Air Canada

ANALYSIS: Canada’s major airlines go upscale in their battle to woo passengers

  • Westjet and Air Canada each target premium-class growth for 2019
  • Upgrades in the air include new business-class products and upgraded amenities
  • The moves could open opportunities in the low-fare market
Air Canada has rebranded its Signature Service featuring upgraded menus, concierge service, and, for some passengers connecting to international flights in Toronto, a BMW chauffeur across the tarmac. (photo: Air Canada)

It wasn’t so long ago Canada’s national airlines were in a race to the bottom. In 2003, after a sharp world-wide downturn in aviation following 9/11, Air Canada filed for bankruptcy protection, and in a bid to save the company, cut onboard services and shrank the size of its business class cabin.

The former Crown corporation was facing ferocious competition from low-cost upstarts, including the short-lived Greyhound Air and Jetsgo, which both offered service across the country. And a young Calgary-based upstart named Westjet was gaining loyal fans by offering low fares and a fun onboard atmosphere, vowing not to compete “wingtip to wingtip” with Air Canada.

My, how times have changed.

As they revealed their plans for 2019, Air Canada and Westjet have both decided that increasing revenues from business class passengers – the people who pay the highest fares – is the way to grow.

Air Canada opened a new Maple Leaf lounge in St. John’s, Newfoundland in

Air Canada is offering improved services in the air, rebranding its business class to Signature Class and offering upgraded menus, amenities and signature cocktails on international flights. On the ground, Air Canada’s upscale offering includes concierge service, chauffeured transfers in BMW cars, as well as new Maple Leaf lounges at New York-LaGuardia and in St. John’s.

The airline says 90 per cent of its growth in the past several years has been directed at international markets, and that expansion has been fuelled by premium passengers.

Over at rival Westjet, it’s a similar story.

Westjet’s new fleet of Boeing 787 Dreamliners will feature lie-flat seats and premium service on flights to Europe. (photo: Westjet)

The airline is in the process of pivoting away from its roots as a folksy discount carrier, preferring to focus on becoming a major international player. Since introducing service to Europe in 2015 aboard used Boeing 767 aircraft, Westjet has gone decidedly upmarket.

After a financially sluggish 2018, the airline has introduced a new business class product aboard its new 787 Dreamliners, with lie-flat seats and luxurious amenities. At the same time, Westjet is re-configuring its Boeing 737 aircraft with a new Premium class, similar to business class on competing airlines, including a self-service bar for business passengers.

Airline executives told investors in early December that concentrating on premium service this year will boost revenues per available seat mile – a key measure of airline performance – between two and four per cent.

On December 5, 2018, the day Westjet pitched its vision to investors, shares traded at a little more than $20.50. On Thursday, shares closed at less than $18. In the same period, Air Canada shares have gone from a little more than $28 to just above $26.50.

The moves have opened opportunities on the lower end of the market.

Edmonton-based Flair Airlines has just come off what it called a record year, marked by a transition to a scheduled ultra low-cost format. In one year, it doubled staff, and plans to introduce new planes and new routes in 2019.

Westjet has responded by launching its own ultra low-cost brand, Swoop. Both airlines charge a fare for the seat, and then charge a separate fee for everything else.

Air Canada, meanwhile offers its Rouge brand aimed at the vacation market, alternating between Trans-Atlantic service in the summer, and sun destinations in the winter.

Two other companies, Enerjet and Canada Jetlines, plan to launch their own ultra low-cost airlines in the near future, indicating they see room to grow in the cost-conscious market.

Air Canada’s Latest Maple Leaf Lounge Opens inLaGuardia Airport’s New Terminal from Air Canada on Vimeo.

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