Air Canada's discount brand Tango soaring on its first anniversary. ALLAN SWIFT Canadian Press Sunday, October 27, 2002 MONTREAL (CP) - Air Canada's no-frills Tango brand met lots of skepticism when it began flying a year ago this week, but it may have been the saviour of Canada's dominant airline, which on Friday reported a fat third-quarter profit. Low-cost Tango has helped keep - and even bring back - travellers despite a weak air travel market. Air Canada's chief executive Robert Milton boasts that many airlines are asking how Tango has succeeded where similar efforts have failed. Milton has taken a lot of flak over the airline's uneven and mostly unprofitable performance, but even skeptics admit Tango has been a hit since it began flying Nov. 1, 2001. Tango taps into a new attitude: that flying is no longer just for business people on expense budgets or a semi-luxury for leisure travellers who expect to be catered to by courteous, smartly-dressed flight attendants. Instead, Tango passengers usually book their own flight on the Internet, bring their own food, find their own seat, and entertain themselves. There is just one class of seats. In the third quarter, Tango accounted for 19.2 per cent of Air Canada's domestic revenues, while its 12 airplanes had 81.4 per cent of their seats filled. The first flights last Nov. connected Toronto to seven cities. Tango now joins 15 Canadian cities, and will add Las Vegas and two Florida cities in December. During the summer peak it rose to 23 Canadian destinations. Managing director Ben Smith said in an interview that Tango exceeded even his own first-year expectations. "A lot of airlines have come to see us, from Star Alliance and even some competitors, wanting to know just how we've managed to create such a strong brand and consumer acceptance so quickly," he said proudly. "You may see some Tango clones coming out in the near future." Air Canada wasn't the first to introduce no-frills air travel - in Canada, Calgary's WestJet Airlines is operating profitably and expanding with a business plan based on the successful U.S. Southwest Airlines model. But the Montreal-based carrier may be the first so-called full-service airline to do it successfully. Southwest of Dallas is considered the pioneer of the concept, very successfully copied by WestJet, although neither is an international, network operator like Air Canada. Michael Carney, who teaches aviation management at Montreal's Concordia University, notes that British Airways tried the approach with Go, KLM with Buzz, Continental with Cal Lite and USAir with Metro Jet, and all failed. Smith believes he succeeded with a different approach, by making Tango "a closed network; we only connect to ourselves, not any other airline including the main line." Tango still operates with Air Canada staff, aircraft and licences, but has lower costs by having more seats, Internet bookings, flying the planes longer each day, and charging for onboard services. It is run by fewer than 15 managers. The brand can be adapted quickly, with an aircraft paint job and adding or removing the business class. Despite its success, Smith has no short-term plans to expand Tango. "It's a very flexible product; we will grow or shrink Tango as needed, depending on the state of the market. "If the economy goes down we may add more flights; if the economy improves and business traffic comes back in a big way we may even shrink." Tango is complementary to Zip Air, the western-based low-frills subsidiary that began operation in September as Air Canada's challenge to WestJet. It initially reaches only four cities, replacing regular Air Canada service. Analyst Ben Cherniavsky of the Raymond James Ltd. brokerage is one of the few to have concerns about Air Canada's multi-brand strategy, which includes Jazz, the Halifax-based regional airline formerly known as Air Canada Regional. He said it risks "watering down" the parent company's product. "We still feel that yield-cannibalization and deconstructing the network will likely bring about negative results in the long run." The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (I95.5FM) http://www.i955fm.com (Radio Station I95.5FM) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************