BS - Wednesday, November 30, 1983 - North Shore News

Air Canada
re-engines

AIR CANADA’S $147 million re-engining pro-
gram on its stretched DC-8 freighters is a suppor-
ting pillar of the airline’s cargo marketing strategy
for the next decade, says Bernard A. Gillies, Vice

President, Cargo.

‘‘Despite the fact that rate
wars have caused many
airlines to abandon
freighters, Air Canada
believes an airline cannot of-
fer a full range of freight ser-
vices without using all-cargo
aircraft to*complement the
belly space -of its passenger
fledt,’"’ he says. ‘“‘Only
freighters offer the necessary
independence from the
passenger system to respond
to the various needs and dif-
ferent schedules of
shippers."’

In 1982, cargo revenues
were $264.6 million, a 3.6 per
cent increase over the year
before.

For the past three years,
Air Canada has used its six
cargo DC-8s as the backbone
of aiosuccessful pricing
strategy that charges accor
ding to the level of service
provided for cach shipment

Rates vary according to the
degree of a shipment’s urgen
cy customers who require
overnight space with short
cut-off and retrieval times at
the cargo terminal pay
premtum prices Ino return,
they are guaranteed premium
service with built tn penalties
if the airline does not mect its
promised standards

“Shippers with some flex
ibility pay a lower rate And
there are others who are quite
content with a space available
service that) usually moves
goods within a few days,"
says Citllies ‘Prices reflect
each of these options, as well
as the individual shippers
abiltty to have ao service
tatlormade for his own
needs

This differential pricing
strategy would be tmpossible
without the continued use of
freighters which can be
sheduled independently from

Pasrsengers Nhatural
preference for daytime
travel

“With the cacepuon of
some small parcels with
“neat flaghe out urpene y
most premium tealfhe moves

on overnight freighters,’’
says Gillies. ‘‘Shipments are
brought to the airport after
5:00 p.m. and are ready for
pickup at destination before
opening hours the next
morning.”’

In comparison, belly com-
partments on passenger air-
craft often carry less urgent
large shipments at = much
reduced prices. For example,
space available rates are ap-
proximately 60 per cent lower
than premium = shipments,
making the service
favourably competitive with
surface transportauvion

Air Canada originally con-
ceived differential pricing as
a competitive tool, as well as
to offset the burden of fuel
increases being passed to
customers already suffering
from escalating interest rates
and inventory-carrying costs

Unul then, cargo pricing
throughout the industry was
“democratic’’, says Crllies
“There was once rate for a
shipment of widgets
whether tt moved on a busy
weekday during peak late
evening hours, during off
peak daytime hours of on
slow weekends when com
mercial shipping and receiv
ing departments are closed

During the last 24 months,
differcntial pricing, with its
underlying dependence on
freighters, has helped Aur
Canada’s cargo business
tread financial water in a
penod of rising airline costs,
shrinking markets and = ad
vanced rate wars tt has pro
vided the airline with a wider
range of rates and discounts,
allowing tt to divert) new
customers from surface
transportation and to give
customers with high levet ser
vece needs valuc foe there
moncy burthermore. cif
ferenital prauing has permn
ted the atrhine to invest ta
modern cargo facilities at
stsatcgn alisports world wide
and in the re cagining pro
gram necessary for che sur
vival of its (reightes Mees

WHILE MANY airlines
have abandoned their
freighters, Air Canada
plans to spend $147
million replacing the
engines on its fleet of six.
One of the stretched
DC-8 cargo craft is pic-
tured outside the Van-
couver International ter-

minal.

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