One on One with Allen B. Graham, CEO Air Transat
October 2, 2007 By Darren Locke
GIVEN AIR TRANSAT’S STRONG INTERNATIONAL FOCUS, COULD YOU DESCRIBE WHAT
IMPACT THE WAR IN IRAQ WILL HAVE OVER THE LONGER TERM?
During the last Gulf War in 1991, we recorded a 10% drop in demand that
lasted three months. That said, no two situations are identical. We
have made plans using various assumptions and it is important to
remember that we do not fly to that part of the world.
costs are already quite significant and we have learned to be
opportunistic and hedge ourselves. But I cannot make predictions about
the level they could reach. Load factors are a different issue, as we
have the option to act on them. At the end of the day, yield is also a
function of prices, not just load factors.
IS THE FACT THAT AIR TRANSAT IS PART OF A VERTICALLY INTEGRATED HOLIDAY TRAVEL COMPANY A BENEFIT IN DIFFICULT TIMES?
Yes. Following 9/11, teamwork and synergy played a vital role in us
emerging from the crisis. A tour operator with no airline sister
company would have had to go through extensive and complex discussions
with its partners to reshuffle its destination mix and capacity. In our
case, we were dealing with colleagues, working hand-in-hand, knowing
that the end result would be mutually acceptable and profitable.
AIR TRANSAT IS DESIGNATED A SCHEDULED CARRIER ON CERTAIN ROUTES. OTHER
CANADIAN CHARTER COMPANIES HAVE FOLLOWED A SCHEDULED STRATEGY AND
FAILED. WHAT WOULD YOU DO DIFFERENTLY?
I can assure you that we
have learned well from the lessons of other failures. Air Transat
remains an origin/destination non-interlining carrier devoted to
serving the leisure/holiday travel market. This is in stark contrast
with Wardair, which essentially tried to build itself into a scheduled
network carrier in the mode of Air Canada.
Although Air Transat
currently operates under numerous scheduled international authorities,
we are essentially maintaining the same business model, and the vast
majority of our seats continue to be sold through our tour
operator/travel agency network. Our scheduled licences allow us to
complement the above sales through GDS and the Internet.
DO YOU SEE OPPORTUNITY IN AIR CANADA SEEKING BANKRUPTCY PROTECTION?
Air Canada’s early CCAA filing came as little surprise. It is our hope
that Air Canada will take this opportunity to drastically restructure
and focus on their strengths.
IS THERE AN UNEVEN PLAYING FIELD FOR CANADIAN AIRLINES VERSUS YOUR US COUNTERPARTS?
The US Congress has just passed a US$3.5-billion aid package for its
airline industry, which President Bush is expected to approve. The US
government is proactively helping its industry deal with the current
crisis by providing cash and cost relief. As long as our government
fails to provide our equally hardhit industry with similar cost-relief
measures, we will be at an obvious disadvantage.