Air Canada goes Rouge with new leisure destination service

It isn’t quite a new carrier and it isn’t quite a discount carrier. It won’t involve service to new destinations and it won’t really alter the way flights are sold. Air Canada‘s new Rouge operation is launching in 2013 and there will be changes but probably not enough to help the airline-within-an-airline model succeed. Rouge is targeting leisure routes. There will be 13 destinations covered by the rouge service including three in Europe and ten so-called "Sun" destinations. The rouge fleet is small – only 4 aircraft – so most destinations will apparently not be served daily.

The infrequent service is unfortunate in some respects but it makes a bit of sense for leisure markets where there is limited demand. There are several other aspects of the service which also speak to the limited amenities associated with leisure/LCC operations. Most in-flight services will be on a paid basis. Meals will be complimentary on flights to and from Europe but the Sun routes will be buy-on-board for everything. The in-flight entertainment systems will take advantage of newer streaming media options, saving the company money. But passengers are likely going to be paying to access that content; full details on the price and systems are not yet available. Oh, and no in-seat power will be provided so hopefully the tablet, phone or laptop batteries are fully charged and long-lasting.

Where Air Canada is really cutting away at the value, however, is in the integration with their Aeroplan frequent flier program. Rather than offering earning based on the distance flown routes operated under the rouge brand will earn a fixed number of points based on the fare paid. And the earning rates are not at all pretty.

Flying a cheap fare from Toronto to Athens on rouge will net most passengers fewer than 1000 points. That same trip flown on Air Canada and other partners would net 10,000 points or more. Certainly for the very occasional traveler those accrual numbers don’t necessarily matter; there is a good chance they’d never get good value out of the 10,000 points either. But the skewing of the rates is rather severe.

Also potentially confusing is that, because it isn’t really a separate operation, the rouge flights are mixed in with the regular search results on the Air Canada site. Here’s what a search from Toronto to Athens looks like:

There is no indication that the direct flight, saving around 3 hours of travel time, comes with distinctly different services, both in-flight and on the ground. Hovering the mouse over the fare names at the top gives some additional details but not all of them. Once the flight is selected there are some additional details offered:

Still, the mixed levels of service have the potential to be rather confusing to customers. Also, it is not clear how these flights will register with Air Canada’s Star Alliance partners. That could lead to even more customer frustration. Air Canada has confirmed that the flights will still be considered Star Alliance-operated with respect to partner benefits. So in many ways these are way better for customers of Air Canada’s partners than for Air Canada’s direct customers:

Air Canada is facing stiff competition from lower cost competitors, including Air Transat and WestJet, competitors which have a similarly limited offering to the new rouge services. But for those competitors there is no confusion amongst the customers; all the service is at that same level. And, at the end of the day, meeting the expectations of customers is more important that having the best product in the market. Air Canada is creating quite the opportunity for such confusion, a move which may ultimately prove to be the downfall of rouge.