From what I recall, before Air Canada created Air Canada Rouge, I believe they were losing money on a big number of flights due to the cost structure of Air Canada. I assume it would be on routes which operated from many airports, such as YUL, YYZ, YYC, and YVR. If I am right, Air Canada Rouge was created due to the fact that Air Canada needed to lower the cost on many flights that were previously unprofitable with the high cost structure of Air Canada. The recalled information may be wrong in some parts, so please correct me if I am wrong on something. I have several questions about Air Canada Rouge at the moment:

1) How is the airline doing regarding profits? Are they more profitable than Air Canada mainline was while on the routes they previously operated?

2) What is the passenger feedback for Air Canada Rouge?

3) More and more routes (like how YYZ-BOG is going to Air Canada Rouge) are being turned over to a low cost carrier. What other routes could be expected to switch to Air Canada Rouge in the foreseeable future? What new routes could Air Canada Rouge start?

4) If I flew on Air Canada Rouge, what would I expect? I've heard that legroom is rather tight, and even though I am answering my own question here (please correct me if I'm wrong) no narrowbody or widebody aircraft have no personal flight entertainment screens, instead you need to use an app to entertain yourself. Disappointing because some passengers don't have devices they can bring.

5) As I said in the beginning of the post, Air Canada has been mostly switching from Air Canada Mainline to Air Canada Rouge for existing destinations. While it may help Air Canada make money on routes that previously lost money, why haven't they retired the old 767-300's which are old and should have been retired by now?

6) Has some of Air Canada Rouge's expansion (to new destinations) been unnecessary? For example, routes like Toronto-Warsaw don't really need to be flown.

7) The final question I have is about something I've read on another post. If I am right, I've heard that Air Canada and Lufthansa have been having a rather troubled relationship. The Air Canada Mainline routes to Germany (which are YYC-FRA, YYZ-FRA, YYZ-MUC, YOW-FRA, and YUL-FRA) are rumored to not be profitable as a result of the expansion of Air Canada Rouge's flights to Europe. Is this true?

Most recent statement from president and CEO Calin Rouveescu is that they are delighted with the operation so far. He went on to say that they plan to meet with the pilots union to see if the fifty aircraft cap can be lifted going forward. Apparently the pilots are happy because of the addition flying opportunities. Only a fool would predict in this business but all going well they should be around for the foreseeable future.

LCC's like Rouge are just that, as cheap as they can make it, as little leg room as possible, even cheaper food (I didn't think that was possible) all designed to compete with airlines like Air Transat, Westjet etc. This is a result of people who put the cost of air travel first over everything else.

1. Profits- yes but not released
2. Passenger feedback - they want cheap flights but complain about no leg room, food etc. You get what you paid for...
3. Routes that compete with other LCC will be considered
4. What can you expect - read above
5. No more profitable than main line actually less profitable on margin

1. They have claimed a profit, but yet to release anything (that should come fairly soon)
2. They're an LCC, any complaining or criticism should be disregarded (you get what you pay for)
3. Any route in the network is susceptible excluding Asian or Australian routes.
4. Not much different than the AC 77W HD seating minus the IFE and cheaper catering
5. AC profitability is essentially on par with Rouge
6. Depends on who you ask, AC fanboys will say no but many will agree that some of the expansion is either a bit bold or unnecessary
7. Don't read into that too much, its a rumour and there's nothing that says AC can't offer what it feels is the most competitive option for them to Germany whether it actually strains relations with LH or not.

ACATROYAL wrote:

2. Passenger feedback - they want cheap flights but complain about no leg room, food etc. You get what you paid for...

Rouge fares are generally not cheaper than regular AC fares. In addition Rouge has replaced entire mainline routes.

I don't recognize Rouge as a separate airline. If it were a true low-fare carrier spin-off it should have it's own website with it's own fare structure. This is just a sneaky way for AC to operate high density aircraft while not damaging their brand as a mainline carrier.

RL777 wrote:

1. They have claimed a profit, but yet to release anything (that should come fairly soon)

Not likely anything "actual" as Rouge is rolled into AC's overall financial report and not reported separately (as it is a wholly-owned unit of AC). They will discuss Rouge as a factor but they don't and won't report separate results for Rouge.

lostsound wrote:

Rouge fares are generally not cheaper than regular AC fares. In addition Rouge has replaced entire mainline routes.

I don't recognize Rouge as a separate airline. If it were a true low-fare carrier spin-off it should have it's own website with it's own fare structure. This is just a sneaky way for AC to operate high density aircraft while not damaging their brand as a mainline carrier.

There is no such thing as a "Rouge Fare".

A city pair attracts a certain fare regardless of the airline, AC, RV, WS. TS, etc etc etc. AC mainline or otherwise can not charge more than the competition as people simply will not pay it ... period. So if a city pair will only garner one fare, and that fare will not generate a profit on a mainline configured aircraft ... AC can either leave the route or put Rouge on the route.

Rouge does not fly any route on which there is no competition. Rouge is running with low 90s load factors. I can't see any route on which Rouge flies, that in all logic would have likely been canned by AC anyway. And when looking at Europe, most of those routes would never have been flown by AC mainline.

As far as the "brand of the mainline carrier", Rouge exists, much like Jetstar, Scoot, Dragon exists. Meeting competition (successfully) with a different product.

NichCage wrote:

4) If I flew on Air Canada Rouge, what would I expect? I've heard that legroom is rather tight, and even though I am answering my own question here (please correct me if I'm wrong) no narrowbody or widebody aircraft have no personal flight entertainment screens, instead you need to use an app to entertain yourself. Disappointing because some passengers don't have devices they can bring.

5) As I said in the beginning of the post, Air Canada has been mostly switching from Air Canada Mainline to Air Canada Rouge for existing destinations. While it may help Air Canada make money on routes that previously lost money, why haven't they retired the old 767-300's which are old and should have been retired by now?

6) Has some of Air Canada Rouge's expansion (to new destinations) been unnecessary? For example, routes like Toronto-Warsaw don't really need to be flown.

7) The final question I have is about something I've read on another post. If I am right, I've heard that Air Canada and Lufthansa have been having a rather troubled relationship. The Air Canada Mainline routes to Germany (which are YYC-FRA, YYZ-FRA, YYZ-MUC, YOW-FRA, and YUL-FRA) are rumored to not be profitable as a result of the expansion of Air Canada Rouge's flights to Europe. Is this true?

