Canada’s Travel Industry Reflects on Key Events in 2012

The announcement of Air Canada’s new leisure-focused airline, the sale of Thomas Cook’s franchise network and strong objections raised by the Association of Canadian Travel Agents to IATA’s new distribution plan were among the top events affecting the Canadian travel industry in 2012.

Here’s a look at some of those events.

Air Canada launches leisure airline
Earlier this week, Air Canada announced Air Canada rouge, a new airline geared for the leisure sector, scheduled to begin service in July 2013. The airline is part of Air Canada’s new leisure group, which also includes Air Canada Vacations.

For its inaugural 2013 season, Air Canada rouge will introduce new routes not currently operated by Air Canada to Venice, Italy and Edinburgh, Scotland.  In addition, Air Canada seasonal services from Toronto and Montreal to Athens, Greece will be flown by the new carrier.  

Similarly, existing Air Canada flights operated in cooperation with Air Canada Vacations to Cuba, the Dominican Republic, Jamaica and Costa Rica will be operated by Air Canada rouge effective July 2013.

Thomas Cook sale, staff departures
In June of this year, Thomas Cook sold its franchise network of 100 agencies to Transat Distribution Co. That move came little more than a year after American Express pulled out of Canada’s retail agency business.

Both were major trade news stories, but in fact their impact on Canada’s retail agency scene was less than profound, travel agency executives told Travel Market Report.

At Thomas Cook, rather than the sale of its franchise network, the real concern seems to be the departure of key Thomas Cook staff members and its impact on the company.

“So many people have left from head office. People are worried about bankruptcy. What do you do with all the pieces?” said Ron Pradinuk, president of Winnipeg, Manitoba-based Renaissance Travel and former president of ACTA.

Michael Friisdahl, Thomas Cook’s former president and COO took early retirement this spring only to show up in October as president and CEO of Air Canada’s newly formed leisure group.

Flemming Friisdahl,  brother of  Michael and former vice president of sales, left Thomas Cook in March after 19 years with the company. His position was eliminated.

(See story: Thomas Cook Sells Off Canada Franchise Network)

ACTA challenges IATA distribution plan
IATA’s announcement of a new distribution plan, New Distribution Capacity (NDC), drew strong reaction from ACTA, Canada’s leading travel agency association.  ACTA said NDC will give airlines access to “extensive” passenger information, enabling them to market directly to agency clients.

“This is the most important development of the year,” said David McCaig, ACTA president and COO. A five-page document released by ACTA to its members in early December warned them of the impact NDC would have on Canadian travel sellers.

In an analysis of the potential impact on agencies of NDC, ACTA said, “since the airlines are demanding the contact information before the consumer has chosen any carrier, the airline could bypass the agency entirely and contact the potential customer directly with its response.”

The location of passenger name records is also an issue with the IATA plan, ACTA charged. Travel agents currently maintain the PNR during the period before the flight, enabling them to make quick changes when necessary.  This would change under the IATA plan.

“IATA has indicated that the technical standards to implement NDC will deal with the location of the PNR, in view of locating all PNRs with the airline, even for bookings made by travel agents,” ACTA said.

(See story: Agent Group Fears Access to Client Data Under IATA Plan)

CTA amends airfare price transparency
After input from nearly 3,600 stakeholders, the Canadian Transportation Agency in July published amendments to the Air Transportation Regulations regarding airfare pricing transparency.

The amendments require that the price of airline tickets in any advertisement reflect the total price, including all taxes, fees and charges.

The advertisement must also incorporate a minimum level of details about the service, including origin and destination, whether it is one way or roundtrip and any booking or travel availability period restrictions. It must also include a breakdown of the taxes, fees and charges that will be paid to a third party.

The amendments are still being finalized and are expected to go into effect this winter.
(See story: ACTA: Canada’s New Airfare Ad Rule Won’t Stop ‘Abusive’ Behavior)

Increasing vertical integration
The Canadian travel industry is seeing growing vertical integration among suppliers.

The latest example is Sunwing Travel Group, which launched the first properties in its new hotel division, Blue Diamond Hotels  & Resorts, in late 2011 and this year continued to expand its properties under two brands – Royalton and Memories.

What are the implications for agents? “It means that because one company has control of that product, it’s not available through other channels, and it means that it’s very possible that they can control the inventory,” said John Featherstone, owner of Featherstone Travel Plus in Simcoe, Ontario.

“It has benefits. The quality can be kept at a certain level. The negative is that they control it. You have to buy it from them.”

Big changes at WestJet
Early this year, WestJet announced it would launch a new regional airline in the second half of 2013. In June, it placed an order for up to 45 Bombardier Q40 NextGen turboprop aircraft in June and in October chose the carrier’s name Encore through an employee vote.

Headquartered in Calgary, the new carrier will service smaller Canadian communities. Changes go beyond WestJet’s new airline, however.

“What it’s doing is it’s moving WestJet into the ultimate competitive carrier against Air Canada as a national carrier, not just because they’re getting stronger as a regional carrier but also because of the code shares they’ve been developing with various international airlines,” said Ron Pradinuk, president of Winnipeg, Manitoba-based Renaissance Travel and former president of ACTA.

“When you take those two together it will have a great impact on the travel industry. The little-engine-that-could will take advantage of some of the smaller markets and will become a viable alternative to flying oversees.

“They’ve been slowly working on code shares, but they flooded the market with them this year. It gives the consumer and agents choices they didn’t have before.”

WestJet signed its eighth code share agreement with British Airways in September. Its code share partners now also include American Airlines, Cathay Pacific, China Eastern Airlines, Delta Air Lines, Japan Airlines, KLM and Korean Air.

Transat changes commission policy
Transat began paying commissions on fuel surcharges and service fees for vacation packages sold by Transat Holidays and Nolitours that were sold after Sept. 1 for travel beginning Nov.1.

Travel agents welcomed the move, which they hope will help to boost revenue, but so far other wholesalers have not followed suit.
(See story: Canada Agents Welcome Transat Holidays’ New Commission Policy)