Air Canada to Launch Year-Round Service to Rio de Janeiro

The introduction of flights to Rio de Janeiro has been on Air Canada’s radar for a while, but with the loss of Brazil’s largest carrier TAM Airlines as an alliance partner from April this year, it has become a higher priority for the Star Alliance member.

Air Canada has announced it will launch a second non-stop route to Brazil with the introduction of flights between Toronto Lester B Pearson International Airport and Rio de Janeiro’s Galeão - Antônio Carlos Jobim International Airport from December 11, 2014. The year-round three times weekly flights to Brazil's ‘Marvelous City’ will complement Air Canada's existing daily non-stop service to Sao Paulo.

The introduction of flights to Rio de Janeiro has been on Air Canada’s radar for a while, but with the loss of Brazil’s largest carrier TAM Airlines as an alliance partner from April this year, it has become a higher priority for the Star Alliance member. Rio de Janeiro is the largest connection market beyond Sao Paulo for the carrier’s existing flight into Brazil with around 11,000 O&D passengers flying with Air Canada in and out of the city in 2013.

To accommodate the obvious reduced demand the launch of the Rio de Janeiro service will have on its existing Sao Paulo flight, Air Canada has downguaged the route from a Boeing 777-330ER to a 777-200LR from October 26, 2014, reducing its offering by around 75 seats a day. It is expected that capacity on the route will be further reduced from summer 2015 with the deployment of a 767-300ER.

The HUB spoke to Nigel Mayes, senior vice president consulting and product development at ASM, the world route development consultants, to find out more about the dynamics of the Canada – Brazil market. He highlighted that demand has grown significantly faster than supply between the two countries during the past ten years.

“Total demand between the countries has increased 73.8 per cent over the past ten years, while Air Canada, the sole airline to offer non-stop flights between the two countries, has increased its seat offering by just 34.3 per cent across the corresponding period. This means increasing passenger flows via a third airport and supports the need for enhanced point-to-point connectivity between the two countries,” he said.

On May 21, 2014, ASM is hosting a workshop in London on the European Commission’s Guidelines on State Aid to Airports and Airlines.  One of the big issues airports in the EU are having to address is the level of assistance they can provide airlines to meet the new EU Guidelines on State Aid to Airports and Airlines which were issued in February 2014. ASM is partnering with Jeremy Robinson, legal director from Hill Dickinson to present this workshop for European Airports and their Regional Government stakeholders examining the new Guidelines. Find out more here.

Celebrated for such landmarks as Sugarloaf Mountain and the beaches at Ipanema and Copacabana, Rio de Janeiro is also a vibrant cultural and business centre that is home to major global corporations and host to international events such as the annual Carnival and the 2016 Summer Olympic and Paralympic Games. However, it has found it difficult to maintain international links with Sao Paulo remaining the preferred gateway into Brazil for foreign operators.

"Air Canada is very pleased to become the only carrier offering non-stop flights between Canada and the storied Brazilian city of Rio de Janeiro. The service will complement our Toronto - Sao Paulo route, meaning Air Canada will now offer two destinations in Brazil, one of the largest and most vibrant economies in the world, and strengthens our position as the only carrier flying non-stop between Canada and South America," said Benjamin Smith, executive vice president and chief commercial officer, Air Canada.

The new Rio de Janeiro service has been timed to offer convenient connections to Air Canada’s network at its Toronto Pearson hub, including flights to Tokyo Haneda, Hong Kong, Beijing and Shanghai. It will be flown by a Boeing 767-300ER with 24 International Business Class and 187 Economy seats.

Air Canada is currently embarking on a major network expansion although much of this growth is taking place at its new leisure division, Air Canada rouge, as new 777 and 787 deliveries have enabled older equipment to be transferred to the new business. A number of existing and new markets are now being served by the leisure carrier in 2014 and the transfer of routes is expected to continue this winter with Air Canada’s link to Hawaii likely to be passed to rouge operation.

In our analysis below we look in greater detail at O&D demand between Canada and Brazil and in particular the markets of Sao Paulo and Rio de Janeiro. After reaching record levels in 2012, passenger demand between the two countries grew further in 2013, up 3.2 per cent to an estimated 232,626 bi-directional passengers. This was partly supported by a 2.6 per cent increase in capacity from Air Canada.

The data shows that O&D demand between Canada and Sao Paulo, the only non-stop market in Brazil served from the North American country, rose 63.4 per cent between 2004 and 2013. Over the same period demand between Canada and Rio de Janeiro rose 84.5 per cent, even though traffic levels declined by three per cent in 2013.