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Air Canada: 2015 is the year of the Rouge

Air Canada (AC.TO) expects most of its 2015 growth to come from its budget airline, Rouge.

The airline is expecting a 10 percent increase in Available Seat Miles (ASM) in 2015, with 55 percent of that total expected to come from rouge, according to Air Canada CEO Calin Rovinescu.

“About 37 percent or so is international long haul flying, so a small portion is left for Canada,” said Rovinescu.

Starting in summer, Rouge will offer more flights. Currently focusing mostly on European destinations and resorts in Cuba and the Dominican Republic, Rouge will expand its routes within Canada.

“It gives us swing capacity that we can move around differently in the winter from the summer,” said Rovinescu.

But while Air Canada is pushing the Rouge brand, passengers may not be too pleased with Rouge taking on more routes.

Labelled by Air Canada as a leisure carrier, Rouge’s budget features have earned criticism.

Kevin O’Leary, Chairman O'Leary Financial, has expressed his opinion on the carrier, saying his flight was “the worst experience I’ve ever had in my life on an airline.”

“For every hour you spend on Rouge, you lose two years of your life expectancy,” O’Leary added.

Meanwhile, passengers have been vocal about their experiences with Rouge.

Air Canada has been breaking records lately, with January 2015 a record month in terms of traffic and passenger load factor.

Overall profit hit a record in 2014, with final profit rising to $105-million from $10-million in 2013.

Lower fuel prices are also expected to increase cost savings, but the airline isn’t holding out on the price of oil staying low. According to Rovinescu, Air Canada is basing its business on the price of oil being $100 per barrel.

“We’ll see what happens,” said Rovinescu. “If there’s short term benefits that’ll help us reduce indebtedness, help us buy some additional product, but we’re not counting on oil staying at these low prices forever.”

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