Air Transat expands into the Middle East with seasonal Tel Aviv service

Air Transat will become the first Canadian carrier to launch flights to Israel from Montreal when the leisure carrier inaugurates a new summer seasonal service this year in association with its tour operator parent Transat AT. The twice weekly link between Montréal Trudeau and Ben Gurion International Airport in Tel Aviv will operate from June 18, 2017 until late October 2017 and will be flown using an Airbus A330-300 with seating for 345 passengers.

The flights will appeal to the sizeable visiting friends and family market between the two countries, while Transat will also be offering an array of packages, guided tours and hotels for discovering Tel Aviv and Jerusalem, as well as the region's many tourist attractions to stimulate further demand.

"We are thrilled to feature our very first destination in the Middle East. The demand for a direct Montreal-Tel Aviv flight was high for travellers visiting friends and family in the two cities and those in search of new discoveries," said Annick Guérard, president and general manager of Transat Tours Canada.

Air Transat is Canada's leading holiday travel airline in the Canadian and transatlantic markets carrying around three million passengers a year across a network of approximately 60 destinations in 26 countries. Alongside this route, it recently announced that it will be multiplying its direct flights to France, the United Kingdom, Italy, Greece, Spain, Portugal, Ireland and Croatia, while maintaining service to the Netherlands, Switzerland, Belgium and the Czech Republic.

"I welcome the decision by Transat to expand its operations into Israel. The opening of an air route is further proof of the success of our marketing efforts and that airlines view Israel as a sought-after tourism destination with economic potential. We view Transat as a partner that will help increase the numbers of tourists arriving in Israel and we hope to see additional routes opening soon," adds Yariv Levin, the Israeli minister of tourism.

Air Canada and El Al Israel Airlines currently provide the only non-stop links from Canada to Israel with flights from Toronto to Tel Aviv and both operators are growing their activities in 2017. According to published inventories, Air Canada will boost its seat count on the route by 13.1 per cent in 2017, while El Al will increase frequencies by 8.3 per cent, albeit slightly reducing capacity through the deployment exclusively of Boeing 767-300ERs rather than utilising larger 777s.

In the last year an estimated 240,000 bi-directional O&D passengers flew between Canada and Israel, approximately 325 PPDEW (Passengers Per-Day Each-Way). This is dominated by the direct Toronto – Tel Aviv operations which account for over half of the traffic (135,000 passengers), but there is already sizeable indirect flows from Montreal and Vancouver. The Montreal – Tel Aviv city pair generates around 47,000 annual O&D passengers and has grown 11.3 per cent in the last 12 months. The majority of indirect passengers are currently routing via Toronto (40.5 per cent), with notable flows also via some European hubs – Zurich (17.6 per cent), Paris (12.8 per cent), Brussels (7.1 per cent), Frankfurt (5.8 per cent) and Istanbul (5.2 per cent).

Tour operator Transat AT reported a 3.5 per cent reduction in revenues during its fiscal fourth quarter, meaning it ended the year (12 months to October 31, 2016) with revenues of $2.9 billion, compared with $2.9 billion in 2015, and adjusted operating income of $25.8 million, compared with $100.6 million in 2015.

"At the end of the previous quarter, we forecasted that we would have difficulty achieving another record summer in 2016, given the drastic increase in overall supply compared with the year before," said Jean-Marc Eustache, president and chief executive officer of Transat. "Our prediction proved to be correct. We've had a satisfactory summer season per se, but it was not enough to offset the especially challenging winter, with the end result that we are finishing the year with a slight adjusted net loss, equivalent to about 0.5 per cent of sales."

Its performance in the fourth quarter was impacted by lower load factors (-3.6 per cent), and lower average selling prices (-8.9 per cent) on the transatlantic market, the main market for this period and where Transat had increased capacity in this market by 7.4 per cent compared with 2015. Meanwhile, in its Sun destinations market, average selling prices increased by 3.7 per cent during the period, with capacity up 5.0 per cent and traffic up 2.2 per cent compared with 2015.

During the full fiscal year, the company increased supply on its Sun destinations market by 4.5 per cent during the winter season and by 6.2 per cent on the transatlantic market in the summer season boosting passenger traffic by 5.5 per cent.

“The year just concluded has been challenging for our bottom line, but particularly fruitful when it came to making progress on our transformation plan," added Jean-Marc Eustache. "We have taken major steps forward in the implementation of our strategic plan, specifically regarding the simplification of our distribution structure in Europe and of our web presence.”

Looking at the first six months of its 2017 fiscal year, Transat sees an improved performance over 2016 despite external factors such as the Zika virus scare, the threat of industrial action by pilots and terror attacks across parts of Europe. However, the impact of the weakened Canadian dollar will add to increases in fuel costs and will deliver around a three per cent increase in operating costs if the dollar and fuel costs remain at their current level.

On its sun routes, its main market over the winter season, capacity has been reduced three per cent versus the same periods last year and bookings and load factors are both up at this stage. In the transatlantic market capacity is eight per cent up on last year, and despite bookings being strong, yields are lower with average sales prices falling by between four and five per cent.