The great challenge facing Canadian airline Air Transat, which has celebrated its maiden flight to Israel, is achieving public recognition of its rather unknown brand. Air Transat is offering direct flights on the Tel Aviv-Montreal route, while veteran Air Canada, an airline that has been flying to Israel for decades, is joining the competition with its own direct route to Montreal, in addition to its direct Tel Aviv-Toronto route.
"When we were considering operations in Israel, we discovered that 70% of the passengers on the line to Israel were Canadians, mainly from the Jewish community, and the rest Israelis. The Canadian winter is very cold. People want to escape to warmer climes, and Israel is a good option," Air Transat VP commercial Gilles Ringwald told "Globes." Air Transat's model differs from most airlines, because most of its business is in the wintertime.
"Our air fleet has 30 planes in the summer. In the winter, we rent more planes, giving us a fleet of 45 planes. Canadians flee the winter, a season that extends from November to April in Canada. 80% of them fly to Florida and the Caribbean Islands (the company flies to 32 destinations in the Caribbean) and 20% to Europe. Canadians love exploring new countries and destinations. You've got everything that a tourist looks for: beaches, culture, and history. In a one-week vacation, you can pretty much see everything."
"Globes": Is it difficult to market Israel as such an ideal place, given its worldwide reputation?
Ringwald: "To be candid, it's a challenge. I won't say that it's dangerous to fly to Israel, or to countries in the region, but it's a marketing challenge. Up until now, we have had positive responses to the campaign we launched portraying Israel as a new destination. 400 passengers have already signed up for flights this summer. We are investing in media through distributors and agents. I've no doubt that the number will increase next year."
Canadian tourist company Transat AT, which includes 600 travel agencies in Canada and North America, and markets tourism products in 50 countries around the world, founded Air Transat in 1986. The airline flies to 61 destinations in 30 countries, and has adopted an unusual motto: it calls itself a "leisure" airline, meaning that officially, it appeals less to the business tourist, although that market accounts for at least half of the world's civil aviation business. The route to Israel launched by Air Transat is the company's longest route, with an 11-hour flying time. It has purchased an Airbus 330-200 model airliner for the route from Emirates, Dubai's national airline. The aircraft includes personal entertainment systems with touch screens and a rich choice of content, and flight include full service with kosher lemehadrin food available for no extra charge but which must be ordered in advance.
"We have a special model because we grew from the world of travel agencies. We're the largest tourism company in North America. We build packages that include flights, transportation from airports to hotels, and hotel overnights. We added flights to the company as part of the package simply as a means of getting to the vacation. We're a leisure airline; we pick the passenger up from his home, fly him to the destination, and offer him a hotel there," Ringwald says, explaining the meaning of the term "leisure airline." He says, "It's something between a low-cost airline and a charter flight. We offer complete service, including baggage and food, but we have no par excellence business class, so we're not a legacy airline. The company was founded in order to support the tourism company, so it matches its agenda. You could call us a 'low fare' airline. We have business class, but without a 180-degree bed. It's also designed mainly for the leisure market that wants better flight conditions in seat space."
In order to offer attractive prices, Ringwald mentions several ways that costs have been cut. "Our air fleet includes narrow-bodied Boeing 737s for flights to nearby destinations and Airbus airliners for more distant destinations. Our pilots have licenses to fly both of these planes, so we have efficient utilization of our air staff.
"Secondly, we have no business lobbies at airports, and that's a significant saving in costs. We have 2,500 employees. It's a lean company in personnel. We have no luxury offices, and this saving in costs is rolled over onto the ticket prices."
Furthermore, Air Transat is one of the airlines rated most environmentally friendly. "Our offices are located in a building that's 100% environmentally friendly. We're fanatical about it. 80% of what enters the building is recycled. When the airplane touches the ground, we turn one engine off, and use only the other one. Of all the airlines, we're the strictest about this, because that's our way of minimizing the airplanes' environmental damage. We don't even use water bottles on board planes; we use pitchers. We pay attention to a lot of little things like that."
The civil aviation industry is subject to competition everywhere in the world, with the entry of low-cost airlines and lower prices.