4) Other than the IFE, the on-board product is identical to mainline Air Canada. Complimentary meals and alcohol on international routes are identical to mainline Air Canada . Buy-On-Board on other routes are identical to mainline Air Canada. The only difference is that on some AC routes there is "high end" BOB ... but that is dictated by route. In other words, while you can buy fresh sushi on AC on a YYZ-YVR flight, that is not available on an AC YYZ-YXE flight.

The premium cabin of Rouge either on the A319/A321 or B767, is identical to North American Business Class product on mainline Air Canada, right down to Maple Leaf Lounge Access, priority boarding / baggage handling and catering.

5) As many other airlines show, an HD version of the B767-300 can be a very profitable machine. It is a very capable airframe, without a lot of capital outlay.

6) I am not sure why you would single out Toronto-Warsaw, but the route is doing very well.

7) That is an interesting question. But you have to imagine, with the existence of Rouge, most destinations like say VCE, BUD, WAW, PRG, etc would have been flown through FRA on LH. Now a non-stop is offered on RV and LH is not needed any more. FRA/MUC will likely evolve to a different customer, much like LHR did when AC lost its connection partner there.

Also understand, that is a very low yield customer, and LH would likely make more selling local traffic ... FRA-VCE for example.

I can only comment on #2 and #4. I'm not a big fan of the 319's as I found the legroom extremely tight and the flight uncomfortable so I avoid them if I can (I'm 5'11) . The 767's were fine. I enjoyed the 2-3-2 seating and the legroom was reasonable. If you don't download the app, there were tablets to rent for $10 iirc on both the narrow and wide bodies. As RL777 said "They're an LCC, any complaining or criticism should be disregarded (you get what you pay for)" and he is right, don't book a flight on Rouge and expect a CX or LH level of comfort or service.

Has Air Canada at LHR changed since BMI went away? YEG was canned but that's it IMHO.

longhauler wrote:

4) Other than the IFE, the on-board product is identical to mainline Air Canada. Complimentary meals and alcohol on international routes are identical to mainline Air Canada . Buy-On-Board on other routes are identical to mainline Air Canada. The only difference is that on some AC routes there is "high end" BOB ... but that is dictated by route. In other words, while you can buy fresh sushi on AC on a YYZ-YVR flight, that is not available on an AC YYZ-YXE flight.

The premium cabin of Rouge either on the A319/A321 or B767, is identical to North American Business Class product on mainline Air Canada, right down to Maple Leaf Lounge Access, priority boarding / baggage handling and catering.

5) As many other airlines show, an HD version of the B767-300 can be a very profitable machine. It is a very capable airframe, without a lot of capital outlay.

6) I am not sure why you would single out Toronto-Warsaw, but the route is doing very well.

7) That is an interesting question. But you have to imagine, with the existence of Rouge, most destinations like say VCE, BUD, WAW, PRG, etc would have been flown through FRA on LH. Now a non-stop is offered on RV and LH is not needed any more. FRA/MUC will likely evolve to a different customer, much like LHR did when AC lost its connection partner there.

Also understand, that is a very low yield customer, and LH would likely make more selling local traffic ... FRA-VCE for example.

I've used Rouge a few times now. One thing, alcohol is most certainly *not* complimentary on Rouge. I had to pay for a small bottle of red wine on my recent trip to/from Glasgow.

IFE requires an iPad... they have some to rent on board. But the movie selection is much less than on mainline. My two most recent flights were Rome, last November, and Glasgow in July/August, from YUL direct (Rome) or via YYZ (GLA). Both trips had significant delays, Rome on the way out by a couple of hours, GLA was four and a half hours late coming home so I am claiming my 600 Euros

Both delays were technical (no idea of the details).

Other than that, yes it's cramped, I just view it as a way of getting from here to where I want to go. I could care less if it's Rouge or Mainline, I care more about on-time performance. IFE isn't an issue for me... a good e-book on my iPad is just as good, and on an overnight TA flight I prefer to doze. F/As are all young and generally quite upbeat. No real complaints there. My only other trip was to Edinburgh via YYZ in 2014 and that one was on-time both ways.

In short the tardiness is the only issue I've had with them and both cases were seriously inconveniencing; the Rome one made me late for a meeting, and the return from GLA resulted in a missed connection; an attempt to book us for an overnight stay in YYZ was unacceptable to my wife who had to return to her medical practice the next day so we got shuttled to Toronto Island for a Q400 flight to YUL thanks to a very accommodating customer service agent. My Rome trip from YUL was a really good $767 CDN return, taxes in. I'm going back in October, and outbound is Rouge non-stop from YUL but return has to be via BRU on mainline as I guess Rouge is seasonal on the FCO route. Which isn't so bad, BRU isn't a bad connection, and the over ocean flight is on an A330 which is pretty much my favourite AC widebody these days... well I haven't tried the 787 yet, so I prefer the A330 compared to the 767 and 777, although the mainline 767s are a close second. Maybe one day AC will fly the 787 out of YUL...

Beech

skipness1E wrote:

Has Air Canada at LHR changed since BMI went away? YEG was canned but that's it IMHO.

Not as far as schedule, no.

The yield has increased as connection traffic through LHR waned slightly. AC does interline with a lot of carriers at LHR, (BA included). But that is basically what I was saying with regard to FRA. As low yield FRA connection traffic goes to RV .... much like LHR, there will be a way to fill aircraft. Cargo revenues remain very very strong at both LHR and FRA.

In my opinion, (an only my opinion), AC pulled out of YEG when the Edmonton Airport Authority gave KL and FI cash incentives to start service. Margins are thin enough without having to compete against the airport authority as well as other airlines. UA pulled out of YEG-EWR at the same time, actually expressing that sentiment. (I understand they sold a lot of YEG-Europe traffic through EWR.)

ACATROYAL wrote:

1. Profits- yes but not released
5. No more profitable than main line actually less profitable on margin

RL777 wrote:

1. They have claimed a profit, but yet to release anything (that should come fairly soon)
5. AC profitability is essentially on par with Rouge

According to the first post, Rogue is less profitable than AC. According to the second post, Rogue profitability is on par with AC. If no stand-alone financials are released how do we know which one is true?

