by the end
of 2011. Through extensive management analysis and benchmarking against other airlines, over 125 initiatives have been
identified, the vast majority of which relate to cost savings such as contract renegotiation, operational process improvements
and productivity gains. In 2010, Air Canada has achieved annual benefits of $330 million, $30 million more than its $300
million CTP target for 2010 (the result of having completed planned 2011 CTP initiatives earlier than expected), and has
achieved $400 million of its overall CTP target of $530 million for the end of 2011, on a run-rate basis.
In 2010, the cost transformation program was a factor in lowering Air Canada’s CASM, excluding fuel, by 4.5% from 2009.
Engaging with customers with a focus on premium passengers and premium products
Customer satisfaction and growth of the premium class segment are key elements to Air Canada’s long term success. Air
Canada’s goal is to continuously meet and exceed customer expectations by delivering consistently friendly, professional
and “best in class” service. In 2011, Air Canada will remain focused on premium passengers and products to build on its
success in 2010, which reflected passenger revenue growth of $378 million or 23 per cent in the premium cabin when
compared to 2009. The airline will continue to focus on better managing its premium class cabin to maximize revenues,
seeking new opportunities to increase premium revenues, and broadening access to corporate customers.
Air Canada is one of the most respected brands in Canada, and Air Canada plans to continue to leverage this strength to
attract premium revenue, particularly on its international service. Air Canada has one of the youngest fleets among North
American legacy carriers, with an average age of 10.7 years at December 31, 2010. The airline’s investment in Boeing 777
and Embraer aircraft and industry-leading on-board products, including personal in-flight entertainment systems and in-
seat power outlets accessible at virtually every seat, showcase the advantages of flying Air Canada. In addition, customers
are increasingly recognizing the value of the airline’s Maple Leaf Lounges, its concierge program and its loyalty program.
In 2010, Air Canada was recognized with the following awards, reflecting the skill and professionalism of its employees as
well as the quality of its product offerings:
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any airline in the world in the magazine’s annual reader survey.
- Best Flight Attendants in North America
- Best In-Flight Services in North America
- Best North American Airline for Business Class Service
- Best North American Airline for International Travel
- Best Airline Web Site
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more than 25,000 readers of Global Traveler Nagazine.
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readership survey of frequent international travelers, for a third consecutive year.
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research firm, Skytrax, for their 2010 World Airline Awards.
Furthermore, in 2010, 71% of Canadian business travelers surveyed by Ipsos Reid in their 2010 Canadian Business Travel
Study named Air Canada as their preferred airline, the third consecutive year of improvement in the airline’s ratings.
The continued year-over-year improvements in monthly customer satisfaction ratings and the numerous industry awards
won in late 2009 and 2010 is evidence that the airline has been successful in engaging with its customers.