"This competition also exists in Canada. We have the national carrier, which is aggressively competitive, and there are other Canadian airlines. We're a huge country with a small market of 30 million people. In Canada, low-cost airlines operate mostly interior flights. It's developing in international flights, and we're also taking note of it. Icelandic airline WOW has opened a route in Canada, and they're offering flights to Tel Aviv that take 26 hours with a connection flight. If you want to try it, good luck. If you compare it with a direct flight, it's obviously not worthwhile, but it's competition that we can't ignore.
"We're examining every move by airlines from North America and Europe, and we know that today, people are looking for the best, but more than that, they want bang for their buck. I'm convinced that we and WOW have different customers. There are people who want to save $5, and don't care about a 26-hour flight, and there are those who are willing to pay more for a direct flight, without losing their baggage on the way. There are some who want only business class. Every company has to define its target. For us, the target is to bring the passenger from Point A to Point B on a direct flight with 30 kilograms of baggage. We may not be as cheap as a connection flight, but from our standpoint, this is the substance of full value for money."
French-born Ringwald, 52, has been in his position for 18 months. He has an impressive resume, with 30 years of experience in the civil aviation industry, including spells at Thai Airways, Jet Airways, and Lufthansa. He lived in New York for years, before moving to Montreal.
"I'm a European. When I lived in the US, I flew a lot with local operators. When I enter a plane and get a friendly slap on my shoulder from the steward, it's a service code I'm not familiar with. Our air crews are trained to be pleasant and friendly; it's in our DNA. We have a lot of families flying with us, and we serve a lot of children. We even have a club for children on the plane. In Thailand, I learned what it means to be champions in service because it comes to them from their hearts. It's a country that was never colonized and has never been in a war, so service and hospitality there is perfect. The tourists don't feel alienated, and the locals regard the guests with respect because of the culture and history."
He also reveals that Thai Airways previously considered opening a direct route from Tel Aviv (something that is likely to occur, following the trade agreements recently signed by Israel and Thailand). "Canada is like Thailand; the tourist resource is also important for us. Montreal celebrated its 375th anniversary this year with daily celebrations. Over the past five or six years, Canada has become a tourist attraction, following the devaluation of its currency. The shekel-Canadian dollar exchange rate has fallen from NIS 4/CAD to NIS 2.6/CAD. Most of the tourists coming to Canada are from the US, followed by the UK, Germany, and France. In addition, Canada is positioned as the world's safest country, which Australia and New Zealand used to be. In view of the security events that have taken place around the world, it's a very important consideration for tourists."
Two airlines operate flights to Canada from Tel Aviv: El Al Israel Airlines Ltd. (TASE: ELAL) to Toronto and Air Canada to Toronto and Montreal. Your brand is almost unknown.
"Air Canada is our direct competitor, not El Al. The fact that Air Canada has been flying here for years, and its brand is known, definitely poses a challenge. We'll take a number of steps to increase the awareness of our brand in cooperation with TAL Aviation (which represents Air Transat in Israel, M. R.-C.). This is our biggest challenge; I admit it and I'm aware of it. I'm confident that our product is more worthwhile, but we have a lot of work here, and we'll invest in campaigns in adaptation to the local market. The timing of Air Canada's entry into the Montreal route was no coincidence; they came shortly after us. For me, it was a sign that we made a good decision."
The competition is good for the consumers, because it will be reflected in the price.
"Competition is good, but in the civil aviation sector, you have to be careful that competition is not destructive, because sometimes, when prices fall too much because of intense competition, some companies don't survive, and drop out. At a certain point, if you don't make money, the service you provide also becomes careless. The prices have to reflect the right balance, so that everyone makes money. Otherwise, a monopoly is created, and the consumers will lose. We've see this happen in civil aviation, too."
Asked whether Montreal can attract Israeli tourists as an alternative to visiting New York, he answers, "No city can compete with New York, just as no city can compete with Paris or London. I'm not comparing cities, but the distance between New York and Montreal is a one-hour flight, and you can combine a visit to both cities. We have many customers who live in New York, mainly members of the Jewish community and families with many children. They drive to Montreal six hours by car, and fly from there to Tel Aviv. For a family of eight, this is significant, and when you add to it the low exchange rate of the Canadian dollar, it's a significant saving. We haven't marketed this product, but it's the result of the currency devaluation and calculations that consumers make by themselves."
Published by Globes [online], Israel Business News - www.globes-online.com - on July 5, 2017
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