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Features Airlines
Airline Insider-November/December 06

Industry News

September 27, 2007  By Brian Dunn


a Scottish budget airline, has unveiled a major long-haul route
expansion which will link Glasgow, London and Manchester with Calgary,
Hamilton and Vancouver beginning next May.

It will also offer
weekly Hamilton flights from seven regional airports – Belfast,
Birmingham, Doncaster, Edinburgh, Exeter, Liverpool and Newcastle. The
airline said that these are likely to be stops on the daily Stansted-
Hamilton route.

In May, Flyglobespan will begin daily Hamilton
services from Glasgow, London- /Stansted and Manchester. At the same
time it plans to roll out a number of services from Glasgow, Manchester
and London/Gatwick to Calgary and Vancouver using Boeing 757-200s in a
three-class configuration.

Based on Flyglobespan’s preliminary
2007 schedule, the airline could add 100,000 to 125,000 seats to the
Canada-UK market next year, a capacity increase of 7% to 8%, according
to David Newman of National Bank Financial. Flyglobespan has also
linked up with Ottawa’s Zoom Airlines, allowing both carriers to sell
seats on each other’s aircraft. Flyglobespan was launched in 2002 as a
subsidiary of Edinburgh-based The Globespan Group, which has been
active in the Canadian travel market since 1974 and uses Air Transat as
its Canadian travel partner.


Flyglobespan began longhaul service
in June with a Glasgow-Orlando/Sanford service. It has since announced
a number of other routes, including Cape Town- Manchester,
Liverpool-New York and Glasgow–Boston, Las Vegas and Barbados.
Flyglobespan’s long-haul fleet consists of a single Boeing 767-300ER
and a 757-200. Earlier this year, the budget carrier detailed plans to
acquire a further two of each aircraft type by summer 2007. It is also
planning to add two Boeing 787-8s from lessor International Lease
Finance to its fleet in 2010.

Canada has hired ITA Software of Cambridge, MA, to develop a
next-generation reservation management system. In addition to
reservations, the system will include inventory control and seat
availability as well as check-in and airport operations modules.

complete system will be operational by late next year across the entire
Air Canada network, including reservation call centres and airport
locations worldwide. “The power of this core management system will be
a key instrument in Air Canada’s strategy to maintain market leadership
through product and customer service differentiation. Moreover, it will
provide unprecedented flexibility and significant cost savings,” said
Sean Menke, executive vice-president and chief commercial officer at
Air Canada.

Transat A.T. has
acquired The Airline Seat Company, its main British rival, which
operates under the Canadian Affair name, for $43 million. Transat and
Canadian Affair each had 40% of the Canada-UK charter market, thereby
giving Transat a commanding 80% of all charter traffic between the two
countries. Including scheduled carriers, Transat now flies about a
quarter of all seats between Canada and the UK.

Transat sold outbound tours from only Canada and France. By adding the
UK, it gains a major presence in the largest European market for
leisure travel to Canada. According to Jean-Marc Eustache, Transat’s
chief executive, “we are now setting up shop in a third market, the UK,
which is the most important European market as far as Canada is

The $43 million Transat paid for Canadian Affair
represents less than a sixth of its current $268-million cash reserves.
Last year, the airline’s holding company was under shareholder pressure
to buy back shares as a way to reduce its cash reserves, which were
then near $500 million.

Transat did buy back $125 million in
shares, but kept the rest as a contingency fund and to finance its
growth plans. It has since bought Thomas Cook Travel in Canada, thereby
expanding its retail distribution network from a Quebec stronghold into
other parts of Canada, especially Ontario.

Transat has also
added three new European routes with direct flights from Montreal to
Madrid, Lisbon and Bordeaux. It also has revealed it is planning to buy
its first hotel chain, but has not yet provided any details. In 2005
Transat carried 2.5 million passengers and had revenues of $1.45
billion. Meanwhile, the travel company recorded a thirdquarter profit
of $4.2 million on revenue of $611.1 million, compared to a
year-earlier profit of $794,000 on revenue of $552.9 million, when the
company wrote off future income tax asset balances worth $5.6 million.

Canada has expanded service from Western Canada to Las Vegas with
twiceweekly non-stop flights from Edmonton to the entertainment capital
and twiceweekly flights from Winnipeg. The Edmonton flights depart
Thursdays and Sundays on 120-seat Airbus 319 aircraft in executive and
economy class. The Winnipeg departures are on the same days on CRJ-705
aircraft with 75 seats in two classes.

This winter, Air Canada
will offer up to 55 weekly flights to Las Vegas from Vancouver,
Calgary, Edmonton, Winnipeg, Toronto and Montreal.

Eagle Airlines was scheduled to initiate nonstop service between New
York’s LaGuardia Airport and Halifax. The daily Embraer ERJ-135 service
was set to begin on December 14. American Eagle also serves Halifax
thrice daily from New York/JFK, while Continental Airlines operates
daily regional jet services from Newark, NJ, to Halifax.

Airways has signed a code-share agreement with China Eastern Airlines.
The deal will link China Eastern’s service between Shanghai and
Vancouver with Harmony’s domestic flights. “Our cooperation with
Harmony Airways, particularly on domestic routes within Canada, will
help us improve our market performance in North America and develop our
international business,” said China Eastern director of airline
planning and international affairs Hu Zhenming. “This agreement
demonstrates our commitment to enhancing the China and North America
aviation network and developing even more economic and cultural ties
between China and other countries.”

Airlines is still alive after it reacquired a key contract to fly
charter flights for tour operator Sunquest, providing job opportunities
for some of its 376 employees laid off in September after the airline
decided to halt scheduled service. CanJet has assured Sunquest that its
aircraft will be available to fly the tour operator’s passengers to sun
destinations this winter. When it halted scheduled operations, CanJet
had 10 leased Boeing 737 aircraft.


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