Canadian, AA Team Up On Transpacific Service

<I>Calgary</I> - Canadian Airlines International expects to capture a much bigger share of the U.S. business travel market to Asia, bolstered by a comprehensive code-share partnership with American Airlines, implementation of the Canada-U.S. Open Skies agreement and a new airport terminal in Vancouver.

The Calgary-based carrier, which now serves eight destinations in Asia, plans to expand transpacific service by 20 percent in the coming months. At the same time, it hopes to see its hub city of Vancouver emerge as North America's premier gateway to Asia, particularly as a connecting point for both Canadian and American flights from destinations all over North America.

Key to Canadian's plans for Asia is a far-reaching code-share agreement with American and the U.S.-Canada Open Skies agreement, granting antitrust immunity to the alliance between the two airlines. Scheduled to be fully phased in by February in Vancouver, the agreement will enable American and Canadian to code share on every transborder flight to and from Vancouver.

The two airlines already have started to more closely coordinate their flight schedules, including a rescheduling of American's daily Chicago-Vancouver service to arrive an hour closer to Canadian's departing flights to Asia.

With American's service to Asia currently consisting of just one daily flight between Tokyo and San Jose, the relationship with Canadian opens up new opportunities for American to serve its client base, according to Don Casey, Canadian's vice president of capacity planning.

"One big incentive is that their frequent flyers now have much greater means of earning AAdvantage points all the way to Asia as we honor each other's mileage programs," he said.

Implementation of the Open Skies agreement also is allowing CAI to expand its own service to U.S. gateways from Vancouver, offering more connections to Asia on its own. The airline started daily service between Vancouver and Los Angeles last summer and plans to start daily service out of Vancouver to Washington, D.C., and Boston on May 4.

"Because of the code-share agreement with American and our own service, we now have 280 city pairs between North America and Asia," Casey said.

In May, Canadian will begin beefing up service out of Vancouver to Asia on existing routes, increasing its service to Beijing from two flights a week to six. Flights to Nagoya, Japan, will increase from five a week to daily; flights to Taiwan will increase from three a week to six; and service to Hong Kong will increase from nine weekly flights to 11.

The airline, which began Vancouver-Manila service last fall, also recently inked a code-share agreement with Philippine Airlines. Together, both carriers now offer seven weekly flights to Manila from Vancouver, three on Canadian and four on PAL.

A focal point of the carrier's strategic thrust is China.

"China is a very important priority for us; that's why we're increasing service to Beijing to six flights a week-and we eventually plan to offer daily service," Casey said. "Right now we're the only North American-based carrier besides Northwest that offers non-stop service to Beijing."

Next summer, Canadian hopes to reinstate service fromVancouver to Shanghai, which it discontinued in 1995.

Playing a crucial role in Canadian's expansion plans is the new international air terminal, which opened at Vancouver International Airport last May. Other than a few flights that originate in Calgary and Toronto, Vancouver is the airline's gateway for all transpacific service.

"The old terminal was congested, and we were constrained in terms of access to gates," said Casey. "In the new terminal, we're able to line up our arrivals and departures in a much tighter bank of standard times, and this means we can dramatically increase our connecting service. We finally have a competitive product for U.S. travelers."

The new terminal also cuts down on the time passengers spend going through Canadian customs. "We have a special area which expedites people going through customs-it's a simplified process," said Casey. By February and March, even that step might be eliminated: The U.S. and Canadian governments are discussing the possibility of passengers flying from the U.S. to Asia via Vancouver with no customs stop in between, Casey said.

Vancouver's geographic position makes it the best possible North American connecting point to Asia, according to Casey. "Because Vancouver is further north than San Francisco or Los Angeles, it means that flights to Asia, which follow a polar route, are shorter," he said.

Canadian's main competitor, Air Canada, is stepping up service to Asia out of Vancouver as well. It recently increased service to Hong Kong from three flights a week to four and is adding service to Osaka from five flights a week to daily. The airline also signed a new code-share agreement with All Nippon Airways applicable to its service between Vancouver and Osaka.

Air Canada's long-term plans could include daily service to Hong Kong from Toronto and Vancouver and service to Indonesia, Singapore and China.