Regardless it must be doing okay if it's still going after four years. It looks like a concept similar to "Ted by United" or "Song by Delta", and it's lasted twice as long as either of those flops.

longhauler wrote:

Rouge does not fly any route on which there is no competition

Rouge does fly routes with no competition (eg. : Bogota (instead of AC), Lima, Edinburgh, St. Kitts, Osaka-Kansai, Dublin from Vancouver).

ACATROYAL wrote:

Passenger feedback - they want cheap flights but complain about no leg room, food etc. You get what you paid for...

,

longhauler wrote:

A city pair attracts a certain fare regardless of the airline, AC, RV, WS. TS, etc etc etc. AC mainline or otherwise can not charge more than the competition as people simply will not pay it ... period.

As you know, fares are much more complex than that. AC mainline can and does regularly charge more than others if people are willing to pay for it. For instance, AC business class fares cost much more on average for YUL-CDG than AF ($4000 for AC vs $3000 for AF).

ACATROYAL wrote:

Passenger feedback - they want cheap flights but complain about no leg room, food etc. You get what you paid for...

RL777 wrote:

They're an LCC, any complaining or criticism should be disregarded (you get what you pay for)

Rouge is not an LCC (or not yet) by any means, quite different from Ryanair or Air Asia. It is a leisure airline with the same fares as AC mainline. People have every right not to be happy to fly Rouge while paying the same fare as AC, especially if they have booked a AC flight and ending up flying on Rouge metal. I would be unhappy too.
With its lower operating costs than AC, Rouge flies to competitive routes or low-yield markets without losing money (or not too much compared to AC mainline). Ultimately, the whole AC can increase its bottom line and its market share. This strategy is working very well.

ACATROYAL wrote:

Routes that compete with other LCC will be considered

Air Transat and Wesjet, main competitors of Rouge on several routes, are not LCC. I would argue that Sunwings is not an LCC, even though it is described as such.

longhauler wrote:

As far as the "brand of the mainline carrier", Rouge exists, much like Jetstar, Scoot, Dragon exists. Meeting competition (successfully) with a different product.

I do not agree. Those are very clearly different airlines with a low-cost fare structure. The only thing LCC about Rouge is the low cost of the business itself. Rouge is just high-density AC aircraft seats sold to customers at the same fare as the rest of the mainline flights. Canada does not have any LCC when it comes to ticket prices. WS is equally as expensive as AC.

[quote="yoni"]Rouge is not an LCC (or not yet) by any means, quite different from Ryanair or Air Asia.[quote]

You are not comparing apples. Ryanair and AirAsia are a ULCC, not an LCC.

yoni wrote:

Rouge is not an LCC (or not yet) by any means

ACATROYAL wrote:

Routes that compete with other LCC will be considered

Air Transat and Wesjet, main competitors of Rouge on several routes, are not LCC. I would argue that Sunwings is not an LCC, even though it is described as such.

I guess it is more by comparison to competitors than world wide. AC has announced that seat mile costs at Rouge are less than Westjet. In fact Westjet employees have been told this as well. I have to assume that was one of the targets.

Margin appears to be about the same as mainline.

yoni wrote:

It is a leisure airline with the same fares as AC mainline. People have every right not to be happy to fly Rouge while paying the same fare as AC, especially if they have booked a AC flight and ending up flying on Rouge metal. I would be unhappy too.
With its lower operating costs than AC, Rouge flies to competitive routes or low-yield markets without losing money (or not too much compared to AC mainline). Ultimately, the whole AC can increase its bottom line and its market share. This strategy is working very well.

It is very very very rare that anyone would book a flight on AC mainline and end up on a Rouge aircraft, as normally a route switches from mainline to Rouge with enough advanced warning that booking engines can be changed. Heck ... internally we hear about route changes a year in advance. However, anytime that has occurred, the passenger is offered a full refund.

Other than last minute equipment switches there will never be a route with a Rouge and mainline flight at the same time, and so far, equipment switches have only been a rescue operation of a delayed Rouge flight by a mainline aircraft.

But people keep referring to "Rouge Fares" or "Mainline Fares" and that concept simply does not exist with the lowest yield passenger. For example, check out the fare from Toronto to Veradero Cuba. The fare is the same on Transat, Westjet, Sunwing or Rouge. It is simply THE fare. When Air Canada tried to compete on that route (for example) they lost their shirt. Consider the same fare on a 189 seat B737 of Transat or a 120 seat A319 of Air Canada, and you can see the issue.

Now ... if even for a second, passengers would pay (even slightly) more to ride a more comfortable aircraft, then Air Canada would likely still be in the leisure market. But .. they wont ... enter Rouge with a 200 seat A321.

toltommy wrote:

yoni wrote:

Rouge is not an LCC (or not yet) by any means, quite different from Ryanair or Air Asia.

You are not comparing apples. Ryanair and AirAsia are a ULCC, not an LCC.

A ULCC is a LCC, but not all LCCs are ULCCs. Here are basic characteristics of a LCC : simple fare structure, one class, pay for extras ( credit card transaction fees, hold baggage, seat selection, airport check-in, boarding pass fees, food and drinks), quick turnaround times under 30 minutes, point-to-point service. As far as I know, Ryanair and Air Asia define themselves as LCCs. Or maybe they have been lying to us all along. Who knows ?

If Rouge is a LCC, it certainly is the Jaguar of all the LCCs worldwide. On European and Asian flights, you don't even pay for meals.

Generally ULCCs offer even cheaper flights than LCCs, not all the time, and you pay for everything they can think of, from carry-on baggage to calling customer service. These fees are often more expensive than LCCs. Spirit is one of them.

Regarding the LCCs in Canada, the FP is wondering why there is no LCC or ULCC airlines in Canada : http://business.financialpost.com/news/transportation/why-an-ultra-low-cost-airline-cant-get-off-the-ground-in-canada

longhauler wrote:

But people keep referring to "Rouge Fares" or "Mainline Fares" and that concept simply does not exist with the lowest yield passenger. For example, check out the fare from Toronto to Veradero Cuba. The fare is the same on Transat, Westjet, Sunwing or Rouge. It is simply THE fare. When Air Canada tried to compete on that route (for example) they lost their shirt. Consider the same fare on a 189 seat B737 of Transat or a 120 seat A319 of Air Canada, and you can see the issue.

