As Canada watches other countries reopen travel and waits on the sidelines for Ottawa to follow suit, Air Canada’s new President and CEO, Michael Rousseau, gave a gripping interview to IATA that expresses great optimism.
“The fact I agreed to take on the CEO role in the midst of the pandemic says a great deal about my outlook for Air Canada and the industry,” Rousseau pointed out. “I am very positive about the future and excited about the opportunities I see for our company in the post-pandemic world.”
Naturally, Rousseau spoke about “working with” Canada’s federal government on a reopening plan, and called for a clear plan with transparent milestones for a phased restart to travel so the industry can plan – and pax can “book with confidence.”
But the rest of the interview revealed great insights into the carrier’s future once travel has begun again.
“A Great Foundation to Rebuild”
He called the nearly $6 billion in federal government financial support, “an extra layer of insurance,” which “ideally, we will not need to access,” due to what Rousseau calls “one of the industry’s strongest balance sheets” going into the pandemic.
And while he acknowledged that government support enabled the carrier to process refunds for customers who were unable to fly due to COVID, he said when it came down to it, “we have been pleased by how few customers have requested refunds and instead are holding onto future travel credits. This is an encouraging sign people want to travel again.”
When they do travel again, flying on Air Canada will be different for pax. Rousseau says the pandemic “accelerated change” for the airline that will translate into a changed experience.
“Airlines have long talked about contactless travel,” he acknowledges. “But with COVID-19 we moved more quickly as part of our biosafety program.” That includes virtual, not physical lineups, touchless check-in and bag drop, and in AC lounges, touchless access and food ordering, even a pilot program “with facial recognition for boarding in San Francisco,” all of which are “likely to be retained and further developed,” as Rousseau says they don’t just make flying safer during COVID, they also “ speed up and simplify processes for our customers.”
In addition to experience, hardware changes are coming, too. In order to control and cut costs, AC “removed 79 older aircraft” from its fleet, which Rousseau says the carrier was able to do, “because we have new Boeing 737 MAX and Airbus A220 aircraft arriving. At the end of 2021, we expect to have 27 of a firm order of 40 737 MAX aircraft.”
The MAX makes a lot of sense for Air Canada. “The capacity and range are optimal for us, as we can use them on long-haul North American and certain ETOPS routes, such as Hawaii from Calgary and Vancouver or London-Heathrow from Halifax and St. John’s. It is a versatile aircraft, and its capacity is well-suited for the early stages of a recovery, when loads might be lighter and bigger aircraft less profitable.”
Not All Sunny Skies
When the interview turned to regulatory issues in Canada, though, the view was less sunny.
“In Canada, a chief concern carriers have is the way air transport infrastructure is financed,” Rousseau told IATA, explaining that unlike other countries, Canada’s air travel infrastructure is underwritten by its users, not supported as a broader social good. Even before COVID, this made costs higher for Canadian carriers, he said, which was worsened by Canada’s large size and small population.
“The weakness, frankly unsustainability, of this user-pay model was exposed by the pandemic,” Rousseau said. “With traffic volumes falling 90%, revenues collapsed, not only for airlines but for airports and Canada’s air navigation service. This has led to higher charges and forced all of us to take on more debt that will have to be paid by future generations of travelers or reduced investments, adding costs and, to close the vicious circle, harming the industry’s competitiveness.”
Regulatory changes must take place, he concluded, “We need to continue to educate governments about the economic benefits airlines deliver so they will treat us as (economic) catalysts and accelerators.”