Topic of the Week: Air Canada Launches rouge

We now know a little more about Air Canada’s low cost carrier including the fact that it will be named rouge. (That’s right, not capitalized. I hate that.) Flights are to leisure destinations in Europe and the Caribbean and we now know some of the cities. So do the details make you like this plan any better?

46 Responses to Topic of the Week: Air Canada Launches rouge

  1. Kathryn Creedy says:

    I still don’t get why these low-cost offshoots of legacy airlines will be any more successful than Ted or Song. No one has covered that angle. I can’t see that anything is different now, just more bottom line oriented, which indicates this is crazy. Happening in Asia, too.

    • Sean S. says:

      If there is one saving grace in Asia, is the sheer number of people and the movement of large groups of those people for work. There simply isn’t, and likely never will be, that amount of movement amongst developed countries of pax who need low-cost international flights.

      • Oliver says:

        The developed world instead has a movement of large groups of pasty white people to beach locations ;)

        (how it compares in scale I don’t know)

      • steve says:

        Ryanair carries more passengers in Europe than anyone else, almost entirely internationally – and within developed countries. Although Southwest is domestic-only, some of its routes are comparable in length. And Westjet has a large international operation as well.

        Do you mean wide-body fleet instead, maybe?

    • I agree that AC has not provided a reason why this will be more successful than other attempts. But the logic does make sense–lower costs, compete for leisure Pax (hopefully not cannibalizing your other ops) with other airlines, be able to grow with profit expectation, match advantages of some of the LCCs, and hopefully connect with better with a product that matches this customer segment.

      I think there is more here than just bored executives looking for their next thrill, but I agree the perfected model has not yet been introduced or articulated.

    • CF says:

      Kathryn – I think a lot of people have covered that angle, though the folks at AC clearly disagree. I even wrote about it back in October.

      Noah – Yes, on paper this all sounds great, but it simply doesn’t work in practice. The problem is that legacy carriers have built-in costs and aren’t likely to beat other LCCs at their own game. We’ve seen that time and time again. It also distracts management from running the core business.

  2. CS says:

    Well Canada didn’t get the 80′s until 1992, so… it’s only right that they are just now getting low-cost offshoots.

  3. Nathaniel says:

    Didn’t they already try this with Tango? The only difference I see is that it’s a longer distance.. I don’t see how this will work.

    • Trent880 says:

      Not only did they start Tango (and Zip) before, but it was the same guy that came up with Tango that is running Rouge. Third time’s a charm!

  4. Chris says:

    you hate jetBlue’s spelling too?

  5. Sanjeev M says:

    Is this just a higher density configuration for leisure Caribbean and Europe routes?

    I don’t know why they just don’t call it that and not ruffle feathers in the union, especially since all these flights are under the AC code. Or are the labor costs at AC really that high that it justifies a separate airline?

    The livery is nice though…

  6. SEAN says:

    Just makes me see red.

  7. The history of these kinds of airlines makes one skeptical to say the least.

  8. Dumb name.

    It’s still AC but offering lower fares to a few vacation destinations where they don’t have to provide top of the line inflight service because it’s rouge and not ‘Air Canada’ (wink wink).

    If the same people with the same bank account can’t make AC work, slapping a stuipd name like ‘rouge’ on the side of your airplanes isn’t going to fill that bank account and make everything okey dokey at AC.

    • CF says:

      David SF – The thing is they already do this with mainline today. They have some 767s that have the old business class configuration and not the flat beds. They put those on leisure routes. If it’s really simply an exercise in capacity, then create a new subfleet with the capacity you want, but don’t bother with all the new low cost carrier fluff.

  9. Interesting to look at the fleet pages. For now Rouge has 2 A319 all-economy and 3 B763 with lie-flat biz ripped out and domestic First seats instead. Econ seats are 31-32″ pitch.