Agreed, especially for flights to the US, Mexico or the Caribbean, critical markets for major Canadian airlines.

longhauler wrote:

Now ... if even for a second, passengers would pay (even slightly) more to ride a more comfortable aircraft, then Air Canada would likely still be in the leisure market. But .. they wont ... enter Rouge with a 200 seat A321.

While offering similar fares like its competitors, AC was losing money on these leisure routes because of its cost structure. Rouge allows them to compete with a similar cost structure as its closest rivals such as WS or TS. BTW a 200 seat A321 is not that bad at all. Wizz Air has 230 seats on its A321, even Swiss is pushing to 218 seats.

Rouge seems like its working out really well. AC is better suited to offer service that cannot support the premium seats and better compete against the Norweign type ULCC carriers and WOW carriers. AC i think was smart to set this up, they are very capable to compete against almost anyone with AC or Rouge as options

longhauler wrote:

Now ... if even for a second, passengers would pay (even slightly) more to ride a more comfortable aircraft, then Air Canada would likely still be in the leisure market. But .. they wont ... enter Rouge with a 200 seat A321.

What I have found interesting though is mainline still operates all sun leisure routes out of YOW, YHZ and YWG and Rouge has been kept solely at YYZ, YUL, YYC and YVR (except for the domestic transcons to YHZ that have been rouged).

Theoretically someone from YUL or YYZ could connect at YOW or from YYC at YWG if they really wanted the much more comfortable mainline seat to any of the sun routes where a connection is possible.

While Rouge has been a boon to the big 4's airport's pax numbers, I think it's a big reason as to why places like YOW have stagnated, including why YOW-FRA is now seasonal.

Before rouge, a steadily increasing number of YOW-Europe pax beyond LHR or FRA connected at one of those two hubs. Now that YUL and YYZ have so many Rouge-Europe flights (along with all the new foreign carriers the hubs have attracted in the past 5 years), it dilutes YOW's YOW-Europe funnelling of traffic to the two hubs. The non-savvy leisure traveller looking for nothing but the cheapest seat, will more often than not chose a backtrack to YYZ, a connection (or drive) to YUL to get to NCE or VCE if it saves them $25 per family member and will only opt for the YOW-FRA connection if it's the cheapest option or on par with everything else...which it usually isn't.

The savvy leisure traveller or regular biz traveller will almost always choose the more intelligent and $25-$50 more expensive choice of connecting at FRA. If I'm flying YOW-VCE and I misconnect at YYZ, I'm screwed, whereas if I misconnect at FRA, the next LH flight to VCE is only a 2-3 hour wait.

Like longhauler said, the once-every-two-years non-savvy leisure pax only cares about the cheapest seat and will gladly spend an extra 3-6 hours longer to reach their final destination in the name of saving 50 bucks...and then will complain about everything afterwards (i.e. the food, the legroom, the ancillary fees, etc.) due to his/her cheapness.

PS to longhauler: Are you still a 767 driver or are you now on the 787s?

2. They're an LCC, any complaining or criticism should be disregarded (you get what you pay for)

*NOT AT ALL*. Not at all, my friend.
You pay for a full AC ticket and you end up on a Rouge aircraft. What AC does is akin to paying for a BA flight, only to end up on Ryanair. NOT FAIR.
there's no Rouge fare at all. Rouge is simply a legalized scam.

It is very very very rare that anyone would book a flight on AC mainline and end up on a Rouge aircraft, as normally a route switches from mainline to Rouge with enough advanced warning that booking engines can be changed. Heck ... internally we hear about route changes a year in advance. However, anytime that has occurred, the passenger is offered a full refund.

Other than last minute equipment switches there will never be a route with a Rouge and mainline flight at the same time,

...how about London, UK, just to name one route where Rouge overlaps at exactly the same fares as AC??

oldannyboy wrote:

It is very very very rare that anyone would book a flight on AC mainline and end up on a Rouge aircraft, as normally a route switches from mainline to Rouge with enough advanced warning that booking engines can be changed. Heck ... internally we hear about route changes a year in advance. However, anytime that has occurred, the passenger is offered a full refund.

Other than last minute equipment switches there will never be a route with a Rouge and mainline flight at the same time,

...how about London, UK, just to name one route where Rouge overlaps at exactly the same fares as AC??

LGW-YYZ is actually quite a bit cheaper than LHR-YYZ ...

oldannyboy wrote:

...how about London, UK, just to name one route where Rouge overlaps at exactly the same fares as AC??

I checked this month, one way ....

YYZ-LGW on Rouge, CAD 571.15
Cheapest fare on Air Canada, YYZ-LHR CAD 1567.16.

Round trip ...

YYZ-LGW-YYZ on Rouge, CAD 880.19
YYZ-LHR-YYZ on Air Canada, CAD 1343.23

longhauler wrote:

oldannyboy wrote:

...how about London, UK, just to name one route where Rouge overlaps at exactly the same fares as AC??

I checked this month, one way ....

YYZ-LGW on Rouge, CAD 571.15
Cheapest fare on Air Canada, YYZ-LHR CAD 1567.16.

Round trip ...

YYZ-LGW-YYZ on Rouge, CAD 880.19
YYZ-LHR-YYZ on Air Canada, CAD 1343.23

LGW being roughly twice as far from Central London as LHR - I guess the lower YYZ-LGW fare not really cheaper when you factor express bus or taxi to Victoria Station.

I imagine bulk of Rouge market is YYZ/YUL to Florida/Caribbean.

longhauler wrote:

oldannyboy wrote:

...how about London, UK, just to name one route where Rouge overlaps at exactly the same fares as AC??

I checked this month, one way ....

YYZ-LGW on Rouge, CAD 571.15
Cheapest fare on Air Canada, YYZ-LHR CAD 1567.16.

Round trip ...

YYZ-LGW-YYZ on Rouge, CAD 880.19
YYZ-LHR-YYZ on Air Canada, CAD 1343.23

Glad to be proved wrong on this! Thanks. It's one of those instances when being wrong is reassuring...

