Air Canada

Air Canada sees continued growth in overseas markets

Air Canada told investors that capacity growth will slow in the near future, with the airline concentrating on new narrow-body aircraft, such as the 737-8 MAX, above. (photo: Air Canada)

Air Canada predicted Thursday that international flights will continue to drive growth at the airline, with routes overseas and to the United States representing more of its capacity, and revenues.

Air Canada’s Senior Vice President of finance, Amos Kazzaz, made the assertion to investors Thursday in Toronto. A copy of his presentation was posted online.

More than 90 per cent of Air Canada’s growth over the past several years has been directed at the U.S. and international destinations. At the same time, the airline said more passengers are choosing to connect through Canadian hubs on flights between the U.S. and overseas destinations.

It’s a lucrative market. International travellers are more likely to demand better service, and pay premium prices.

Air Canada held a little more than one per cent of all traffic between the U.S. and overseas destinations in 2017. Kazzaz said if that share can be increased to two per cent, Air Canada would reap a $930 million windfall.

Kazzaz made the revelations the same day Air Canada announced it has completed the purchase of its Aeroplan loyalty program. Air Canada reassured nervous customers that they will be able to accumulate and use their frequent flyer miles into the future.

Kazzaz said overall system capacity has grown 40 per cent over the past three years, a period when Air Canada concentrated on introducing new wide-body aircraft, including the Boeing 787 Dreamliner, and on building its leisure airline, Air Canada Rouge.

Air Canada rival Westjet is also targeting international traffic in its growth plans, introducing its own Dreamliners this year on flights to Europe.

Air Canada rival Westjet is banking on overseas growth, introducing the Boeing 787 Dreamliner on flights to Europe. (photo: Boeing)

Kazzaz said capacity growth will slow, as Air Canada concentrates on replacing ageing Airbus and Embraer planes that fly the bulk of its domestic routes. The airline recently introduced the Boeing 737-8 MAX, and will introduce the A220 into service. Each new aircraft is expected to cut costs by at least 11 per cent.