It’s a rare opportunity to be face-to-face with Annick Guérard, President and CEO of Transat. When invited to a ‘causerie’ table for Guérard’s address to the Montreal Chamber of Commerce, Open Jaw seized the proffered seat.
Transat’s CEO spoke to a full house at the luncheon on Thursday, May 4, 2023, discussing a new business model in the wake of the historic crisis that disrupted the travel industry for two years.
"When we look at the global losses that have been accumulated in the travel industry in 2020, we are talking about USD $138 billion. By 2022, the industry saw USD $10 billion in losses. These figures reflect the intensity of the shock, but also the strength of the recovery," said Ms. Guérard at the conference.
The conference was also an opportunity to present Transat's new flight plan.
The upheavals of the crisis
"When I started during the pandemic, the company was a shadow of its former self. All our planes were grounded and 85% of our employees had to be laid off," Guérard said.
Citing current figures, Guérard points out Transat is now in recovery mode:
- 4,600 employees back at work
- a 2023 flight schedule equivalent to 90% of the pre-pandemic levels
- a rallying financial position
According to Guérard's estimates, Transat should be in growth mode by 2025.
A new model for Transat
The years of crisis were also an opportunity for Transat to review its business model.
"Three years ago, Transat defined itself as a tour operator, a company specializing in travel arrangements. Since then, we have refocused our activities around the airline sector."
Guérard highlighted a few new measures taken to bring Transat in line with its new positioning:
- Refocusing Transat's operations to Eastern Canada, mainly to Ontario and Montreal
- Reduction in the number of aircraft models in the fleet from 4 to 2
- Development of new airline partnerships, notably with WestJet and Porter
- Digitizing processes for greater efficiency
According to Guérard, the plan is complemented by a focus on specific destinations. "Transat's ambition is not to offer every destination in the world, but to be the best on each of the routes Transat offers."
Transat's main market remains Europe, highlighting it is the only airline to operate direct flights to destinations such as Malaga, Porto, Zagreb, Gatwick and Glasgow.
Future challenges for the airline industry
"According to the International Air Transport Association, airlines are expected to deploy 90% of 2019 capacity in 2023 and by 2024 air traffic is expected to return to 2019 levels," said Guérard. Even still, several challenges lie ahead for airlines.
First, the type of travel consumers choose is changing while business travel is facing a slower recovery, she noted.
"Companies are reducing the frequency of these trips and at the same time, consumers are increasing the length of their stay, in order to extend their vacation while traveling on business or vice versa," she explains.
According to Guérard, these changes represent an important challenge, mainly for airlines whose profits are based on the corporate customer segment.
Another challenge is the arrival of low-cost airlines in the domestic and transborder markets.
However, Ms. Guérard remains optimistic: "Transat is not very active in the corporate travel segment and very little in the low-cost market. Our target is the long-haul leisure and international markets."
Market conditions also remain difficult, she says, citing several factors including inflation, geopolitical tensions, the exchange rate, delays in the aviation supply chain and the fact that many airports have not regained their pre-crisis fluidity.
When will the air transport sector be decarbonized?
A major issue is also reconciling the human need to travel with major concerns for climate change.
"The airline industry currently contributes 2.5% to 3% of global CO2 emissions," says Ms. Guérard. "Decarbonization is crucial at Transat. We plan to reduce our carbon emissions by 24% by 2030."
The focus is on sustainable fuel, SAF (Sustainable aviation fuel), as Guérard explained: "Transat is an original partner in the SAF consortium that aims to develop sustainable fuel in Canada, specifically SAF electro, the most promising technology."
"Our goal requires a 10% SAF contribution in our aircraft and we don't have it right now. The technology exists, it's in Montreal. But to get to the point where we can produce on an industrial scale, we need major investments and therefore a commitment from governments at all levels."
"For us, it is essential that the need for travel is matched with a reliable decarbonization approach," she concluded.