7) The final question I have is about something I've read on another post. If I am right, I've heard that Air Canada and Lufthansa have been having a rather troubled relationship. The Air Canada Mainline routes to Germany (which are YYC-FRA, YYZ-FRA, YYZ-MUC, YOW-FRA, and YUL-FRA) are rumored to not be profitable as a result of the expansion of Air Canada Rouge's flights to Europe. Is this true?

I find this part particularly funny, yet confusing & hope this is simply rumour. Is AC part of the LH group? What part of A++ has AC violated in their agreement with LH? So AC should be a designated feeder for LH & feed their business into FRA/MUC, while LH can expand throughout North America as they whish? JVs are already under scrutiny as being anticompetitive. Should these rumours have any validity, then LH better be careful!

LH starts FRA-YUL (a well established route for AC) & drives down yield, but they seems to have a problem when rouge starts going to eastern Europe out of YYZ? What about SN starting BRU-YYZ, taking market share from an already established YUL-BRU? One must wonder why AC can't seem to be able to start YVR-FRA? It was listed in their growth plan in the investors day presentation, yet there's been no announcement of that sort?

6. Depends on who you ask, AC fanboys will say no but many will agree that some of the expansion is either a bit bold or unnecessary

Bold & unnecessary? What do you believe happened? Management just woke up one day & decided that it was a good day to begin plans for expansions? Are you aware of how much market share AC has lost from the 2000s up to around 2012? Now that the company is the middle of a successful transformation process (so far), it has every right to make up for lost organic growth & execute it's main business strategy out of YYZ. (Longhaul, 6th freedom, Rouge, etc..)

Now to stay on topic here. If we are to interpolate AC's financial results over the past 3 years, it's reasonable to assume that Rouge is profitable (though not official). I myself have mixed feelings about the RV product, but I found the strategy to be necessary. One can only ask how AC mainline's product was to compete with TS,WJA & SWG? My only whish is that they created a cheaper IFE (transat like), instead of the internal wifi system. Seems that wja is moving in that direction as well?

1900Driver wrote:

7) The final question I have is about something I've read on another post. If I am right, I've heard that Air Canada and Lufthansa have been having a rather troubled relationship. The Air Canada Mainline routes to Germany (which are YYC-FRA, YYZ-FRA, YYZ-MUC, YOW-FRA, and YUL-FRA) are rumored to not be profitable as a result of the expansion of Air Canada Rouge's flights to Europe. Is this true?

I find this part particularly funny, yet confusing & hope this is simply rumour. Is AC part of the LH group? What part of A++ has AC violated in their agreement with LH? So AC should be a designated feeder for LH & feed their business into FRA/MUC, while LH can expand throughout North America as they whish? JVs are already under scrutiny as being anticompetitive. Should these rumours have any validity, then LH better be careful!

LH starts FRA-YUL (a well established route for AC) & drives down yield, but they seems to have a problem when rouge starts going to eastern Europe out of YYZ? What about SN starting BRU-YYZ, taking market share from an already established YUL-BRU? One must wonder why AC can't seem to be able to start YVR-FRA? It was listed in their growth plan in the investors day presentation, yet there's been no announcement of that sort?

6. Depends on who you ask, AC fanboys will say no but many will agree that some of the expansion is either a bit bold or unnecessary

Bold & unnecessary? What do you believe happened? Management just woke up one day & decided that it was a good day to begin plans for expansions? Are you aware of how much market share AC has lost from the 2000s up to around 2012? Now that the company is the middle of a successful transformation process (so far), it has every right to make up for lost organic growth & execute it's main business strategy out of YYZ. (Longhaul, 6th freedom, Rouge, etc..)

Now to stay on topic here. If we are to interpolate AC's financial results over the past 3 years, it's reasonable to assume that Rouge is profitable (though not official). I myself have mixed feelings about the RV product, but I found the strategy to be necessary. One can only ask how AC mainline's product was to compete with TS,WJA & SWG? My only whish is that they created a cheaper IFE (transat like), instead of the internal wifi system. Seems that wja is moving in that direction as well?

Is Rouge not part of the AC-LH-UA joint venture? LH has Cityline to 5 North America locations including YUL. Isn't this also part of the JV? If so, why would any of the airlines have a problem if one of the JV partners can bring a low cost solution to market?

http://airwaysnews.com/blog/2013/10/08/ ... -montreal/
"The important thing for Air Canada here is that the combination of rouge and its participation in the trans-Atlantic joint venture give it a powerful ability to maximize profits on trans-Atlantic passengers."

I wonder if having Rouge under a different OC could have allowed AC to provide point to point service to Europe. There was a rumour floating around that they were limited due to agreements made with LH during restructuring and having Rouge allowed them to side step these restrictions made during the exit financing from CCAA with deutsche bank and LH.

Total rumour and speculation.

As a onetime flier on Air Canada Rouge... I will say that last year November 2015 Thanksgiving Week from LAX-YVR was decent, IFE on cellphone did not work until 30 mins from arrival and poor Legroom, even for a Filipino Child.

There are numerous examples for r/t non stop flights departing YYZ in a week or so for 7-14 day stays where, overall, the flights to London are ridiculously cheap, with Rouge a mere $17 cheaper to LGW than the much higher cost mainline is to LHR, (C$701 vs C$718 r/t). So much for the LHR premium.

Fares to LHR the same time last year were 30-40% more.

The best I could find from NYC to London n/s r/t over the same period, (about 100 miles shorter) was c$1,300. I guess this helps explain why, even with all AC's "success", they still dramatically lag the performance of US airlines.

jimbo737 wrote:

There are numerous examples for r/t non stop flights departing YYZ in a week or so for 7-14 day stays where, overall, the flights to London are ridiculously cheap, with Rouge a mere $17 cheaper to LGW than the much higher cost mainline is to LHR, (C$701 vs C$718 r/t). So much for the LHR premium.

Fares to LHR the same time last year were 30-40% more.

The best I could find from NYC to London n/s r/t over the same period, (about 100 miles shorter) was c$1,300. I guess this helps explain why, even with all AC's "success", they still dramatically lag the performance of US airlines.

