Centerlines - April 2008 - (Page 19) ONE ON ONE We are also the world’s largest operator of the Embraer E-Jet series. These aircraft are helping to blur the lines between regional and mainline products and services. The level of passenger comfort on the 170/175 rivals that of narrow-body mainline aircraft such as the Boeing 737 and Airbus 320, and it allows our partners to confidently entrust their brand to us, knowing we can provide a seamless service to our mutual passengers. As the largest operator of E-Jets in the world and with a strong option position for future deliveries of that aircraft type, we are the best positioned to partner with airlines looking to add large regional jets to their networks. of smaller airplanes at its disposal when it makes decisions on routes, frequencies, etc. We feed Air Canada from smaller airports because we have the right sized airplanes. At certain times of day on heavy routes, they’ll offer a Jazz flight because our capacity and our trip cost is at the right level for that time of day, even dense city pairs like MontrealToronto or Ottawa-Toronto. And then, of course, we have other routes that we serve that have high local demand between cities in Canada, but again, for which our aircraft are the right size with the right economics. You have a capacity purchasing agreement with Air Canada. Could you explain to our readers what that means? Essentially our role is to fly on their behalf as essentially a contract carrier. They determine the missions that we fly, and we fly them for a certain cost. And for us, frankly, it doesn’t matter where we fly, although we care because we like to see our partners do well, but it doesn’t directly affect us in terms of whether the flight is full or half full or whether there’s a seat sale on or whatever. Our income is very stable and predictable. Looking forward to 2008, what are some challenges you’ll have to overcome? The challenges this year will be to continue to deliver those positive results and to further grow and diversify Jazz. (There won’t be) major challenges compared to the challenges that we’ve tackled in the past. The airline environment is always an interesting environment. We will be renegotiating our rates with Air Canada for our controllable costs for 2009-11, and we have our labor agreements that are coming due in mid-2009. Our major focus will be improving our efficiency, lowering our costs and growing and diversifying our business. In terms of diversification, Jazz late last year appointed a senior executive to develop other business opportunities for the carrier—and that includes contract flying for another airline. Nothing in Jazz’s contract with Air Canada precludes it from flying for another airline. The company has had some discussions with other carriers, but it won’t talk about them. Jazz’s ability to fly for Air Canada is somewhat limited by the Air Canada’s pilots’ labor agreement. The agreement precludes Jazz pilots from flying any aircraft with more than 75 seats or the more advanced regional jets. Jazz flies the Bombardier CRJ 705 with 75 seats in a two-class cabin. This aircraft is essentially an 84-seat CRJ 900 configured with fewer seats. The same agreement has Air Canada flying the Embraer 175 configured with 73 seats in two cabins. As you look back at 2007, what accomplishments are you most proud of? I think our financial results were very positive year-over-year. We’ve seen some good growth there. That was particularly good. We had a good reduction in our controllable costs, which was positive. We also had a very strong year operationally. Our on-time performance was very much improved over the year previous. And as a matter of fact, when we compare ourselves to all the U.S. regionals, we are consistently ahead every quarter in arrivals within 15 minutes, and that results in operational incentives being paid by Air Canada. We also made improvements in terms of baggage service, our maintenance reliability improved very substantially year-over-year and, of course, we spent a lot of time in cost Air Canada Jazz’s Joe Randell Air Canada Jazz is Air Canada’s primary regional carrier. Based in Halifax, it came together in 2001 from four Canadian regional carriers. Joe Randell, the carrier’s CEO, helped build Jazz from the operations four regional airline brands—AirBC, Air Nova, Air Ontario, and Canadian Regional—that were consolidated in 2002. Randell was uniquely qualified to do so, having co-founded one of the Jazz predecessors, Air Nova in 1985. At one time Jazz was a whollyowned unit of Air Canada and its parent, ACE Holdings. However, it is now semi-independent with its own stock. Public shareholders now own 79.9 percent of the company while ACE owns 20.1 percent. Jazz currently serves 85 cities in Canada and the United States with more than 848 daily routes. It flies the turboprop Dash 8, and two regional jet series, the 50-seat CRJ 100/200s and the 75-seat, CRJ 705—all are made in Canada by Bombardier. Can you describe how Jazz is important to Air Canada’s commercial strategy? First of all, our cost structure is beneficial to Air Canada. We operate at lower costs, especially lower trip costs. Our aircraft are smaller, and that gives Air Canada the effect of having a fleet AIR CANADA JAZZ FLEET Bombardier CRJ 705 Bombardier CRJ 100/200 Bombardier Dash 8-300 Bombardier Dash 8-100 Total 16 57 26 34 133 continued on page 23 www.aci-na.org | CENTERLINES 19 http://www.aci-na.org
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