Air Canada is aiming to establish a profit-sharing joint venture in the Canada-South Korea market with Asiana as it prepares to implement its revenue-sharing joint venture in the Canada-US market with United and Continental early next year.
Star Alliance partners Air Canada and United in October inked a memorandum of understanding to establish a joint venture with implementation expected in early 2011, subject to regulatory approvals. Earlier this year Air Canada also signed a broader agreement with Star partner Asiana to deepen their cooperation.
Air Canada VP alliances Yves Dufresne tells ATI and Flightglobal the joint venture with United is still on track to be implemented in early 2011. He says the new partnerships with United-Continental and Asiana follow the same "framework" established in the "Atlantic Plus-Plus" joint venture which was implemented earlier this year between Air Canada, Continental, United and Lufthansa. Continental and United have since merged.
"We are targeting to implement early next year on the transborder and it's going to be a revenue sharing JV based on the model that we have in Atlantic Plus-Plus," Dufresne says.
Asiana initially said in April that its new partnership with Air Canada could include sales, services and marketing. But until now few specific details have been provided and no timeframe has been given on potential implementation.
Dufresne says Air Canada hopes the partnership with Asiana will take the form of a profit-sharing joint venture but Asiana first needs to join Air Canada on the Vancouver-Seoul route.
Air Canada now operates one daily flight from Vancouver to Seoul while SkyTeam member Korean Air has two daily frequencies. Asiana currently does not serve Canada although it operates into Seattle, which is only about 200km from Vancouver.
"They don't serve Canada. We'd like them to fly. We want the other carrier to come in and make an investment," Dufresne explains. "We'd be looking more at profit-sharing."
Air Canada also sees potential for establishing revenue-sharing or profit-sharing joint ventures in other parts of Asia and Latin America. "We are working towards a closer type of cooperation elsewhere. We are looking at Asia. Sooner or later there will have to be something between North America and South America. That's going to be challenging," Dufresne says.
He explains the challenge in Latin America will be incorporating multiple carriers, including potentially Star's new members in the region. Brazil's TAM joined Star earlier this year and last month Avianca-TACA and Copa were announced as new members.
Dufresne says Air Canada played a key role in recruiting Avianca-TACA into Star. He says Air Canada already codeshares with Avianca, which feeds Air Canada's Toronto-Bogota service with passengers from other South American destinations. Dufresne says Ecuador is particularly a big offline market for Air Canada, with about 20 passengers per Toronto-Bogota flight heading to Ecuador.
Dufresne adds Avianca "is doing a great job covering for us in the northern part of South America" and "we were very active within Star to get them". Air Canada currently does not codeshare with TACA but Dufresne sees its Avianca codeshare being eventually extended to include TACA-operated flights.
Air Canada currently serves Bogota, Buenos Aires, Caracas, Lima, Sao Paulo and Santiago in South America. Dufresne says the carrier is currently not looking at launching new destinations in South America, explaining South America is a relatively new region for Air Canada and the carrier is now focusing on stabilising its existing markets and using Star partners to provide connections to other markets in the region.
Source: Air Transport Intelligence news
