Air Canada Sales VP Bureau Talks International Expansion, U.S. Sales Growth

Air Canada significantly has bulked up its U.S. sales force as the carrier prepares for major international expansion during the next several years. Today, the carrier serves about 190 markets and carries 38 million people per year; by 2020, it aims to operate in 250 markets and carry about 50 million people annually, according to vice president of global sales Duncan Bureau. Comprising much of that increase will be international expansion “focused on turning Toronto—and Canada, for that matter—into a super-hub, much like Amsterdam,” Bureau said in a recent interview with BTN transportation editor Michael B. Baker. An edited transcript of the interview, in which Bureau details expansion plans, U.S. sales growth and Air Canada’s low-cost subsidiary Rouge, follows.

Where are your growth targets?

We’ve got about a 50 percent increase of seats to our international markets since 2009, and that continues to be our focus. Overall revenue for our international markets counts for about 43 percent of our passenger revenue. We’ve got new nonstop flights including Brisbane, Australia, which starts next year three times a week. In June 2016, we plan to increase that to daily service. We’ve got the New Delhi service that starts on Nov. 1, and we also have a new Dubai service that starts on Nov. 3. We added Amsterdam and a lot of international markets, and new Osaka service with our Rouge product from Vancouver. We’ve got Montreal-Venice, Montreal-Mexico City. When you look at our total capacity, you’re looking at about 10 percent growth year over year, and 90 percent of that is going to be focused on the international market. Our [available seat mile] growth in the domestic marketplace is probably about 2 percent to 2.3 percent, while the rest is focused on international markets. We’re very happy as well with the growth in the U.S. We operate into 52 markets. We still see tremendous opportunity in the U.S. We have great connecting markets out of all our international bases—Vancouver, Calgary, Toronto and Montreal. We think there’s more for us to really capture.

How does the U.S. corporate travel market figure into your growth strategy?

We literally doubled the size of our sales force in the U.S. We now have 29 people in the U.S. focused on [travel management companies] and corporate business. We obviously are working closely with United on the joint venture, so United is our lead for global contracts that have transatlantic business. We have our own team focused on transborder where we don’t have a JV. The investment between Canada and the U.S. is massive, and the amount of traffic going back and forth is astonishing and continues to grow. With the Canadian dollar at 75 [U.S] cents, Canada is a very attractive destination for U.S. citizens who want to travel internationally. From a corporate perspective, investing in Canada makes sense from the strength of the U.S. dollar.

How are you positioning Canada as an international connection point over established U.S. hubs?

Canada is very well situated, and with the addition of newer, longer-range aircraft, the ability for us to service markets on a non-stop basis out of the Americas and connect guests from anyone in the world via Toronto or Vancouver is something that’s extremely attractive. From a competitive perspective, transiting the U.S. is nowhere near as clean and easy as it is to transfer Toronto. The Toronto Airports Authority has done a fantastic job in creating a facility that allows that Sixth Freedom transfer to happen very effectively, and we’re working with governments to ensure we have the opportunity to carry passengers who are transiting Canada without a visa. You’re clearing U.S. Customs in Toronto, so when you arrive in the U.S., you’re arriving on a domestic carousel, and you’ve already pre-cleared customs and avoided those massive lines in New York, Boston or Los Angeles.

What are you adding to your fleet?

We have an order for 37 787s, which we’ve already started taking delivery of. We have nine in our fleet, and [in early August], we received our first 787-900. The benefit of those aircraft is around the fuel efficiency. They incorporate the latest in terms of engine, reliability and comfort. Our costs decline when you introduce new aircraft that have that incredible efficiency.

What have you done to enhance reporting?

On the TMC side, we now have launched and implemented [Agency Incentive Management], which allows us to do much more robust reporting for our travel agency partners. We just completed our first month of AIM reporting since we implemented the system. We work with different data sources, whether it’s [market intelligence data] or Prism, our intention is that we want to have as good a visibility in our customers’ business as we can, so we can help them manage their travel spend, whether that’s how they purchase in terms of advance booking or corporate compliance. Having rules around our booking engines in terms of a small or medium enterprise that wants to book with us directly, we have the capability to service that customer. Our focus is to make sure we have the ability to allow our customer to transact with us how they want to transact with us. Whether that’s through a TMC or a corporate booking engine that we have, the [Air Canada Corporate Rewards] product, we’re going to be able to do that. Our investment in ACCR as it relates to reporting capabilities is something we’re working on.

Are you seeing much corporate usage of Rouge?

When we first launched Rouge, we had a high-density model that included a European-style business class, branded as Premium Rouge, with three-by-three [seating]. That wasn’t really that well received, and we heard a lot from our corporate travelers and super-elites who fly into some destinations. The Rouge product was launched for us to compete with the WestJets and Allegiants of the world, and the carriers who were attracting customers from a transborder origin. Rouge has been extremely effective. It’s one of the fastest-growing airlines in the world right now. We today have 38 aircraft, and we’re growing that to 50. We’ll have 25 narrow-body and 25 wide-body. The 767 in the way we have it configured allows us to operate in markets that historically we would not have been able to operate into. When you think of markets like the Caribbean, Mexico and Florida and some of the California markets, we had a significant cost disadvantage. This Rouge product allows us to compete and serves both our leisure customers and allows us to deal with, because of the new business-class product, those frequent flyers with homes in Florida or California. We’ve now completed the conversion, so every Rouge aircraft has a North American business-class product that our Air Canada super-elite are used to.