Air Canada 2013 Annual Report Download - page 33

2013 Management’s Discussion and Analysis
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Components of the year-over-year change in fourth quarter Atlantic passenger revenues included:
• The 1.7% traffic increase which reflected traffic growth on all major Atlantic services with the exception of certain
services to the United Kingdom which was impacted by increased competitive pressures. Traffic declines on services to
Greece and Spain were in line with the capacity reductions on those services while the airline’s services to Scandinavia
faced additional competitive capacity.
• The 0.7% yield improvement which reflected higher average fares and a greater proportion of higher-yielding traffic,
particularly in the Economy cabin. Yield growth was recorded on all major Atlantic services. A favourable currency impact
of $11 million also contributed to the yield improvement year-over-year.
The 3.2% RASM decrease was due to a 3.1 percentage point decline in passenger load factor, as overall traffic improvements
were not sufficient to cover the capacity increases despite being partly offset by the yield growth of 0.7%.
Pacific passenger revenues decreased 3.2% from the fourth quarter of 2012
In the fourth quarter of 2013, on capacity growth of 4.4%, Pacific passenger revenues of $353 million decreased $13 million
or 3.2% from the fourth quarter of 2012. The decrease in Pacific passenger revenues was due to a yield decline of 4.0% partly
offset by traffic growth of 0.7%.
The table below provides year-over-year percentage changes in Pacific passenger revenues and operating statistics for the
fourth quarter 2013 and each of the previous four quarters. Revenues and related statistical data associated with Australia,
which were previously classified within the Other category, have been reclassified into Pacific services, including in the
comparative figures.
Pacific Year-over-Year by Quarter (% Change)
Q4'12 Q1'13 Q2'13 Q3'13 Q4'13
Passenger revenues 11.8 9.2 3.7 3.8 (3.2)
Capacity (ASMs) 2.9 4.0 5.7 12.1 4.4
Traffic (RPMs) 5.0 5.4 2.3 8.5 0.7
Passenger load factor
(pp change) 1.7 1.2 (2.9) (2.9) (3.0)
Yield 6.7 4.0 1.1 (4.8) (4.0)
RASM 8.9 5.5 (2.3) (7.9) (7.4)
In the fourth quarter of 2013, the 4.4% Pacific capacity increase reflected capacity growth on services to Korea, Hong Kong
and China partly offset by capacity reductions on services to Japan and Australia.
Components of the year-over-year change in fourth quarter Pacific passenger revenues included:
• The 4.0% yield decrease which reflected yield declines on all major Pacific services with the exception of Australia and
Korea. Air Canada’s Japan service was adversely impacted by increased industry capacity in the Pacific, aggressive pricing
activities and a weaker Japanese Yen when compared to the fourth quarter of 2012. Significant increased industry
capacity and a higher proportion of lower-yielding traffic put pressure on yields on services to China and Hong Kong.
• The 0.7% traffic increase which reflected traffic growth on services to China and Hong Kong. Air Canada’s service to Japan
was impacted by increased industry capacity. Traffic on services to Australia declined in line with the capacity reduction.
Air Canada’s winter service to Korea reverted to a daily service from Vancouver (previously the service to Korea was split
between Toronto and Vancouver).
The 7.4% RASM decrease was due to the yield decline of 4.0% and a 3.0 percentage point decline in passenger load factor.