You haven't proven anything with this assertion. That is such a small sample size to use as a comparison, there is no value in using it to draw any sort of legitimate conclusion. At this time of year, leisure traffic is low, school is recently back in session, families aren't travelling as much. Looking at next week as you pointed out, the cheapest J fare I could get was over $7000 RT. That tells me where the money is at this time of year. If Y fares have to be discounted to fill the back end, so be it, but at 7k RT for J, with flights sold out in that cabin, sounds like they aren't hurting. Take the average fare for the entire summer this year versus last, and compare them, that will tell you everything you need to know. The performance of AC in the past year has been excellent, looking at their profit margins, they are in the black. They might not have the margins of others, but remember what they have done in the past year, how many new airplanes they have taken on. Pardew my lack of financial knowledge, but I think its pretty clear that their strategy is working.

It's important to remember that in some cases AC wouldn't serve a route without the Rouge cost structure, so as much as the inflight amenities might be less than AC mainline, passengers have additional options that they might not otherwise have. For example, Vancouver to Osaka and Vancouver to Dublin. It's unlikely that AC mainline would choose to operate those route, but Rouge has. There are other examples, I'm sure.

The fares to LHR have been way, way down for months compared to the spring, summer and fall of 2015.

Apologists will always respond in this way, (ie it's a "one off" example and not accurate!), but when the same result happens over and over and over again, week after week, month after month, it paints a pretty obvious picture of what's going on.

All the Rouge flying that over flies the JV hubs is destroying those markets.

AC and LH have ZERO n/s competition from YYZ to FRA tomorrow and for the next week yet seats are priced tomorrow between $434 on its iron and $519 on LH iron one way, (and $434 for as far out as you'd like to look). Munich is $434. That one way fare on this route this time last summer was more than $1,500 and it didn't matter how far in advance you booked it. One way was full fare and Europe operated with 90% loads in the summer of 2015.

AC is charging $1,567 from YYZ to LHR tomorrow, $2,512 on Rouge to LGW, $1,755 to CPH, $1,786 to AMS, $1,755 to PRG, (via MUC) and on and on.

How many clever people will simply book a $434 seat to FRA, then buy a $578 one way fare on SAS or LH to CPH for a total of $1,012 and pocket the $744 difference?

The cheapest fare n/s from NYC to FRA tomorrow is on Singapore Airlines at $862, After that, its UAL, DAL and LH at $3,765. The cheapest n/s fare from Detroit to FRA tomorrow is $3,852 on both LH and DL. Again, AC is $434 from Toronto to Frankfurt, operated by it's highest cost operation, AC mainline.

How does AC win here? Singapore is still cheaper and its n/s. AC acquires a transatlantic passenger and $723 in revenue, but in doing so, removes about $3,000 in revenue from its Star Partner, United.

Here's the kicker: Even though the sum of two separate tickets on AC from LGA to YYZ to LHR is $723, they are pricing it as a single ticket tomorrow at $1,977, $1,200 higher. In other words, they are under cutting themselves by $1,200. What ticket would YOU buy? $723 or $1,977, operated on EXACTLY the same aircraft leaving at EXACTLY the same time.

I'm sure LH, who already reported transatlantic weakness are simply overjoyed with yields from YYZ and Canada to Europe these days.

Here's some perspective: the cheapest fare from Toronto to Winnipeg tomorrow on AC is $596, a flight that is 977 miles compared to 3,953 miles from YYZ to FRA with wide open $435 fares. Wow.

Sure, AC is telling everyone who will listen that they are getting lots of 6th freedom traffic from the US, but holy cripes, look at the discounting they are doing to acquire it! $288 for a last minute, (supposedly premium) fare from LGA to YYZ and then a $435 seat from YYZ to FRA! With that sort of "Air India" discounting, it shouldn't be a surprise that 6th freedom traffic is "way up". BMW sales would be "way up" if they started discounting new cars by 70%. I doubt their profits would be "way up" though.

People can talk about the "success" of Rouge till the cows come home, but when it results in these sorts of upside down issues that destroys the profitability of key strategic routes and the former cash cow joint venture with LH, the full story is not being told.

It definitely illustrates why, even with the cheapest fuel in decades and after years of cost cutting, that AC still can't generate results that can compete with the US airlines.

They've flooded the market with new capacity that is only being filled by "discount bombshell" pricing.

The US carriers are already cutting back their TATL capacity, even with far superior overall margins than AC, who continue to plow more capacity into the market to compete with far lower cost operators purely on price.

It really doesn't make a great deal of sense. Maybe we'll see evidence of this in early November.

oldannyboy wrote:

2. They're an LCC, any complaining or criticism should be disregarded (you get what you pay for)

*NOT AT ALL*. Not at all, my friend.
You pay for a full AC ticket and you end up on a Rouge aircraft. What AC does is akin to paying for a BA flight, only to end up on Ryanair. NOT FAIR.
there's no Rouge fare at all. Rouge is simply a legalized scam.

This is exactly the point. Basically people are buying Ac tickets to fly an LCC airline. This is ridiculous. Now of course if you are a frequent flyer or a well traveled person you know which routes are operated by rouge, but a non-expert wouldn't have a clue. Also, because most rouge routes are former AC routes, it is very easy to notice the fares have not come down a cent. Last but not least, AC is not *an* airline independent from AC. The designation RV is never used in ticket itinerary or even on the airport schedule. For all legal purposes rouge flights are operated by AC which is what pisses is off.

jimbo737 wrote:

The fares to LHR have been way, way down for months compared to the spring, summer and fall of 2015.

Apologists will always respond in this way, (ie it's a "one off" example and not accurate!), but when the same result happens over and over and over again, week after week, month after month, it paints a pretty obvious picture of what's going on.

All the Rouge flying that over flies the JV hubs is destroying those markets.

AC and LH have ZERO n/s competition from YYZ to FRA tomorrow and for the next week yet seats are priced tomorrow between $434 on its iron and $519 on LH iron one way, (and $434 for as far out as you'd like to look). Munich is $434. That one way fare on this route this time last summer was more than $1,500 and it didn't matter how far in advance you booked it. One way was full fare and Europe operated with 90% loads in the summer of 2015.

AC is charging $1,567 from YYZ to LHR tomorrow, $2,512 on Rouge to LGW, $1,755 to CPH, $1,786 to AMS, $1,755 to PRG, (via MUC) and on and on.

How many clever people will simply book a $434 seat to FRA, then buy a $578 one way fare on SAS or LH to CPH for a total of $1,012 and pocket the $744 difference?

