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Air Transat plans more seats, more fees in bid to save money

03/12/2015 11:25 EDT | Updated 05/12/2015 05:59 EDT
Air Transat plans to increase the number of seats aboard its Airbus A330 jets on routes to London and Paris in a bid to save money.

It also plans to increase revenue from passengers on "ancillary services,"  a term that could include baggage fees or preferred seating.

The airline is aiming for $100 million in cost savings and margin improvements over the next three years, after losing $64.3 million in the first quarter of 2015, widening from a $25.6 million loss a year earlier.

Air Transat announced plans to increase seating density on its wide-bodied Airbus A330 jets, but didn't say what would happen to legroom. The planes currently have 333 economy class seats with 81-84 centimetres of pitch (room from the back of one seat to the next.)

Extra fees on airlines

The plan comes after Westjet announced plans to put thinner seats on its aircraft to boost the number of passengers.

Additionally Air Canada CEO Calin Rovinescu told CBC last week that fees for extra services are often the only way to improve profitability in the airline business, which has razor-thin margins.

On Thursday, Transat said revenue for the first quarter of 2015 fell 6.9 per cent to $788.6 million. The number of passengers travelling declined and revenue from subleasing aircraft also fell.

The airline also felt the impact of a falling Canadian dollar, which "even in light of lower aircraft fuel prices, led to a $15 million increase in operating expenses," according to a company news release. Costs in many sun destinations remain tied to the U.S. dollar, even as the loonie falls.

Its European routes were hurt by the decline of the euro, amid tough competition on discount fares.

Cost-savings plan

The number of travellers on Air Transat declined by 8.1 per cent, the company said.

In light of the difficulties, Air Transat announced a plan to save $45 million in 2015, $30 million in 2016 and $25 million in 2017

Among its cost-cutting proposals:

- Decrease the number of wide-body aircraft operated in winter by using its more flexible narrow-body aircraft fleet.

- Implement a connecting-flights strategy, starting next summer in Canada, to some markets.

- Gain an air partner in Europe by 2016 in Europe to pave the way for new destinations.

- Increase density of three wide-body Airbus A330s on the London and Paris routes.

- Increase ancillary revenues from the sale of optional services to travellers and from other sources such as freight.

- Upgrade the technology on its reservation systems.

Air Transat also proposed some measures to build passenger traffic, among them:

- Introduce new destinations in Europe, starting with Budapest in summer 2015.

- Fine-tune its sun destinations packages.

- Continue to develop partnerships with family-oriented Lookea clubs in France.

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