Air Canada 2014 Annual Report Download - page 8

88 2014 Annual Report
Air Canada is Canada’s largest domestic, U.S.
transborder and international airline and the largest
provider of scheduled passenger services in the
Canadian market, the Canada-U.S. transborder
market and in the international market to and from
Canada. In 2014, Air Canada, together with Jazz and
other regional airlines operating flights on behalf of
Air Canada under capacity purchase agreements,
operated, on average, 1,519 daily scheduled flights
to 186 direct destinations on five continents,
comprised of 61 Canadian cities, 50 destinations in
the United States and a total of 75 cities in Europe,
the Middle East, Asia, Australia, the Caribbean, Mexico
and South America. Domestic, U.S. transborder and
international departures accounted for approximately
67%, 25% and 8%, respectively, of the 1,519 average
daily departures. In 2014, Air Canada carried over
38.5 million passengers.
At December 31, 2014, Air Canada operated
a mainline fleet of 172 aircraft, comprised of
69 Airbus narrow-body aircraft, 58 Boeing and
Airbus wide-body aircraft and 45 Embraer 190
regional jets, while Air Canada rouge operated a fleet
of 28 aircraft, comprised of 20 Airbus A319 aircraft
and eight Boeing 767-300 aircraft, for a total fleet of
200 aircraft.
Air Canada’s wide-body fleet is an important element
of its strategy to develop its network internationally
and further strengthen its position as a global
player. In 2014, Air Canada took delivery of six of
37 Boeing 787 aircraft on order. These aircraft,
with their lower operating costs, mid-size capacity
and longer range, are driving new opportunities for
profitable growth at Air Canada and allowing the
airline to operate existing Boeing 767 mainline routes
in a more efficient manner. In the last year, Air Canada
also expanded its mainline wide-body fleet by adding
five high-density Boeing 777-300ER aircraft, with
an additional two such aircraft scheduled for
delivery in 2016. These aircraft are being deployed
on select routes where there is high demand for
economy travel.
In order to improve the airline’s profitability and
competitive position in the expanding leisure markets,
a travel leisure group was created at Air Canada in
2012. The Air Canada Leisure Group represents a
coordinated strategy which leverages the strengths of
Air Canada, Air Canada rouge, the airline’s lower-cost
leisure airline, and Air Canada Vacations. Through
Air Canada rouge, Air Canada is improving margins
on leisure routes previously operated by the mainline
fleet and is pursuing opportunities in international
leisure markets made viable by Air Canada rouge’s
more competitive cost structure. Air Canada
Vacations is a leading Canadian tour operator. Based
in Montreal and Toronto, Air Canada Vacations
operates its business in the outbound leisure travel
market (Caribbean, Mexico, U.S., Europe, Central and
South America, South Pacific, Australia and Asia)
by developing, marketing and distributing vacation
travel packages. Air Canada Vacations also offers
cruise packages in North America, Europe and the
Caribbean.
Air Canada enhances its domestic and transborder
network through capacity purchase agreements
(“CPAs”) with regional airlines, namely Jazz, Sky
Regional, Air Georgian Limited (“Air Georgian”) and
Exploits Valley Air Services Ltd. (“EVAS”), which
operate flights on behalf of Air Canada under
the Air Canada Express banner. These carriers
form an integral part of the airline’s international
network strategy as they provide valuable traffic
feed to Air Canada mainline and rouge routes. At
December 31, 2014, the Air Canada Express fleet
was comprised of 46 Bombardier regional jets,
86 Bombardier Dash-8 turboprop aircraft, 15 Embraer
175 regional jets and 17 Beech 1900 aircraft. As part
of Air Canada’s continued focus on cost reduction, on
February 2, 2015, Air Canada and Jazz Aviation LP
(“Jazz”) concluded an amended and extended
capacity purchase agreement (“Jazz CPA”) which
allows for significant cost reductions, a stronger
relationship and better alignment of interests over
the long-term. The agreement extends the Jazz CPA
by five years to December 31, 2025.
Air Canada is a founding member of the Star Alliance®
network. Through Star Alliance® network’s
27 member airlines, Air Canada is able to offer its
customers access to approximately 1,321 destinations
in 193 countries, as well as reciprocal participation
in frequent flyer programs and use of airport lounges
and other common airport facilities.
Air Canada participates in a transatlantic joint venture
with United Airlines and Deutsche Lufthansa AG
through which the carriers provide customers with
more choice and streamlined service on routings
between North and Central America, and Africa, India,
Europe and the Middle East. This transatlantic joint
venture, including its revenue sharing structure, was
implemented effective January 1, 2010. Furthermore,
in the fourth quarter of 2014, Air Canada concluded a
memorandum of understanding with Air China which
sets out the main principles for a comprehensive
revenue sharing joint venture providing for an
enhanced partnership on routes between Canada and
China which will stimulate traffic growth between the
3. ABOUT AIR CANADA