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Air Transat braces for more pressure from currency headwinds than the challenge from rouge

Analysis

Air Canada's low-cost subsidiary rouge for the moment does not seem to be creating huge pressure for Air Transat, which operates on many of the same routes as rouge, targeting the same segment of leisure passengers.

Air Transat appears to be making moves to keep the overall supply-demand equilibrium in check in the busy summer season trans-Atlantic markets by keeping its supply growth relatively flat year-on-year, while Air Canada capacity increases. Even with Air Transat keeping a tight lid on supply, the company does project an overall 10% rise in supply from Canada to Europe during the summer season. However, pricing seems to be holding steady in those markets, perhaps indicating that rouge and Air Transat for now can co-exist.

As it kept capacity in check on trans-Atlantic services, Air Transat opted to grow its supply by 9% year-on-year to sun destinations during the summer season period. But the company believes pricing in those markets is holding steady even though some of the routes are amply served by other Canadian airlines.

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