The cheapest fare n/s from NYC to FRA tomorrow is on Singapore Airlines at $862, After that, its UAL, DAL and LH at $3,765. The cheapest n/s fare from Detroit to FRA tomorrow is $3,852 on both LH and DL. Again, AC is $434 from Toronto to Frankfurt, operated by it's highest cost operation, AC mainline.

How does AC win here? Singapore is still cheaper and its n/s. AC acquires a transatlantic passenger and $723 in revenue, but in doing so, removes about $3,000 in revenue from its Star Partner, United.

Here's the kicker: Even though the sum of two separate tickets on AC from LGA to YYZ to LHR is $723, they are pricing it as a single ticket tomorrow at $1,977, $1,200 higher. In other words, they are under cutting themselves by $1,200. What ticket would YOU buy? $723 or $1,977, operated on EXACTLY the same aircraft leaving at EXACTLY the same time.

I'm sure LH, who already reported transatlantic weakness are simply overjoyed with yields from YYZ and Canada to Europe these days.

Here's some perspective: the cheapest fare from Toronto to Winnipeg tomorrow on AC is $596, a flight that is 977 miles compared to 3,953 miles from YYZ to FRA with wide open $435 fares. Wow.

Sure, AC is telling everyone who will listen that they are getting lots of 6th freedom traffic from the US, but holy cripes, look at the discounting they are doing to acquire it! $288 for a last minute, (supposedly premium) fare from LGA to YYZ and then a $435 seat from YYZ to FRA! With that sort of "Air India" discounting, it shouldn't be a surprise that 6th freedom traffic is "way up". BMW sales would be "way up" if they started discounting new cars by 70%. I doubt their profits would be "way up" though.

People can talk about the "success" of Rouge till the cows come home, but when it results in these sorts of upside down issues that destroys the profitability of key strategic routes and the former cash cow joint venture with LH, the full story is not being told.

It definitely illustrates why, even with the cheapest fuel in decades and after years of cost cutting, that AC still can't generate results that can compete with the US airlines.

They've flooded the market with new capacity that is only being filled by "discount bombshell" pricing.

The US carriers are already cutting back their TATL capacity, even with far superior overall margins than AC, who continue to plow more capacity into the market to compete with far lower cost operators purely on price.

It really doesn't make a great deal of sense. Maybe we'll see evidence of this in early November.

Really now. So please explain to me what A++ represents to you? Is it an agreement to benefit LH exclusively? Let's flip the argument around and see what LH has done in kind . Flooding the YUL market by introducing FRA-YUL when AC was well established & drowning fares? Who fired the shot? What about SN doing BRU-YYZ? (Please do not confuse me as a protectionist)

Has AC added any other route in Germany with RV?? Why would they not be allowed to tap into eastern European routes & have direct access to these markets. Has LH shown the same regard over the past decade broadening their network in North America & bypassing AC/UA hubs?

Comparing air fares to car sales is simply incomprehensible! Anyone with basic knowledge of economics would not confuse consumer descretionary goods with services. It's like comparing Japanese to Spanish. Little to no correlation.

AC can't compete with US carriers? Loaded statement?? Which carriers are you comparing with directly. With Delta perhaps, but relative to UA or AA? Not so sure about that.

Jimbo, I believe in JVs but there is a limit to how much capacity discipline they can preach, since some groups label them as anticompetitive. LH is already fighting a fierce battle to the east. They cannot afford to start one to the west. (Ironic isn't it??)

jimbo737 wrote:

AC and LH have ZERO n/s competition from YYZ to FRA tomorrow and for the next week yet seats are priced tomorrow between $434 on its iron and $519 on LH iron one way, (and $434 for as far out as you'd like to look). Munich is $434. That one way fare on this route this time last summer was more than $1,500 and it didn't matter how far in advance you booked it. One way was full fare and Europe operated with 90% loads in the summer of 2015.

You need to check your facts. Condor offers n/s competition on YYZ-FRA who are the ones offering $443 fares for tomorrow (09/21).

o/w AC and LH fares are $1786 for YYZ-FRA for the same date.

VCEflyboy wrote:

Now of course if you are a frequent flyer or a well traveled person you know which routes are operated by rouge, but a non-expert wouldn't have a clue.

Even if you are an AC frequent flyer and know the difference, what happens in cases like this?

http://www.routesonline.com/news/38/air ... ght=bogota

If you had bought a AC ticket for travel to Bogata in October before September 13, you would have knowingly bought a ticket to fly on a real AC plane. Now, after it's purchased, you are getting stuck on a Rouge low service/high capacity flight. These passengers had a choice between AC and other airlines and chose AC. If the choice had been between Rogue and other airlines, many would likely choose other airlines. Does AC give them a refund? Do they compensate them for the fare difference if they now have higher fares on other airlines? Do they at least get preferred seating, free food/alcohol, or some other compensation, since they are not going to get what they paid for when purchasing their ticket?

yyztpa wrote:

1900Driver wrote:

7) The final question I have is about something I've read on another post. If I am right, I've heard that Air Canada and Lufthansa have been having a rather troubled relationship. The Air Canada Mainline routes to Germany (which are YYC-FRA, YYZ-FRA, YYZ-MUC, YOW-FRA, and YUL-FRA) are rumored to not be profitable as a result of the expansion of Air Canada Rouge's flights to Europe. Is this true?

I find this part particularly funny, yet confusing & hope this is simply rumour. Is AC part of the LH group? What part of A++ has AC violated in their agreement with LH? So AC should be a designated feeder for LH & feed their business into FRA/MUC, while LH can expand throughout North America as they whish? JVs are already under scrutiny as being anticompetitive. Should these rumours have any validity, then LH better be careful!

LH starts FRA-YUL (a well established route for AC) & drives down yield, but they seems to have a problem when rouge starts going to eastern Europe out of YYZ? What about SN starting BRU-YYZ, taking market share from an already established YUL-BRU? One must wonder why AC can't seem to be able to start YVR-FRA? It was listed in their growth plan in the investors day presentation, yet there's been no announcement of that sort?

