Air Canada Rouge helps shock Air Canada back to life as leisure business acts as ‘defibrillator for mainline’

The growth of Air Canada Rouge, the leisure focused low cost division of Air Canada, has been phenomenal since it launched operations just five years ago. It was conceived to allow Air Canada to better compete with local and foreign rivals in Canada and born out of a fleet renewal at the mainline business, but it has delivered more than just enhanced efficiency, lower operating costs and an expanded network strategy.


Summary:

  • Air Canada Rouge has grown significantly in its five years of operation and now operates a fleet of over 53 aircraft, consisting a mix of A320 and 767 equipment;
  • The airline was conceived to allow Air Canada to better compete with local and foreign rivals in Canada and born out of a fleet renewal at the mainline business;
  • Its president, Duncan Bureau, suggests the profitable ‘airline within an airline’ has actually been a lifesaver for the Air Canada business;
  • Mr Bureau describes Air Canada Rouge as “the defibrillator for mainline” and adds: “Without Rouge there probably is no Air Canada.”

In a keynote address at the inaugural CAPA – Centre for Aviation Low Cost Long Haul Global Summit in Seville earlier this month, its president, Duncan Bureau, went as far saying that the Rouge business had ultimately been the lifesaver for Air Canada. “Without Rouge there probably is no Air Canada,” he says, describing the operation as “the defibrillator for mainline”. According to Mr Bureau, Rouge is able to operate in markets that Air Canada would otherwise have had to exit or operate at a “significant loss” and the business has been “very competitive”, grown market share and been “accretive” to the mainline operation.

From starting out with just a couple of aircraft, Air Canada Rouge has grown to now operate a fleet of 53 Airbus A320s and Boeing 767s, serving more than 25 million passengers. During its five years of operation the carrier has added more than 40 new markets to the overall Air Canada network, mainly in Europe, Asia, South America and the Caribbean and passenger numbers are increasing +6.5% year-on-year to more than 15 million in summer 2018.

The airline continues “to have record performance quarter after quarter”, according to Mr Bureau. He said Rouge has been “extremely successful” and he sees “tremendous opportunity ahead”. The airline remains focused on network growth, international expansion and creating a “super hub” in Toronto, connecting its own flights with Air Canada mainline operations. Rouge is also developing hubs in Montreal and Vancouver and aims to grow US point of origin traffic, where Mr Bureau sees a “tremendous amount of opportunity”.

While there are many markets where Air Canada and a premium operation remains relevant, Rouge has successfully grown in markets where leisure demand dominates – Florida, in the United States of America (USA) a prime example. But being an LCC is a lot more than simply “painting aircraft in a different colour,” acknowledges Mr Bureau, but is about approaching everything with a different mindset.

As an example, the airline sends all of its cabin crew to Disney University for training to focus on customer centricity and to create a “really different culture”. Mr Bureau said Rouge’s young and “energetic” workforce is “a huge differentiator”, while the airline also derives “significant economic benefit” from the productivity of its pilots and cabin crew.

Together this all means that Rouge gas a very different passenger profile than the mainline business, with a greater proportion of female passengers, a more polarised demographic, a lower percentage of ‘Elite’ frequent flyers, a higher number of customers per PNR and earlier booking timelines by passengers than with Air Canada.

LEARN MORE insights into the Air Canada Rouge business and how it works to complement the premium operations of Air Canada and offer the mainline business a brand to better compete with LCCs and ULCCs, in our exclusive CAPA TV interview with Duncan Bureau, filmed on the sidelines of the CAPA Low Cost Long Haul Global Summit in Seville in early Oct-2018.