Welcome to the new age of no-frills corporate travel

[Blastor]

Welcome to the new age of no-frills corporate travel

Air Canada says its new business model goes to the heart of what business travellers say they need
Tuesday, October 26, 2004 - Page T2

It's a new era for Canadian business travellers -- as any frequent flier can attest -- and industry watchers see little on the horizon that might alter the new, no-frills world.

Joel Rosen, for one, believes that future of business travel by air in Canada has become crystal clear.

"We are now in the era of bus travel in the air," says the chairman of Toronto-based Horwath Horizon Consultants in Toronto. "That is probably the closest parallel I can think of. We have four major scheduled airlines in Canada and all of them are mainly targeting the no-frills market."

Dr. Karl Moore, a professor of marketing strategy in the faculty of management at McGill University in Montreal, thinks the analogy is apt.

"In Canada, business class has almost disappeared. Only Air Canada still maintains one," he says. "I do a lot of travel outside Canada and there is abundant choice there. In Canada, however, there is little remaining choice. Even Air Canada seems to have cut back on business-class seats. If you want to fly on business, you fly at the back of the plane.

"All the carriers are going head to head on price, and that means no frills."

Granted, air travel is becoming less comfortable. Economy passengers wanting a meal on flights best bring their own, although some carriers make a limited selection available at a price. The exception is flights over three hours. Air Canada and some others provide in-flight meals to longer-haul destinations. The same applies to complimentary bar service.

On the plus side, the price of tickets has dropped. BTI Canada, which provides corporate business travel services, says domestic ticket prices fell by an average of $26 during the second half of last year. Trans-border fares fell by an average of $48 and intra-U.S. prices declined by an average $65.

The average per-mile cost of air fares slipped to 43 cents a mile from 46 cents during the corresponding period a year earlier. Falling prices helped drive a 13 per cent increase in business travel by air, says Michele Ferrari, senior vice-president, client management at BTI.

"The rise seems to be a global trend," she says.

Now that Air Canada has emerged from creditor protection and is following a business plan that calls for it to compete as a low-cost carrier, the sky is the limit when it comes to price competition, says Mr. Rosen.

"While Air Canada was in bankruptcy protection the three other carriers, WestJet, CanJet and Jetsgo made inroads into Air Canada's traditional business. They drove prices down," he says. "The result is that Air Canada now has to take the tack that it will not be undersold.

"Today there is one long continuous seat sale as all the carriers struggle to fill seats."

Air Canada admits that competition will be stiff, but says its new business model goes to the heart of what business travellers say they need.

"During the past 18 to 24 months we have redefined ourselves and our services to fliers, especially business fliers," says Charles McKee, director of strategic marketing. "To start, we have dramatically revised our fare structure. In the past we had over 300 different fares; now we have four basic categories for economy and two for business."

Those two business-class fares are Executive, which Mr. McKee says is the traditional business-class fare, plus what he calls a new "Mini-markets discount fare." The latter is available only in major markets and only when there are seats available in the front of the plane.

All seats, business and economy alike, are sold on the basis of one-way fares. All fares are available right up to the day of departure.

"That is so business travellers can mix and match," Mr. McKee says. "They might want to fly from Toronto to Vancouver economy and then return business class late in the day."

Economy fares fall into a quartet of categories, listed in descending order of price: The Freedom Fare: This is the equivalent of Air Canada's former full-fare economy ticket. Today, however, that Freedom Fare ticket also provides entrance to Air Canada's airport lounges, priority check-in and 125 per cent points on Aeroplan.

The Latitude Fare: Essentially, this category is the same as the Freedom Fare without most of the perks. "It is our most popular fare, and the price represents a double-digit reduction from three years ago," says Mr. McKee.

The Fun Fare: Aimed at leisure travellers, the fun fare costs less but also comes with restrictions. Changing a booked flight costs an extra $30, for example, and if there are no Fun Fare seats available on the desired flight, then passengers have to pay the higher fare.

The Tango Fare: This is a holdover from Air Canada's experience with its Tango service, says Mr. McKee. It is the carrier's bottom-line fare, competitive with those offered by the low-cost competition. Aisle seats cost an extra $10 and fliers get only 50 per cent of regular Aeroplan miles.

Attracting a healthy chunk of the lucrative business travel market demands two things today, says Wayne Morrison, director of corporate and public relations at Halifax-based CanJet Airlines.

"What business travellers are looking for are the best fares combined with the most convenient flight times," he says. "When we started flying in June, 2002, we had very little business traffic. Now it is growing all the time. Maybe half our passengers are travelling on business today."

Montreal-based Jetsgo, which now serves 15 Canadian and 12 U.S. cities, thinks it has stolen a march on the competition. While it does not offer a true business class, passengers can pay $25 extra and ride up front in its Comfort class. There, seats are just two abreast instead of three; they are made of leather and feature a 35-inch pitch or about 9 inches more of leg room.

To smooth check-in, Jetsgo has created a virtual check-in counter at its Internet website where passengers can select their seat the day before or day of their flight.

WestJet in Calgary has taken web check-in a step further, says Donald Bell, senior vice-president of customer service and co-chief operating officer. WestJet Biz is a new dedicated web site, launched at the beginning of October, which allows member companies not only on-line check-in and seat selection but, which also provides WestJet corporate clients business travel management software.

While Canada's low-cost carriers prefer to talk about bargain fares and convenient flight schedules, they are willing to admit that Mr. Rosen's bus analogy is fair.

"Yes, I guess if you needed a comparison, that is a pretty fair one," says CanJet's Mr. Morrison. "We are the Greyhounds of the sky."

[LT]

Funny how Lufthansa caters to the Business clients and has 737s with 35* seats only...




Numbers and a/c could be wrong, but biz fair is real

[Panama Jack]

Doesn't surprise me at all LT.

It's been my observation that Canadians as a whole are willing to sacrifice creature comforts in exchange for thrift. Compair, for example, the average school bus in Canada (Blue Bird) to one in Western Europe (Mercedes). Sure, anybody will say they want nice meals served on bone china, seats with extra pitch and complimentary alcoholic beverages and frequent flyer miles, but then they are unwilling to foot the bill for it nor do they really "expect" it.

B.T.W., even intra-European business class leaves a lit to be desired-- flew on a KLM 737 in Business class-- had a good breakfast but 6 across seating, not exactly generous seat pitch, oh well . . . what can I say other than it was less than I had expected.

I believe the 737 you are referring to is Privat Air-- and that is the aircraft they send across the "Pond." Air Canada also has a similar aircraft-- that sub-brand is "AC Jetz."

[Blastor]

They got what they asked for.......