Air Canada 2014 Annual Report Download - page 10

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1010 2014 Annual Report
Air Canada’s goal is to fully develop as a leading
global airline, to be among those with the highest
levels of customer experience, employee engagement
and value creation for shareholders and other
stakeholders. This is being pursued through the
following four key strategies:
• Continually identifying and implementing cost
reduction and revenue generating initiatives
• Expanding internationally and increasing connecting
traffic through international gateways, on a
sustainable and profitable basis, and competing
effectively in the leisure market to and from Canada
• Engaging customers by continually enhancing the travel
experience and providing a consistently high level
of customer experience, with additional emphasis
on premium and business passengers and products
• Fostering positive culture change through
employee engagement programs designed to
promote an understanding of how the airline
and its employees can work together to deliver
on the customer promise and investing in the tools
and training required to provide a culture
of top customer care
REVENUE ENHANCEMENT AND
COST TRANSFORMATION
Margin improvement through sustainable cost
transformation and profitable revenue enhancements
remains a key priority at Air Canada. Over the last
several years, Air Canada has taken significant actions
to reduce costs and generate incremental revenue.
Key achievements in 2014
• Reduced adjusted CASM by 2.6% when compared
to 2013
• Increased ancillary revenue per passenger by 10%
from 2013
• Continued to successfully expand Air Canada rouge,
the airline’s lower-cost leisure carrier
• Introduced six Boeing 787 aircraft into the mainline
fleet, allowing Air Canada to operate existing
Boeing 767 routes in a more cost-efficient manner
and permitting the airline to pursue new, profitable
international growth opportunities
• Took delivery of one high-density
Boeing 777-300ER aircraft, for a total of five of
these aircraft in the mainline fleet. These aircraft
are primarily being deployed to lower-yielding,
high-volume markets
• Exercised purchase rights for two additional
Boeing 777-300ER aircraft to be delivered, in
the second quarter of 2016, in the lower-cost,
high-density configuration
• Announced plans to reconfigure 12
Boeing 777-300ER and six 777-200LR aircraft
in the mainline fleet into the three-cabin
international product and Boeing 787 seating
standard and to harmonize the interior of the
five higher-density Boeing 777-300 aircraft in
the mainline fleet to Boeing 787 standards
• Aligned Air Canada’s first checked bag policy
for North American travel with prevailing
North American industry practice
• Aligned the airline’s operations to industry
standards to allow for a ratio of one flight
attendant for every 50 passenger seats on its
narrow-body aircraft, with expected annual
savings of $28 million
Ongoing Initiatives
Air Canada continues to take tangible steps to
implement its strategy for sustained value creation
and profitability through the execution of ongoing
and new strategic initiatives. These include:
AIR CANADA ROUGE
The continued strategic expansion of
Air Canada rouge in conjunction with Air Canada’s
mainline fleet expansion is a key driver of the
airline’s strategy for sustainable, profitable growth.
Air Canada rouge’s lower and more competitive
cost structure has effectively delivered enhanced
margins on leisure routes previously operated by
Air Canada and provides new opportunities for
profitable growth in international leisure markets. To
date, Air Canada rouge has exceeded management
expectations. Since its first flight in July 2013,
Air Canada rouge has been deployed to a growing
number of Caribbean destinations and select
leisure destinations in the United States, as well
as in international leisure markets where demand
is highly elastic and responds positively to lower-
priced, non-stop capacity. In 2015, Air Canada also
plans on deploying Air Canada rouge in certain
domestic markets that have high volumes of leisure
traffic. Air Canada rouge believes that its ability to
leverage the strengths of Air Canada, including its
extensive network with enhanced connection options,
operational expertise and frequent flyer program,
is a competitive advantage, generating additional
4. STRATEGY