We-asked-Air-Canada-answered--Domestic-demand-middle-seats-and-refunds
Lisa Pierce, Air Canada’s Managing Director of Canada & USA Sales

We asked, Air Canada answered: Domestic demand, middle seats & refunds

TORONTO — Canada Day was a “bright spot” for Air Canada in a third quarter that has seen the carrier slash its schedule by 85% due to the global pandemic.

Speaking exclusively with Travelweek, Lisa Pierce, Air Canada’s Managing Director of Canada & USA Sales, said that the airline had a record day on July 1, with really good loads during Canada Day weekend although admittedly these were “much smaller than usual.”

Noting that transcon routes have been among Air Canada’s best performing so far, Pierce added that overall domestic service is “doing well” as there’s been pent-up demand among travellers to visit family and take staycations within Canada.

Regional domestic routes, however, haven’t been faring as well, which is why Air Canada recently cut 30 of these routes due to weak demand for both leisure and business travel.

“It’s much more challenging on the regional routes because they are smaller communities and they are heavily dependent on our entire network, both domestic and international,” said Pierce. “So with the reduced demand due to COVID-19, plus all the provincial and federal travel and border restrictions, it makes it much more difficult to make these routes work in this environment.”

The regional downsizing was the latest in a growing list of “significant structural changes” that Air Canada has made in recent months to adapt to the COVID-19 pandemic. These include reducing its fleet by 79 planes, laying off 20,000 employees and announcing a cost-savings initiative of $1 billion.

“We’ve obviously had to make a lot of very difficult decisions and this was one of them, and we are aware that it does impact communities and employees,” said Pierce. “We started out with a really good balance sheet before this all started, which has helped us through this, but we have to be able to make some tough decisions. It’s not easy and we don’t take them lightly, but they are necessary.”

Here are more highlights from our exclusive interview with Pierce:

WHAT’S GOING ON WITH THE U.S.?

When Air Canada first announced its reduced summer schedule in late May, it started with limited U.S. destinations including New York, Washington, Los Angeles, San Francisco, Boston and Chicago, with hopes for eventual expansion. However, news that the Canada-U.S. border will remain closed until at least Aug. 21 has put the brakes on any expansion plans for the moment.

To maximize its limited network, Air Canada is leaning heavily into its codeshare relationship with United, which allows it to reach cities it otherwise cannot fly to due to travel restrictions. Pierce also noted that there is some essential travel where Canadians can travel between the two countries, though they’re subject to the 14-day quarantine upon their return home, if travelling by air.

When asked whether the growing number of COVID-19 cases in the United States is of any concern, Pierce, an American citizen, expressed her frustrations over the blanket news coverage that has painted the entire country in a negative light.

“Our sales manager in New York lives in Brooklyn, across the street from the hospital, and has seen horrible things. But his parents live in South Carolina and it’s like a different country,” she said. “So I think we have to be very careful – it isn’t the whole country.”

And if/when Air Canada is ready to expand its routes in the U.S., what will its approach be?

“We follow where the demand is, and at some point there’s a leap of faith you have to take. It’s a chicken and the egg scenario – if there’s no flight then people can’t go. You have to make an educated guess and we have a lot of data that we use before making a decision on where to fly. And obviously we have the resources, we have the planes,” said Pierce. “We’re partnering with Cleveland Clinic for this very reason, so that every decision we make is based on scientific evidence, and with every bio-safety measure we put in place we can actually stand by what we’re doing and provide actual data to support the decisions we’re making.”

WHAT ABOUT MIDDLE SEATS?

Air Canada eliminated its adjacent empty seat policy on July 1, a measure it had implemented at the start of post-pandemic commercial flights. Many travellers criticized the move, saying it would put passengers at risk at a time when global numbers of COVID-19 are still rising. But Pierce said Air Canada has always been transparent about it being a temporary measure that would last only until June 30.

“We have a multi-layered approach and that was one of the measures we took,” she said. “But a lot has happened since then and we’ve done a lot of research and put out a lot of other measures in place, like temperature checks, mandatory face coverings, bio-static sprayers and medical grade disinfectants.”

Pierce was also quick to add that the time on a plane “is actually quite safe” now with mandatory face coverings and the air getting changed every 2-3 minutes.

REFUNDS & GOVERNMENT AID

The debate over refunds rages on, with Canada’s airlines under the microscope for offering future travel credits and vouchers as per the Canadian Transportation Agency’s statement on the matter. But Pierce noted that Air Canada has already refunded $1 billion in refundable tickets and maintains that Air Canada is refunding as per the fare rules.

“There are many constituents involved, including the travel trade and the consumer. We recognize that there is a burden on consumers but the decisions we’re making are for the benefit of everyone for the long term,” she said.

Pierce added that Air Canada has made several investments in recent months to “make the travel voucher a much more palatable option.” These include offering Aeroplan miles and a 65% bonus, making vouchers transferable without any expiration date, and introducing new refundable fares, giving customers more options at a more reasonable price to purchase refundable tickets in the future.

All this, said Pierce, was done in lieu of receiving government aid; to date, the Canadian government has not offered Canada’s airlines any kind of financial assistance.

“We are not waiting for the government to provide us with aid, that’s why we’re making some of these tough decisions so that we can survive without it,” she said. “Obviously if the terms were right and it made sense, of course we’d be open to it. But our objective is to make sure we’re sustainable, and we’ve been very fortunate with what we’ve been able to do to improve our liquidity position and we’ll continue to do that.”

A FINAL WORD TO TRAVEL AGENTS

In a crisis situation, the only way to survive is to rely on your most trusted partners, which is why Air Canada has been working very closely with travel agents. Noting how difficult these past few months for the retail trade have been, Pierce took the time to thank agents across Canada for their continued support.

“They are obviously in survival mode just like airlines are, and we’re talking to them regularly to find ways to help them and provide programs that help them survive,” said Pierce. “We’ve been partners for many years and will continue to be in the future. We are in this together, and we know that we need them as much as they need us. We have to do this together.”