Call this damage control;
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Sunwing grapples with "training bottleneck"
Fast-growing Sunwing Airlines Inc. has laid claim to a large segment of charter flights to sun destinations, relying on Boeing 737-800s to meet surging consumer demand this winter.
Fast-growing Sunwing Airlines Inc. has laid claim to a large segment of charter flights to sun destinations, relying on Boeing 737-800s to meet surging consumer demand this winter.
Sunwing president Mark Williams makes no apologies for the seven-year-old company’s aggressive expansion, saying charters from Canada to southern vacation destinations are a competitive business.
Sunwing’s growth, especially its reliance on hiring foreign pilots in recent winters, has drawn the ire of rivals, notably tour operator Transat A.T. Inc.
Transat, WestJet Airlines Ltd., and Air Canada have raised concerns about Sunwing’s strategy of hiring pilots from abroad. But Williams said he prefers to place the spotlight on Sunwing’s ability to create more travel options for Canadians.
There are 33 Canadian cities on Sunwing’s route map this winter, including major cities in Western Canada, as well as big and small airports in Ontario, Quebec and Atlantic Canada.
The carrier’s parent, Sunwing Travel Group Inc., will be neck-and-neck in the 2012-13 winter season with Transat, with each holding roughly 35 per cent market share for flights south to sunny climes such as Mexico and the Caribbean, Williams estimates.
Stephen Hunter, Sunwing Travel’s chief executive officer, and his father Colin, who serves as chairman, had the vision to tap into Canadians’ thirst for winter getaways, said Williams.
Industry experts figure that Sunwing Travel’s revenue in 2012 exceeded $1.1 billion, rising gradually from $900 million in 2009.
About 70 per cent of the revenue comes in the period from November to May, or roughly during the colder months in Canada, Williams said.
Sunwing, which has steadily expanded over the years, is operating 29 leased Boeing 737-800s during this winter travel period – representing huge growth when compared to the airline’s humble beginnings with two aircraft in 2005.
WestJet Vacations and Air Canada Vacations are the other key players in the market this winter.
Sunwing flies 189-seat Boeing 737-800s on behalf of tour operators Sunwing Vacations and Signature Vacations, which are both part of Sunwing Travel.
In the 2013-14 winter travel season, Air Canada will have its fledgling discount operation, Air Canada Rouge, up and running to holiday hot spots, intensifying the battle for sun seekers.
“We’re keeping an eye out. We’re not afraid to compete. There will certainly be a focus from Air Canada on making that a success. We welcome the challenge of operating against them,” said Williams.
Sunwing Travel is controlled by the Hunter family of Toronto. The Hunters have a 51 per cent equity stake and 75 per cent voting interest in Sunwing Travel. International leisure firm TUI Travel PLC reached a deal in 2009 to acquire a 49 per cent equity stake and 25 per cent voting interest.
Toronto-based Sunwing Travel’s merger in 2009 with the Canadian operations of British-based TUI placed competitive pressure on Transat. TUI, through its First Choice Canada division, previously ran Signature and also oversaw the SellOffVacations retail arm.
In November, the Canadian Transportation Agency (CTA) issued a ruling in response to complaints about Sunwing entities allegedly having business decisions swayed by its foreign partner. In dismissing the complaints, the CTA concluded that “nothing indicates that TUI is able to exert control over the affairs” of Sunwing entities.
The CTA pointed out that Sunwing must operate a much greater number of planes in the winter than the summer due to shifts in seasonal demand.
“Sunwing’s business model has addressed the seasonality of the market by developing a year-round core fleet of aircraft, which it supplements through the leasing of aircraft from European carriers,” the CTA said.
Williams said Sunwing hires seasonal pilots from European carriers, including from TUI, but he is working with union officials to lessen the negative impacts on Canadian pilots.
The issue of hiring Canadian pilots is complicated by the need for such workers to be “type certified” on the proper aircraft. “There are Canadian pilots who do have experience but who aren’t trained” on Boeing 737-800s, explained Williams.
He said his company has 156 full-time and 20 seasonal Canadian pilots on the payroll. Those 20 seasonal pilots received training to qualify them to fly Boeing 737-800s. Sunwing absorbed $800,000 in training costs at $40,000 for each pilot.
To be fiscally prudent, Sunwing tries to budget as much as possible for new training. Still, to meet increased demand for flights, the carrier has added 172 seasonal pilots from Europe to fill the void this winter, compared with 186 last winter, said Williams.
He said Sunwing believes in “reciprocity,” namely making arrangements where possible for its Canadian pilots to fly in the summer in Europe.
Roughly 50 Canadian pilots from Sunwing were able to secure duties in Europe in the summer of 2012, still a far cry from how many foreign pilots have been hired to fly in Canada for the winter.
“There are a lot of moving pieces,” Williams said, adding that the economic slump in Europe has weakened travel demand there and led to fewer Canadian pilots being required in the summer.
“We have tried to balance the seasonality by finding work for our pilots and planes in the summer. Our planes don’t have the range to fly to Europe, so they’re only good for domestic or sun destinations because they can’t go transatlantic,” Williams said. “We’ve had a difficult time finding more summer work for our pilots.”
The Canadian Auto Workers union, which represents Sunwing pilots, is working with management to find creative solutions, said Ron Smith, director of transportation at the CAW.
“Our position is that we would like all the Sunwing pilots to be Canadian. But the company has a training bottleneck and it is a complex case,” said Smith, who acknowledges that emotions have run high on the issue of hiring foreign pilots. He said management understandably wants to spread out the training of Canadian pilots over several years to control expenses. As well, Sunwing is wary of spending money on training and then having pilots jump to another carrier.
“We like having good relationships but we also aren’t afraid to take on an employer. The growth in Sunwing’s flying over winter is what is causing the hiccup. They can’t meet the training demand,” Smith said.
Transat, Air Canada and WestJet are opposed to Sunwing’s practice of relying on short-term “wet leases,” which involve borrowing crews and planes from Europe.
Transat chairman Jean-Marc Eustache said Canadian fleets should have planes primarily from Canada and a “very substantial majority of Canadian pilots and crews.”
Union officials at the Air Line Pilots Association (ALPA), with represents Air Transat pilots, are also upset with Sunwing.
“As long as any Canadian pilot is unemployed, there should be no foreign pilots working here,” said Captain Bradley Small, vice-president of ALPA Canada. ALPA Canada estimates that two-thirds of Sunwing’s fleet has been leased from overseas.
In November, Transat laid off nearly 60 Canadian pilots, but they were trained on Airbus aircraft, not Boeing 737-800s.
“What’s going on at Sunwing is really unfair to Canadian pilots,” said Captain Sylvain Aubin, former president of the master executive council that represents Transat pilots. “They should be protecting Canadian jobs.”
Transat hires CanJet Airlines to fly some of its routes, but Small and Aubin defended CanJet’s limited hiring of foreign pilots, saying the carrier offsets the influx by sending Canadians to work in Europe in the summer.
