Venice Marco Polo Airport

Air Canada aims to sustain profitability momentum through a focus on international service

Air Canada returned to profitability for the full year 2012 despite bruising labour unrest and intensifying competitive pressure from its main domestic rival WestJet.

To combat the increasing threat from WestJet, Air Canada is leveraging its international network in the hopes that strategic moves it is making to improve existing service and introduce new markets will allow it to sustain its recently-achieved fragile profitability.

The carrier’s 2012 adjusted net income of CAD53 million (USD53 million) reversed a loss of CAD122 million (USD122 million) for the year-prior. Its full year 2012 profit is all the more noteworthy given its net losses for 1H2012 grew by CAD241 million (USD241 million) to CAD306 million (USD307 million).

While Air Canada turned a CAD107 million (USD 107 million) profit in 2010, it sustained losses of CAD24 million (USD24 million) in 2009. During 2008 Air Canada bled CAD1 billion (USD1 billion), which was followed by concessionary agreements reached with labour groups in 2009 to avoid a second stint in creditor protection after its emergence in 2004.

Qantas-Virgin dispute over Italy rights goes to the heart of the new alliance partnerships

Virgin Australia and Qantas are squaring off over a limited number of codeshare seats available for use with third airlines between Australia and Italy, setting the stage for a looming battle for Europe. The Italian dispute goes to the strategic heart of the alliances created between the two Australian carriers and their Middle East and Asian counterparts.

Qantas currently holds the entire 1,000 weekly codeshare seats available under the air services agreement between the two countries. But with an expanding virtual European network through partners Etihad and Singapore Airlines, Virgin Australia is gunning for its share to keep up with the proposed Qantas-Emirates mega-alliance to Italy.

Qantas has reapplied for renewal of the entire capacity which until now it has used in conjunction with Cathay Pacific over Hong Kong and British Airways via Singapore and London, arguing that as the incumbent it has first rights. But Virgin Australia believes it is entitled to a commercially viable share as a new Australian airline entrant on the route.

Romania’s Carpatair is feeling the inroads of LCCs in its regional market

Carpatair has added its first Boeing 737 to its fleet of regional aircraft, allowing the airline to develop longer range routes and to reduce unit costs particularly on routes where it competes head-to-head with Wizz Air. By deploying higher capacity aircraft, Carpatair hopes to boost its competitiveness and adapt to the changing environment with LCCs increasingly expanding their footprint into regional markets.

Carpatair commenced operations in 1999 providing regional connectivity from Timişoara Traian Vuia International Airport to other cities in Romania as well as a number of international airports. The airline built its operations on the traditional hub-and-spoke model using a fleet of Saab 2000 and Fokker 70/Fokker 100 aircraft. Carpatair has developed step by step by remaining truthful to its niche approach and growing its market share versus TAROM, but the mushrooming LCCs are now forcing the carrier to rethink its model and branch out with longer range routes and higher capacity aircraft.

In Europe, Scandinavian airports are rising to the economic challenge

Major European airports – some privatised, others in the public sector – have released financial results for 1Q2012 and in two cases for FY2011. Unlike the last time an across-the-board results survey was undertaken, in 2011, there is a greater degree of uncertainty in some countries in this first quarter that is reflected in these reports but there still remain more positive than negative results, especially in Scandinavia.

Italy's S.A.V.E. airport operator invests and prospers

While most of the attention that is directed towards airport operators in Italy is focused on Rome and Milan, the two biggest cities, the Venice-based S.A.V.E., which operates both the Marco Polo and Treviso airports in addition to others in Italy and beyond, quietly gets on with the job of turning its small- to medium-sized airports into success stories.

European LCC start-up Volotea looks to stimulate demand in regional markets, starting with Venice

Volotea, Europe’s newest low-cost carrier, is preparing to launch operations in April with a base at Venice Marco Polo Airport in Italy. The carrier is headquartered in Barcelona, which was the main hub for now defunct carrier Spanair, but has decided to base its initial fleet of Boeing 717s in Venice. Volotea will initially serve several destinations in Italy, France and Spain but has no immediate plans to serve Barcelona.

Volotea was founded last year by Carlos Muñoz and Lázaro Ros, who founded Spanish budget carrier Vueling in 2004. Mr Muñoz, who is Volotea’s CEO, says the airline’s goal “is to forge new and efficient air connections between Europe's small and mid-sized cities currently not well served by direct flights”. By selecting the 717, which is smaller and significantly cheaper to acquire than 737NGs or A320s, Volotea is able to enter routes which are generally too thin for other LCCs.