Air Canada Case Study: Economic Analysis and Future Outlook

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AIR CANADA

Table of Contents
• Brief History of the Firm
• Two Big Economic Questions
• How to Achieve Allocating Efficiency
• Elasticity of Demand
• Future observations
• Market Structure
• Production Possibility Frontier
• Externalities
• Effects of Globalization

History
• Air Canada is one of the 20 biggest
airlines in the whole world. It has
over 30,000 employees. Its
headquarter is in Montreal.
• Air Canada was founded in 10th
April, 1937. It was earlier called as
Trans-Canada Airlines. It was
renamed to Air Canada on 1st
January, 1965 and it commenced
its operation from 1st
September,1937.

Continued…
• In 2018, Air Canada launched 29 new air-routes along with 11
new international air-routes:
• In 2019, they are launching two new destinations from
Montreal to Bordeaux, Raleigh, N.C. and from Toronto to Vienna.
• Also runs a Air Canada Foundation Mission for helping the child
and the youth in Canada and focuses on their well-being.
• By this mission, they are offering financial support to the
children in need. Donating paediatric hospitals so that the
children can access their basic medical care.
• Air Canada serves approximately 48 million customers
worldwide.

Two Big Economic Questions
• What services are provided?
Air Canada offers extreme comfortable flights to enhance your
experience from booking to flying.
The services that are provide for the customers are:-
• Business Class
• North American & Caribbean Business Class
• Business Class- Transcontinental
• Premium Economy Class WHAT?

• How these services are produced?
Passengers travelling in Air Canada are treated with extreme care
and respect.
The ticket booking is done online and discounts are also offered
so that a common man can also have an experience of flight.
Staff members are also present if the passenger is facing any
regarding check-in, missing luggage or lost items.
Special care is taken of the passengers suffering from any medical
problem and is made sure that everything is arranged for them.
HOW?

• The services are offered for the passengers who want to have an
higher level of experience be it a person sitting in Business Class
or a person in Economy Class.
• Every small thing is taken cared of while travelling in Air Canada.
FOR
WHOM?

Achieve Allocating Efficiency
• Allocating Efficiency is achieved where the output level of a
product, goods and services is equal to the cost of production.
• Air Canada has planned its new targets for 2018-2020 to
update the loyalty business.
• They are targeting on the EBITDAR margin of 17-20% and
annual return on invested capital of 13-16%.
• Air Canada is also focusing cumulative free cash flow.

Elasticity of Demand
• It means measuring the
demand of a particular
product, goods and services.
A higher elasticity means
that the consumer is more
responsive and is the regular
customer of that particular
goods and services.

Future Observations
• This year, Air Canada
has announced it’s
launch of two new
international flights
from Montreal to
Bordeaux, Raleigh, N.C.
and from Toronto to
Vienna. It also marks
the expansion of the
airlines.

Improving Operations
• The techniques which can lead to the increase in the traffic of
the airlines. They can be-
• Technological Advancement- Promote your airlines online and
also get access to the new technological equipment in the
market which will make it more comfortable for the
passengers.
• Global Expansion- expand your business globally. Acquisition
is the best way to expand. Hiring a company will help your
business to grow and expand and also it will help in gaining
more traffic to the organization.
• Job Deigns and HR Process
• Leadership Experience

Market Structure
• Comparing with the competitor WestJet, Air Canada has
successfully managed to be the best in fleet, employees, daily
flights, passengers etc.
• The table shows the performance of West Jet and Air Canada.
West Jet Air Canada
Passengers 24 Million 48 Million
Fleet 1,70 3,00
Staff 13,000 30,000
Daily Flights 7,40 1,600