Air Canada CEO praises high-density 777s


Air Canada is enjoying significant benefits from the deployment of five high-density, 458-seat Boeing 777-300ERs, says company CEO Calin Rovinescu.

The carrier offers three classes on the aircraft, including a premium economy product. Montreal-Paris was one of the first routes where Air Canada deployed the new high-density widebodies that are pegged for markets featuring a higher volume of leisure travelers.

Before the carrier deployed the new 777, the route was one of Air Canadaʼs worst performers, says Rovinescu. But now the new jets have allowed the airline to significantly improve its performance from Montreal to Paris. Rovinescu estimates the added seats on the new 777s offer a 21% reduction in unit costs compared to the airlineʼs existing 777s. The carrier also operates the new aircraft on service from Vancouver to Hong Kong and London.

Presently Air Canada also operates less-dense Boeing 777-300ERs and 777-200LR jets.

Deliveries of six 9-abreast 787s are slated to begin this spring. Those new widebody jets, the operation of higher-gauge 777s and the debut of the carrierʼs new lower-cost subsidiary Rouge in 2013 are pillars of Air Canadaʼs ambitious goal to lower its unit cost excluding fuel by 15% over the medium term.

For the moment Air Canadaʼs higher-density 777 jets seem to be meeting the carrierʼs stated goal for the aircraft, which, says Rovinescu, allows the airline to add capacity on routes with a higher leisure demand “and continue growing at significantly lower incremental costs”.

Passengers are clearly willing to buy tickets in the 10-abreast economy class section of these aircraft. But, on reading Rovinescu’s comments, one regular traveler notes on Twitter, “I do not think CEOs travel in high density economy cabins…do they?!”

Air Canada will also start bearing fruit from a new revenue management system in 2015. It expects to net about C$100 million of annual incremental revenue from a new approach to managing pricing and inventory. Recently Rovinescu declared that a new revenue management system employed by the airline is a “very important piece” of Air Canadaʼs international strategy.

“What it seeks to do is capture both the pricing and inventory for O&D [origin and destination] travel as opposed to only leg,” Rovinescu explains. While the technology exists “to get this thing running and make us more intelligent” Air Canada has to input a large volume of data from the last number of years “to see what kind of flows to expect”, Air Canadaʼs chief states.

Supplying an example of the kind of changes Air Canada is working towards as its manages an overall itinerary, Rovinescu says that if a passenger is traveling on a Boston-Toronto-Beijing routing, “we know to keep [all] that inventory available as opposed to selling Boston-Toronto at a higher price”.