Exactly ten years after pulling out of India, Air Canada made a comeback to the country on November 2nd when its recently inducted Dreamliner 787-9 (with three class configuration) touched down at Delhi airport. A global aviation force (with over 300 aircrafts in its fleet reaching out to 195 destinations), Air Canada has commenced its Indian operations with four weekly non-stop flights between Delhi and Toronto which will be upgraded to seven by next September. Speaking to TourismFirst, Duncan Bureau, VP (Global Sales), Air Canada claimed that the airline has re-entered with a fair degree of confidence and it clearly has a long- haul plan for India this time. Edited excerpts:
It took you almost ten years to decide to come back to India. Let me begin with a simple point: what is the mood within the airline?
I must tell you, Air Canada and its thousands of employees are pretty excited to be back in India. This had really started with the visit of Indian Prime Minister Mr. Narendra Modi to Canada last year which had triggered the momentum. We were targeting to launch it around Diwali because we knew by then we will have 787-9 aircraft available for this route. So it was pretty exciting for all of us when it touched down at Delhi on 2nd November.
You had started the booking process quite early for this service. How has been the response from the market?
The response from the market has been fantastic. Our initial flights are completely sold out. We are looking at a load factor of over 85 percent for the rest of November. In December too, we are noticing many flights sold out. And I think this momentum will continue. We have re-entered at the right time and we are extremely focused to develop this route. There are 600 Canadian companies which have some investment in India. The Canadian government too has strong business interests in India. Plus, there is a strong presence of Indians in Canada. All of this is reflecting in the growing aviation demand between the two countries. Today there is a demand of 1200 seats each day on both ways. And we see that growing further as the bilateral business between the two countries become more stronger in the coming years.
Do you think your major USP is offering a non-stop product? There are many carriers who are connecting the two countries but not with a non-stop product.
There are two things which need to be considered. First is the aircraft itself which is an incredible airplane. The business class is second to none. And we have provisioned for a premium economy class which is also best in its category. The other critical USP is as you take this flight, you also have easy accessibility to many other destinations not only in the US but also South America like Cuba and Argentina. Just to give you a sense of our scale of operations in North America, we are connecting 52 destinations in the US.
You are undertaking a rapid global expansion drive. Apart from coming back to India, you are commencing a non-stop from Dubai shortly, will have a similar product for Seoul next year and going by the market buzz you will be opening new destinations in Africa next year. What has propelled this kind of expansion plan?
The financial health of Canada is better than it has ever been. We have a very strong balance sheet. We have already committed to invest over $9 billion in new aircrafts and we will have one of the youngest fleet in the next few years. We have made significant investments in making Toronto a super hub. We also now have a ten year long labour agreement with pilots which give us a lot of certainty in terms of deployment of our resources. We are signing a similar agreement with flight attendants which will come into the force very soon. We are probably the only airline on the planet which has a 10 year deal with the pilots and flight attendants and that means there would not be disruption in our work flow. And we are also indulging in a serious re-fleeting drive. We have our Rouge Airline, a wholly owned subsidiary of Air Canada. It is one of the fastest growing airline in the world – with 25 light and 25 narrow body aircrafts. It has carried 4 million people and it’s a leisure based product. And it will be doing a lot of heavy lifting in terms of new markets which we are adding next year.
Do you think you have re-entered in India at the most opportune moment? Or if you had a choice, you would have preferred to come back at least two-three years earlier? I am asking this question because some foreign carriers have become very strong in the Indian market.
We were waiting for the right aircraft. We took the delivery of 787-9 couple of weeks ago and we are here. Now your question is: would it have made any difference if we had come back two-three years ago? My response is: in any market, it is advisable to enter prior to your competitors. But as I mentioned, there was no point in coming with any different aircraft because economics would not have worked.
When you had pulled out in 2005, the commonplace feeling here was: your flights were not doing well. How would you respond to that?
There are a lot of airlines which focus on high load factors. But load factors are not a determinant of profitability. You have to have the right mix of passengers and right mix of product. So if you look at our product which we had here historically – we had economy and we had business class. And we did not have a right mix. Now the aircraft which we have put in has three class configuration which allows us the right mix of passengers in order to be profitable. If we had this aircraft two-three years back, we would definitely have re-entered into the Indian market and taken over some of the traffic which is going via the hubs in Gulf nations. But that was not possible. However, this new service is extremely competitive with any other product – whether its Asian or any Middle-Eastern carrier.
Since Delhi is your only port of call in South Asia, for getting traffic from India’s neighbouring countries, will you rely on Air India which has a reasonable sound base in this pocket. Both of you are members of Star Alliance.
Of course. That is the reason you get into Star Alliance. As partners, we are supposed to help each other in growing volume. There is no doubt that we will work with Air India for this product as much as Air India relies on us to grow volume beyond our gateways. We will need that feed into Delhi from Sri Lanka, Bangladesh or Nepal until we have our services to some of these markets.
And that is unlikely to happen in the near to medium run – opening new markets in South Asia?
Its fair to say that within South Asia, we are going to focus on Delhi. This service has to work. Once we prove to our shareholders that Delhi market is working right, then we can look at other markets.
Can I get a sense of your global operational profile today? And what are those larger milestones which you intend to achieve in the next five years now that you are claiming that the airline is in a strong financial position and there is a guarantee of hassle free operations from the employees’ side in the next ten years?
We are the 14th largest airline in the world, flying to 195 destinations carrying about 38 million passengers annually. By 2020, we will reach to 250 markets and our passenger base will grow to 50 million. And Asia is going to be a big part of that investment. We are heavily invested in Chinese and Japanese markets and with more 787s joining our fleet (by 2020, all 37 ordered 787 Dreamliners will be in place), our bond with Asia will grow stronger.
When you decided to come back to India, was Delhi your only choice? And secondly, since you are claiming to have come back with a long haul plan, you will definitely look forward to add more destinations. When can that happen?
Delhi was indeed the only choice we considered. And right now, we are only focused on Delhi. Our first priority is to convert this four per week service to seven per week by next September. We have to first ensure that this service becomes profitable. Of course, there are markets within India which are of interest for us. But right now, we are not even contemplating those options.
So finally, can you say with a fair degree of confidence that this time you have come to India with unflinching commitment. The decision of any major carrier to completely pull out of a specific market sends a very wrong signal.
I would not dispute this statement. And the big difference this time is the aircraft which we have deployed. Nobody should have any doubt, we are absolutely committed to the market.