Air Canada is stepping up its efforts to entice business travellers, targeting a growing market that offers the airline an opportunity to boost profits.
Air Canada will open a new lounge at Pearson International Airport on Friday that will be exclusive to international business passengers and also plans to expand a deal with BMW Canada Inc. that offers some of those passengers a ride to the lounge area from check-in so they can avoid crowds in the terminal.
"We are putting a lot of investment and focus on the international business customer," Ben Smith, Air Canada's president of passenger airlines said in an interview in the Signature Suite, which is an upgrade from its traditional Maple Leaf lounge, which will still cater to other Air Canada customers.
"This is a segment of the industry where we are seeing our product well accepted, valued appropriately and a great opportunity for us to drive increased profits," Mr. Smith said. "We're positioning – not the entire airline – but a big component of our international strategy around attracting more and more business-class customers."
A cocktail is poured at the bar of the Air Canada luxury business lounge at Pearson International Airport in Toronto.
Chris Donovan/The Globe and Mail
The business-traveller market is growing, he said, and passengers in that category are demanding more.
The carrier sees the expansion of such services as a way of attracting passengers from U.S. cities that don't have direct access to Europe and Asia, and can be convinced to travel to such destinations through Canadian cities instead of New York, Chicago or Los Angeles.
"What we hear from our existing business customers is the desire for more customization, more flexibility and higher quality at every step of the way," he said.
One step is how international business travellers get to the current Maple Leaf lounge and the new lounge. For the moment, Air Canada offers passengers rides on a random basis, using four BMW 7-Series sedans so some of them can avoid the noise and bustle of walking through Terminal 1.
The plan is to expand that to 20 vehicles within the next three months and offer it to every international business traveller whose journey starts in Toronto.
The idea, Mr. Smith said, came from Deutsche Lufthansa AG, a partner with Air Canada in the Star Alliance network. Many planes in Frankfurt load passengers away from the terminal so they must travel by bus across the tarmac to board the plane.
"They felt this was a real deterrent for high-end customers to use Frankfurt as a hub," he said. So Deutsche Lufthansa lined up Mercedes-Benz and Porsche vehicles to take first-class customers to the planes.
Business travellers are in the same segment of the population that BMW is trying to attract, he noted.
The new lounge can accommodate up to 160 customers, but Andrew Yiu, vice-president of product, said the peak is likely to be about 90 people during its heaviest use in the 5 p.m. to 9 p.m. window when many Air Canada international flights out of Toronto take off.
It boasts walls of Italian marble accented with Canadian maple wood treatments, buffet meals, full-course meals from a menu and a bar with a bar menu. Mr. Smith would not reveal how much Air Canada spent on the facility.
The lounge menu was created by award-winning Vancouver chef David Hawksworth.
Chris Donovan/The Globe and Mail
The menu was designed by chef David Hawksworth, whose Vancouver restaurant has been awarded "best upscale dining" by Vancouver Magazine for four consecutive years.
Air Canada flies to and from 60 cities in the United States, but only seven of those have non-stop service to Asia, Mr. Smith said. So Air Canada has stepped up its U.S. marketing so people from Pittsburgh, Philadelphia, Indianapolis and other centres will consider flying through its hubs in Toronto, Montreal and Vancouver.
Air Canada chief executive officer Calin Rovinescu told investors in September that the airline's 0.9 per cent share of U.S. passengers flying on non-U.S. airlines to Asia or Europe is lower than its "natural share."
If Air Canada could boost its share to 2 per cent it would generate $1.2-billion more in annual revenue, Mr. Rovinescu said.
American Airlines appears to have taken notice. The Fort Worth, Tex.-based airline said Tuesday it is expanding its Canada-bound flights and has redesigned its lounge at Pearson Airport's Terminal 3.
The carrier will offer overnight flights between Vancouver and Chicago starting May 4 and seasonal Calgary-Chicago flights beginning June 7. Passengers will be able to connect to flights to 130 destinations in 12 countries, American said. By comparison, Air Canada flies from Vancouver and Calgary directly to several destinations in Asia as well as London.
Air Canada and the Star Alliance are the biggest players out of Canada across the Atlantic and the Pacific oceans, and American and its Oneworld alliance want a bigger share, said one industry analyst.