  10. J Gorham says:

    Isn’t a rouge worth one point in Canada? (Of course, that would imply that their airplanes never get out of the end zone…)

  11. I happen to like that they don’t capitalize the name. haha.

  12. A says:

    I was in YYC this week and being home of WestJet I can see why AC needs to do something. Canadians rave about their “Southwest” clone but gripe up and down about AC. Sure do see a lot of people on WestJet going to warm weather destinations.

    That said the problem in Canada isn’t exactly the airlines, it’s the absurdly expensive airports, taxes and fees. When traveling from a major US hub there shouldn’t be a $200+ dollar difference between the Canadian airport and a cross border (usually smaller) US airport.

    I know many Canadians that are crossing the border on wheels only to take a flight on a US airline to their warm weather desitinations. From what I’ve been told there really is no competition in price – especially these days when the Canadian doller is worth more than the US dollar.

    This has got to be killing Canadian airlines all around and something Ottawa should address. IMO they should match whatever subsudies the US gov’t provides to level the playing field. Just my 2 cents as an American who spends a lot of time traveling in Canada…often time myself crossing that border in a rental car since I landed at a US airport, not the Canadian one.

    • I used to do that when I was going to West Toronto (Burlington area) a lot. Pearson was $1000 but flying into Buffalo was $500.

    • CF says:

      A – That is definitely true that Canadian government policy is crushing the potential demand because people go across the border. Allegiant has set up several stations along the border for just that reason. Look at Bellingham, WA – huge traffic from Vancouver.

  13. Chicago Chris says:

    I think Cranky has written articles about how no low-cost airline has succeeded taking people across the Atlantic. Part of this reminds me of the ill-fated Zoom Airlines.

    • Arcanum says:

      Air Transat seems to have done well.

    • CF says:

      Chicago Chris – Yep, it hasn’t happened yet. Though Norwegian is going to give it a go again next year. *sigh*

      Arcanum – Air Transat isn’t really a low cost carrier. It’s a charter carrier, so it has a different model.

      • Arcanum says:

        CF, I’m not sure where you’re getting the charter carrier thing from.

        Air Transat sells its own tickets for flights it operates under its own name. Yes, they offer vacation packages as well, but you can certainly buy a standalone flight from them. I’ve done it myself (although I’m in no rush to repeat the experience). I’d say their model is closer to Allengiant’s than to a charter carrier. Check out the website:

        http://www.airtransat.ca/en/Home.aspx

        • CF says:

          Arcanum – From Air Transat itself. Do a google search for Air Transat and you’ll see the metadata on the website shows that it’s the leading charter carrier in Canada. Air Transat is a different model – it is more like USA3000 – it’s just an arm of a tour operator meant to bring people to those destinations. Yes it sells things under its own name, but that doesn’t mean you aren’t a scheduled charter operation.

          • CF/Arcanum

            Wasn’t that like Wardair? Some flights were scheduled and some charter even in the same market. Example, some days to Hawaii flights were scheduled and other days charter. So charter days must have been sold to groups/vacation packages and scheduled days anyone could travel at the published fare like any other airline would charge.

          • CF says:

            David SF – Probably similar models. They can mix things too. Just because it’s a charter doesn’t mean they can’t sell seats directly, even if it’s on behalf of a tour operator. ATA used to do that. They had charters that they operated for Pleasant Hawaiian but you could buy seats directly as well.

  14. Arcanum says:

    @Noah: AC currently services most of these routes, particularly to the Caribbean, using their standard mainline crew and aircraft. That means high labour costs, low seating density, and business cabins with little or no paid J traffic. The rouge A319s will be in a high-density, all-Y configuration with no IFE, power, etc. to better compete with the discount carriers. I believe they may be using separate (non-union?) crews as well, which further lowers operating costs.

    @Trent880: This situation is a little different. Zip and Tango primarily flew domestic routes within Canada to compete with Westjet, although I think Tango did have some sun destinations as well. Domestic Canada is a tough business due to the high airport fees and long distances. Once Westjet stopped being a LCC domestically and just matched AC’s mainline pricing, there wasn’t much of a role for Zip or Tango. With rouge, the idea is to compete against true LCCs like Sunwing, Air Transat, etc. who fly mainly international leisure routes.

