Air Canada 2014 Annual Report Download - page 34

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34 2014 Annual Report
In the fourth quarter of 2014, Air Canada’s system capacity was 8.5% higher than in the fourth quarter of 2013,
with capacity growth reflected in all markets.
Components of the year-over-year change in system passenger revenues included:
• The 9.4% traffic increase which reflected traffic growth in all markets. Consistent with the airline’s objective of
increasing global international-to-international connecting traffic through its major Canadian hubs, the traffic
growth in 2014 also reflected lower-yielding incremental connecting traffic to international destinations.
• The 1.9% yield decrease which was largely due to an increase in average stage length of 2.2%, which had
the effect of reducing system yield by 1.2 percentage points, higher proportional growth of lower-yielding
international-to-international passenger flows in support of the airline’s international expansion strategy, a
higher proportion of seats into long-haul leisure markets, and the use of lower-cost Boeing 777 high-density
aircraft which have a larger economy cabin. These decreases were largely offset by a favourable currency
impact of $33 million and improvements in Air Canada’s business cabin revenue performance.
The 1.2% PRASM decrease was due to the lower yield partly offset by a passenger load factor improvement of
0.6 percentage points.
DOMESTIC PASSENGER REVENUES INCREASED 5.7% FROM THE
FOURTH QUARTER OF 2013
In the fourth quarter of 2014, on capacity growth of 6.1%, domestic passenger revenues of $1,099 million
increased $59 million or 5.7% from the fourth quarter of 2013. The increase in domestic passenger revenues was
due to traffic growth of 6.6% and an increase in baggage fee revenues (baggage fee revenues are not included in
Air Canada’s yield and PRASM results). These increases were partly offset by a yield decline of 1.8%.
The table below provides year-over-year percentage changes in domestic passenger revenues and operating
statistics for the fourth quarter of 2014 and each of the previous four quarters.
YEAR-OVER-YEAR BY QUARTER (% CHANGE)
Q4’13 Q1’14 Q2’14 Q3’14 Q4’14
CANADA
Passenger revenues (1.1) (1.5) 2.2 6.5 5.7
Capacity (ASMs) 3.2 3.9 3.6 5.3 6.1
Traffic (RPMs) 2.6 1.7 5.3 6.9 6.6
Passenger load factor (pp change) (0.4) (1.8) 1.3 1.2 0.4
Yield (3.6) (3.5) (3.3) (0.7) (1.8)
PRASM (4.1) (5.5) (1.8) 0.8 (1.3)
In the fourth quarter of 2014, the 6.1% domestic capacity growth reflected capacity increases on all major
domestic services.
Components of the year-over-year change in fourth quarter domestic passenger revenues included:
• The 6.6% traffic increase which reflected traffic growth on all major domestic services. The traffic growth in
the fourth quarter of 2014 reflected increases on services within Canada, as well as incremental connecting
traffic to U.S. and international destinations.
• An increase in baggage fee revenues following an adjustment to the airline’s first checked bag policy
which became effective for travel on or after November 2, 2014. Baggage fee revenues are not included in
Air Canada’s yield and PRASM results.
• The 1.8% yield decrease which reflected an increase in average stage length which had the effect of
reducing domestic yield by 0.9 percentage points, higher proportional growth of lower-yielding international