The sky is the limit…

Interview with Daniel Shurz, Air Canada.

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1,370 scheduled flights per day, over 33 million passengers carried to 170 destinations and services offered in 965 airports world-wide. Air Canada’s Vice-President, Networking Planning, Daniel Shurz, knows very well this universe. The executive, father of a little boy who keeps him busy while at home and away from the airplanes, was closely involved with the negotiations that lead to the Memorandum of Understanding for Codesharing and Frequent Flyer Benefits, which was closed in June with Brazil’s TAM.

By Paula Mazulquim

How is a typical day at Air Canada’s network planning?
Daniel Shurz – Every day we are focused on running the airline in terms of planning or flight scheduling and building effective alliance partnerships with the world’s top airlines. We plan our routes for future seasons, at least 6 months out, by identifying market opportunities and seeing how we can deploy our assets, planes and crew in a profitable manner. Our scheduling group then builds the timings with the right sized aircraft on a route-by-route basis. We are also a founding member of “Star Alliance”, which is the world’s first and largest alliance that combines our partners’ respective networks to offer customers broader reach than any single carrier could afford to do. This is another area of activity that Air Canada has been a leader in and it’s why we pursued a recent memorandum of understanding with TAM to find ways of serving more points within Brazil, than Sao Paulo that Air Canada serves directly from our main hub in Toronto.

How long did the negotiations take until the final MOU agreement was signed last June? How was negotiating with TAM?
Daniel Shurz – It’s a pleasure doing business with TAM. They’re an excellent airline, very professional. I’d say a couple of months or so.

 Considering that Air Canada has a market-dominant position in the domestic airline market, how do you think this agreement will help Air Canada to become stronger in Canada’s airline market?
Daniel Shurz – We have a strong market position particularly because of our international network, alliances and the ability to connect Canadians and the world. We think TAM customers will find our network useful, not only to and from all points across Canada, but also to reach major Asian and European destinations.

 Through alliances such as the one Air Canada just signed with Brazil’s TAM, airlines gain access to larger international networks, and membership in an alliance tends to enhance an airline’s productivity and profitability. Considering current Canadian circumstances, do you think that transborder and international competition has been reduced?
Daniel Shurz – On the contrary, the level of international and transborder U.S. flying is currently lower than a year ago due to the unrelenting record high cost of fuel. Even with a small dip seen in August, it’s still twice the level a year ago and quadruple what airlines were paying four years ago. Nevertheless, every carrier that was flying in January 2008 is still flying today to the U.S. and most international markets. With three major global alliances, including “Star Alliance”, that Air Canada helped to found in 1997, we believe competition has increased as we all work more effectively to attract customers.

Next winter (northern hemisphere), Air Canada will be deploying its largest and most modern aircraft (Boeing 777-300 ER) for Brazil providing an additional 138 seats a day. Why this increase?
Daniel Shurz – Brazil is our largest South America market. We find there’s strong business demand due to the growth of the Brazilian economy, and consistent year-after-year growth of southbound Canada-Brazil trade.

Daniel Shurz

 The deployment of a Boeing 777 on the route will also enable Air Canada to expand cargo services between Canada and Brazil. How much of today’s airplane capacity is devoted to cargo services and how much are you expecting to increase?
Daniel Shurz – Currently our Boeing 767-300 aircraft are able to lift four cargo palettes, in addition to passenger baggage. With our new Boeing 777-300 aircraft during the northern hemisphere winter season (we revert back to Boeing 767-300 aircraft for the rest of the year), that capacity will increase by 250% to 10 palettes. In weight, that represents about a doubling our current load capability to a maximum of up to 19 tons northbound to Canada, slightly less southbound.

 Besides increasing air traffic between Brazil and Canada from 73,000 to 93,000 per year, how does signing an agreement with Brazil’s largest airline make Air Canada even stronger competing for international traffic?
Daniel Shurz – Our agreement with TAM will allow us to provide our customers, and theirs, a single ticket, checked-through bags, a single point for customer service and easy access to competitive fares. So it gives our customers, and theirs, access to a greatly expanded network. And it goes without saying, from a business perspective, additional traffic from secondary markets throughout a major country like Brazil.

Many countries’ airline sectors have weathered a period of consolidation and restructuring in recent years. What is the biggest challenge of attempting to create conditions to sustain a competitive airline industry in the relatively small Canadian market?
Daniel Shurz – We have a relatively stable industry environment already in Canada. With two major domestic players and ourselves competing with the largest international carriers serving Canada, we keep each other on our toes. Market forces mean there’s less risk of irrational behaviour. The biggest challenges, aside from fuel, our single largest expense item that’s doubled from one year ago, are other operating costs such as airport fees, air navigation charges and high taxes for customers.

According to Canada Transportation Act Review, over the next 20 years, passenger traffic will grow at an estimated rate of 3.1% annually and freight traffic at a rate of 4.8%. Will this trend persist, even though oil prices are over $100 a barrel?
Daniel Shurz – That’s a tough one, and I’m not a crystal ball gazer. However, assuming oil prices stabilize at a particular price point, while there will inevitably be a reduction in demand as fares rise, GDP growth and international trade will see a return to growth from a lower base point.

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