Air Canada not trou­bled by ul­tra-low-cost WestJet plan

The Hamilton Spectator - - BUSINESS - ROSS MAROWITS

MON­TREAL — Air Canada ex­ec­u­tives say the coun­try’s big­gest air­line is bet­ter po­si­tioned than it has been in more than a decade to re­spond to WestJet’s plan for a new low-cost ser­vice.

“We ac­tu­ally have many more tools at our dis­posal, which gives us a much bet­ter feel­ing and con­fi­dence that we are well-po­si­tioned to re­spond to what­ever gets put in front of us,” says Ben Smith, Air Canada’s pres­i­dent of pas­sen­ger air­lines.

The Mon­treal-based com­pany has tested the use of its Rouge sub­sidiary on some do­mes­tic routes and could de­ploy its planes, as ap­pro­pri­ate, to com­pete with a new WestJet ba­sic ser­vice that is set to launch next year.

In ad­di­tion, pre­mium seats could be re­moved from its Rouge and Air Canada planes to match the num­ber of econ­omy seats that WestJet’s ven­ture will have.

Air Canada also has more flex­i­bil­ity be­cause of the in­dus­try’s move to charge lower fares but higher fees for checked bags, re­served seats and other things.

WestJet has es­ti­mated ul­tra-low­cost air­lines could grow to ac­count for five per cent of the Cana­dian mar­ket. How­ever, Air Canada says the coun­try faces im­ped­i­ments such as higher costs, in­clud­ing taxes, air­port fees and se­cu­rity charges, that are dif­fer­ent from the United States and Europe.

Chief ex­ec­u­tive Calin Rovi­nescu says Air Canada will have no prob­lem with WestJet’s plans to ex­pand its main ser­vice on in­ter­na­tional routes by adding at least 10 Boe­ing 787 Dream­lin­ers be­gin­ning in 2019.

“The ad­di­tion of in­cre­men­tal com­pe­ti­tion is some­thing that at this stage is not trou­bling to us,” Rovi­nescu told an­a­lysts Fri­day on a first-quar­ter con­fer­ence call.

Air Canada swung to a $37-mil­lion loss in the first quar­ter as higher fuel prices con­trib­uted to in­creased op­er­at­ing costs.

The loss was equal to 14 cents per share and con­trasted with a $101mil­lion profit in last year’s first quar­ter, when crude oil prices were near 13-year lows.

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