At The Gate: Making its move
With the busy winter vacation period just around the corner, Sunwing
Airlines plans to increase its capacity in the Quebec market by 30 per
September 10, 2012 By Brian Dunn
With the busy winter vacation period just around the corner, Sunwing Airlines plans to increase its capacity in the Quebec market by 30 per cent.
|“We’re not dictating the increased capacity, it’s our customers who want more flights to more destinations.” Photo: Sunwing Airlines
The Toronto-based carrier plans to have 11 of its 28 Boeing 737-800 aircraft servicing the Quebec market from Montreal, Quebec City, Bagotville, Sept-îles, Val-d’Or and Ottawa which is operated by its Quebec division, offering close to 400,000 seats. Seven of the aircraft will be based in Montreal and two each in Quebec City and Ottawa. The sun destination carrier offers 160 flights a week from Canada during the peak winter season.
Sam Char, executive director of Sunwing Quebec, which has 600 employees in the province and a personnel operations centre near Trudeau International in Montreal, says the demand is there.
“We’re not dictating the increased capacity, it’s our customers who want more flights to more destinations. We have been the preferred carrier by travel agencies in Quebec for the last five consecutive years,” Char said.
New destinations include Montreal-Aruba, Montreal-Huatulco (Mexico), Quebec City-Cayo Santa Maria (Cuba) and Sept-îles-Punta Cana (Dominican Republic). All aircraft have 189 seats with an Elite Plus class, which offers more legroom and priority check-in and priority boarding.
The company has been profitable every year since it was created nine years ago, according to Char. The carrier has been 49-per-cent owned by TUI Travel of the U.K. since January 2010 and generated $32 million in profits for the company during the first fiscal quarter of 2012, according to TUI.
Sunwing also has a profit margin of around six per cent compared to the industry average of between 1 and 1.5 per cent, noted Char which he partly attributes to the carrier being so new and having tight control of its expenditures, without heavy cost structures and is not being unionized.
“We’ve got a total of about 1,800 employees in Canada and not a lot of vice-presidents, so we have a relatively light operating structure. That enables us to make a lot of quick decisions on the spot,” Char said.
And because its fleet is relatively young, Char noted Sunwing’s aircraft are extremely fuel efficient, “so when the cost of fuel goes up it hurts us, but not as badly as other carriers.” And with just one single type of aircraft, the company also saves on pilot training, on-board personnel training and on maintenance.
The vertically integrated travel company has more than 350 properties at its disposal through its Signature Vacations brand, including the Blue Diamond Resorts, a new wholly-owned subsidiary that will manage and develop its own portfolio of destination resorts and the Riu Hotels chain.
“We’re stretching the travelling dollar by offering all-inclusive service with no frills,” said Char. “We also take calculated risks like offering four flights a week from Bagotville and we were the first in Quebec to offer flights south from Sept-îles. We’re also the first in Quebec to offer flexible holidays from a few days [as opposed to the minimum standard of a week] to several weeks.”
The company has even adapted an old Neil Sedaka song, “Let’s Go Steady” for its ad campaign in Quebec called “C’est le temps des vacances.” Char ended up singing the song himself after Quebec singer Pierre Lalonde refused to give up the rights to his version.
“I think one of the main reasons we’re so successful is that our clients keep coming back again and again. If they didn’t like our product, they have two or three other choices.”
Meanwhile, rival Transat AT said it will spend $48 million to update its aircraft to help preserve its market share in what it called “an over-served market.”
Transat is totally reconfiguring its 12 largest Airbus A330 planes by the end of 2013. Three planes were ready for transatlantic service this summer. Six smaller A310s will receive smaller upgrades. In addition to having hi-def entertainment screens at each seat and mood lighting, the large aircraft weigh two tonnes less, for an annual cost saving of $13,000 in fuel.
“We believe that product differentiation is going to be one of the keys to the future and so we want to differentiate ourselves from the pack,” said Air Transat president Allen Graham.
The company is hoping customers will pay more for a more enjoyable flying experience as it tries to cut its losses. It has already shed 143 positions, and overhauled its executive suite among other changes in an attempt to save $20 million a year beginning in 2013.
Brian Dunn is a Wings writer and columnist.