    @canuck_in_ca: The 767s they’ll be using are the “Three Amigos” left over from the old Canadian Airlines fleet. They were never updated to the standard interior and still have the overhead video, recliners in J, etc. from the 1990s. Those planes have been doing leisure routes to Hawaii, Barcelona, Athens, etc. for years. The only change will be staffing them with rouge crews instead of AC mainline to reduce costs. In a sense that’s good news since there will no longer be the risk of an equipment swap when flying AC now.

    On a tangential note, I still think the last Canadian Airlines livery was one of the best of all time. Gotta love the goose:

    http://en.wikipedia.org/wiki/File:Canadian_Airlines_A320-211.jpg

    • CF says:

      Arcanum – Zip was just short haul stuff on old 737-200s. I think that was designed to compete with WestJet in the west. Tango was the newer A320s and while it did do trunk routes in Canada, it did a lot of sun destinations including Florida and Caribbean. So Tango and rouge are going to have a lot of similarities.

      Oh, and I loved that goose too. I don’t know why, but it looked great. Still, this was my favorite of theirs:
      http://en.wikipedia.org/wiki/File:Canadian_Boeing_747-400_KvW.jpg

      • Arcanum says:

        Also nice. I’m dating myself here, but I remember getting a flight bag with that logo from the crew when I was around 8 and we flew to somewhere or other. Still, the goose seems more “Canadian”. I think logos and tail fin designs should reflect something of the airline’s home country – kangaroos, maple leaves, korus, etc. Contrast those with the old Continental/new United logo which is the epitome of drab nondescript branding. It’s the airline livery equivalent of oatmeal.

        Back to the topic at hand, I thought Tango used mainline crews while rouge will have a separate employee pool to keep costs down.

        • CF says:

          Arcanum – True that the goose seemed more Canadian, but I loved how they got around the dual language problem with that first logo with the > instead of an “a” or “e.”

  15. David M says:

    The only successful example I can think of of a LCC spinoff of a mainline carrier is JetStar. I’m not certain, but I think they’re actually doing better financially than Qantas itself.

    • Todd says:

      I think Cathay’s Dragonair and Singapore’s SilkAir both do okay.

      • CF says:

        Todd – Dragonair and SilkAir aren’t really low cost carriers. They are effectively just short haul airlines to complement the long haul operations. There is a little overlap but they definitely aren’t low cost. For Singapore, low cost is Tiger for short haul and now Scoot for long haul. Tiger has mixed results and Scott is still TBD.

    • Axelsarkis says:

      Yeah, I’ve heard that they are doing better that Qantas. But that is not saying much, is it?

  16. Ed Kelty says:

    Wish airlines would simply tell us which flights have excess capacity and price them accordingly. It doesn’t make economic sense to start another sub-airline like Tango.

  17. ptahcha says:

    Ugh – why bother. Should we just start a death watch count down clock?

  18. Yet another misguided atempt. History is full of “airline within and airline” pieces of memorabilia. This silly attempt by rouge, a mere five years from now will be nothing more than a collectable on ebay. It cheapens the mainline product by acknowledging they’re overpriced and mis-managed. In the end both mainline and subsidiary are fools who’ve lost money. If one wants to offer a return ticket from Toronto to the islands for a mere $300 round-trip, do so with the name of Air Canada on the tail. This is all a miserable exercise to make rock-star executives with newly minted MBAs show wonderful financial gains….at the loss of the parent company’s bottom line, reputation, and brand recognition. Fire the lot of ‘em and let them go start a Canadian ValuJet with their own money. Let the bidding begin on a rouge luggage tag!

  19. yo says:

    Hey, maybe we can restart Roots air eh?

    This time they can last 2 weeks.

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