6. Depends on who you ask, AC fanboys will say no but many will agree that some of the expansion is either a bit bold or unnecessary

Bold & unnecessary? What do you believe happened? Management just woke up one day & decided that it was a good day to begin plans for expansions? Are you aware of how much market share AC has lost from the 2000s up to around 2012? Now that the company is the middle of a successful transformation process (so far), it has every right to make up for lost organic growth & execute it's main business strategy out of YYZ. (Longhaul, 6th freedom, Rouge, etc..)

Now to stay on topic here. If we are to interpolate AC's financial results over the past 3 years, it's reasonable to assume that Rouge is profitable (though not official). I myself have mixed feelings about the RV product, but I found the strategy to be necessary. One can only ask how AC mainline's product was to compete with TS,WJA & SWG? My only whish is that they created a cheaper IFE (transat like), instead of the internal wifi system. Seems that wja is moving in that direction as well?

Is Rouge not part of the AC-LH-UA joint venture? LH has Cityline to 5 North America locations including YUL. Isn't this also part of the JV? If so, why would any of the airlines have a problem if one of the JV partners can bring a low cost solution to market?

http://airwaysnews.com/blog/2013/10/08/ ... -montreal/
"The important thing for Air Canada here is that the combination of rouge and its participation in the trans-Atlantic joint venture give it a powerful ability to maximize profits on trans-Atlantic passengers."

That's the point I am trying to make. However, some are suggesting that LH seems to have a problem with that?

1900Driver wrote:

yyztpa wrote:

1900Driver wrote:

I find this part particularly funny, yet confusing & hope this is simply rumour. Is AC part of the LH group? What part of A++ has AC violated in their agreement with LH? So AC should be a designated feeder for LH & feed their business into FRA/MUC, while LH can expand throughout North America as they whish? JVs are already under scrutiny as being anticompetitive. Should these rumours have any validity, then LH better be careful!

LH starts FRA-YUL (a well established route for AC) & drives down yield, but they seems to have a problem when rouge starts going to eastern Europe out of YYZ? What about SN starting BRU-YYZ, taking market share from an already established YUL-BRU? One must wonder why AC can't seem to be able to start YVR-FRA? It was listed in their growth plan in the investors day presentation, yet there's been no announcement of that sort?



Bold & unnecessary? What do you believe happened? Management just woke up one day & decided that it was a good day to begin plans for expansions? Are you aware of how much market share AC has lost from the 2000s up to around 2012? Now that the company is the middle of a successful transformation process (so far), it has every right to make up for lost organic growth & execute it's main business strategy out of YYZ. (Longhaul, 6th freedom, Rouge, etc..)

Now to stay on topic here. If we are to interpolate AC's financial results over the past 3 years, it's reasonable to assume that Rouge is profitable (though not official). I myself have mixed feelings about the RV product, but I found the strategy to be necessary. One can only ask how AC mainline's product was to compete with TS,WJA & SWG? My only whish is that they created a cheaper IFE (transat like), instead of the internal wifi system. Seems that wja is moving in that direction as well?

Is Rouge not part of the AC-LH-UA joint venture? LH has Cityline to 5 North America locations including YUL. Isn't this also part of the JV? If so, why would any of the airlines have a problem if one of the JV partners can bring a low cost solution to market?

http://airwaysnews.com/blog/2013/10/08/ ... -montreal/
"The important thing for Air Canada here is that the combination of rouge and its participation in the trans-Atlantic joint venture give it a powerful ability to maximize profits on trans-Atlantic passengers."

That's the point I am trying to make. However, some are suggesting that LH seems to have a problem with that?

Thanks to everyone who has added there thoughts to this post. You guys have brought some very good evidence to the table and it keeps getting better every time I read it. Keep in mind that most of this is a rumour. Air Canada Rouge might be causing some serious problems in Europe, as well as problems for its relationship with Lufthansa. However, keep in mind that Lufthansa CityLine should not be involved in this. Sure, they started a seasonal FRA-YUL service, but otherwise most of the Lufthansa CityLine flights don't even touch what is going on between Air Canada Rouge and Lufthansa (if anything is really happening between Air Canada and Lufthansa). Other than FRA-YUL, the only destinations that will be fully served by Lufthansa CityLine will be NBO, PTY, PHL, SJC, TPA, CUN, MLE, and MRU. Some destinations like ATL and MAA are going back to mainline.

The problem with all the new capacity to Europe from YYZ is that it has canibalized traffic that used to fly through the highly profitable star hub. In order to fill otherwise empty aircraft, there is massive discounting going on from Toronto MUC and FRA.

One way fares are usually well below $500 whereas they used to be in the $1,700 to $1,800 range.

This is causing all kinds of yield issues as passengers are discovering all kinds of cheap workarounds.

Why pay $1,800+ to fly from YYC or YVR to Germany when you can by a ticket on AC or WJ to YYZ and then connect onto AC's heavily discounted flights to Germany and save $600 to $700 a ticket? If they fly WJ down to YYZ, AC loses even more revenue, turning a $1,700 ticket into a $450 ticket.

If you think passengers won't do this, check out what people will do to save 5 cents a liter in gas, maybe $5 total on a fill up!

Unless this cannibalization of the mainline is accounted for, it's a little premature to assume Rouge is a huge success.

NichCage wrote:

Thanks to everyone who has added there thoughts to this post. You guys have brought some very good evidence to the table and it keeps getting better every time I read it. Keep in mind that most of this is a rumour. Air Canada Rouge might be causing some serious problems in Europe, as well as problems for its relationship with Lufthansa. However, keep in mind that Lufthansa CityLine should not be involved in this. Sure, they started a seasonal FRA-YUL service, but otherwise most of the Lufthansa CityLine flights don't even touch what is going on between Air Canada Rouge and Lufthansa (if anything is really happening between Air Canada and Lufthansa). Other than FRA-YUL, the only destinations that will be fully served by Lufthansa CityLine will be NBO, PTY, PHL, SJC, TPA, CUN, MLE, and MRU. Some destinations like ATL and MAA are going back to mainline.

The LH product which is officially operated by LH City Line (because of the pilots flying these birds) is a different thing than what Rouge does for AC.

While Rouge has aircraft completely equipped for leisure routes (high density, no Biz Class), the only difference on the LH City Line flights besides the pilots is the smaller Biz Cabin. But the seats in all classes are the same. The LH approach for what AC is doing with Rouge is Eurowings with the difference that they don't fly out of LH's hubs in Germany but rather out of CGN.