From The Globe and Mail
Air Canada unveils radical fare structure
By KEITH McARTHUR
TRANSPORTATION REPORTER
Wednesday, May 21, 2003 - Page B1
Air Canada yesterday unveiled a radical, new domestic fare structure -- a major plank in its efforts to reinvent itself under bankruptcy protection.
The airline will also attempt to take another step forward today when it presents its unions with a formal proposal for how it intends to cut $770-million from its $3-billion annual labour bill. You can be sure that this next week is going to be huge for labour negotiations, one union official said.
Air Canada says the new pricing system -- first reported in The Globe -- will make fares more flexible and transparent. Passengers who book over the Internet will be able to get cheaper fares without the traditional requirement they buy round-trip tickets or stay over a Saturday night.
Travellers will also get more flexibility to change their dates and times of travel for a small service charge.
This move will be one of many that will allow us to re-engineer the company into a new way of doing business from the old, executive vice-president Montie Brewer said.
The new fare structure is closer to that offered by discount carriers such as WestJet Airlines Ltd. and Southwest Airlines Co. Mr. Brewer said the new fare structure will eventually be expanded to include flights into the United States and overseas.
The new fare structure raises questions about the future of Air Canada''s domestic discount brands: Tango and Zip Air Inc.
Sources say Air Canada will shelve one or both of these carriers as it progresses in its restructuring.
To the degree they can still add more value, we''ll keep them; to the degree we can''t, we''ll rethink through it, Mr. Brewer said.
Zip president Steven Smith said it is too early to say what Zip will look like when and if Air Canada emerges from bankruptcy protection.
Right now, there are no plans not to operate Zip, Mr. Smith said. Zip is an ongoing operation, but our role may change going forward. We may do slightly different things.
Air Canada also said it is moving to paperless ticketing for all North American flights. The airline said 94 per cent of its domestic customers already use electronic tickets.
One of Air Canada''s goals is to get customers -- and travel agents -- to book over the Internet, so the new fares are available only for on-line bookings. The airline, which had previously eliminated most commissions for travel agents, has reinstituted them for most tickets booked over the Internet.
Traditionally, Air Canada has offered dozens of different fares on a single route. Mr. Brewer said customers will no longer tolerate complex pricing schemes.
Customers who book over the Internet will now have a choice of between three and five economy-class fares for each flight:
The fun fare will be priced to compete with discount carriers. The fare is non-refundable, but customers can make unlimited changes to an itinerary for $25 a change. Customers will earn half the frequent-flier points they would with the latitude fare.
The latitude fare is more expensive, is fully refundable and allows unlimited free changes to an itinerary.
The freedom fare is the most expensive, giving passengers access to executive lounges, and awarding 25 per cent more frequent-flier points than the latitude fare.
For a one-way flight from St. John''s to Toronto on July 2, for example, the fun fare is $153, the latitude fare is $492 and the freedom fare is $949.
Two other low fares, the econo and flash fares, will be available for certain round-trip flights, but will require a Saturday-night stay. The econo and flash fares will also be available for tickets not booked through the Internet. These more restrictive fares are sometimes cheaper than the fun fare.
Sam Barone, president of Ottawa-based consulting firm Transportation Partners, said the move toward Internet bookings requires a simpler fare structure, since a travel agent isn''t always there to sort through the complicated array of choices.
Fare structures have been too complicated to be consumer friendly. This will be more consumer friendly, Mr. Barone said.
Air Canada will meet with its unions today in Toronto.
Mr. Justice Warren Winkler, a court-appointed facilitator, has asked Air Canada to present its unions with a detailed proposal for labour cost reductions.
Sources say Judge Winkler will give the unions just one week to review the company''s proposal.
Air Canada unveils radical fare structure
By KEITH McARTHUR
TRANSPORTATION REPORTER
Wednesday, May 21, 2003 - Page B1
Air Canada yesterday unveiled a radical, new domestic fare structure -- a major plank in its efforts to reinvent itself under bankruptcy protection.
The airline will also attempt to take another step forward today when it presents its unions with a formal proposal for how it intends to cut $770-million from its $3-billion annual labour bill. You can be sure that this next week is going to be huge for labour negotiations, one union official said.
Air Canada says the new pricing system -- first reported in The Globe -- will make fares more flexible and transparent. Passengers who book over the Internet will be able to get cheaper fares without the traditional requirement they buy round-trip tickets or stay over a Saturday night.
Travellers will also get more flexibility to change their dates and times of travel for a small service charge.
This move will be one of many that will allow us to re-engineer the company into a new way of doing business from the old, executive vice-president Montie Brewer said.
The new fare structure is closer to that offered by discount carriers such as WestJet Airlines Ltd. and Southwest Airlines Co. Mr. Brewer said the new fare structure will eventually be expanded to include flights into the United States and overseas.
The new fare structure raises questions about the future of Air Canada''s domestic discount brands: Tango and Zip Air Inc.
Sources say Air Canada will shelve one or both of these carriers as it progresses in its restructuring.
To the degree they can still add more value, we''ll keep them; to the degree we can''t, we''ll rethink through it, Mr. Brewer said.
Zip president Steven Smith said it is too early to say what Zip will look like when and if Air Canada emerges from bankruptcy protection.
Right now, there are no plans not to operate Zip, Mr. Smith said. Zip is an ongoing operation, but our role may change going forward. We may do slightly different things.
Air Canada also said it is moving to paperless ticketing for all North American flights. The airline said 94 per cent of its domestic customers already use electronic tickets.
One of Air Canada''s goals is to get customers -- and travel agents -- to book over the Internet, so the new fares are available only for on-line bookings. The airline, which had previously eliminated most commissions for travel agents, has reinstituted them for most tickets booked over the Internet.
Traditionally, Air Canada has offered dozens of different fares on a single route. Mr. Brewer said customers will no longer tolerate complex pricing schemes.
Customers who book over the Internet will now have a choice of between three and five economy-class fares for each flight:
The fun fare will be priced to compete with discount carriers. The fare is non-refundable, but customers can make unlimited changes to an itinerary for $25 a change. Customers will earn half the frequent-flier points they would with the latitude fare.
The latitude fare is more expensive, is fully refundable and allows unlimited free changes to an itinerary.
The freedom fare is the most expensive, giving passengers access to executive lounges, and awarding 25 per cent more frequent-flier points than the latitude fare.
For a one-way flight from St. John''s to Toronto on July 2, for example, the fun fare is $153, the latitude fare is $492 and the freedom fare is $949.
Two other low fares, the econo and flash fares, will be available for certain round-trip flights, but will require a Saturday-night stay. The econo and flash fares will also be available for tickets not booked through the Internet. These more restrictive fares are sometimes cheaper than the fun fare.
Sam Barone, president of Ottawa-based consulting firm Transportation Partners, said the move toward Internet bookings requires a simpler fare structure, since a travel agent isn''t always there to sort through the complicated array of choices.
Fare structures have been too complicated to be consumer friendly. This will be more consumer friendly, Mr. Barone said.
Air Canada will meet with its unions today in Toronto.
Mr. Justice Warren Winkler, a court-appointed facilitator, has asked Air Canada to present its unions with a detailed proposal for labour cost reductions.
Sources say Judge Winkler will give the unions just one week to review the company''s proposal.
