M RahmanSWOT analysis of Air Canada
This is a detailed SWOT analysis of Air Canada which provides an overview of the largest provider of scheduled passenger services in Canada. It aims to analyse the strengths and the weaknesses of Air Canada. It also aims to explore some of the opportunities and the threats that can have serious implications on the airline’s strategic decisions.
Strengths of Air Canada
As stated above, Air Canada is the largest airline in Canada. It works with a number of regional partners under the Air Canada Express banner. The airlines that operate under this banner are: Jazz Aviation LP, Sky Regional Airlines Inc., Exploits Valley Air Services (EVAS), and Air Georgian Ltd (Air Canada, 2023). Air Canada Rouge is Air Canada’s leisure airline that caters for the needs of leisure travellers.
Air Canada together with its partners under Air Canada Express carries millions of customers every year (Statista, 2023). It has a very good financial position and has a very good reputation for its cost-effective operations as well.
Air Canada’s extensive route network gives it a competitive advantage over some of its competitors. It operates flights to more than 220 destinations in six continents, giving customers plenty of options when it comes to choosing their destination (Air Canada, 2023).
Air Canada is well-known for its excellent customer service. It has a team of dedicated employees who are always ready to help passengers with their queries and concerns. It also offers a wide range of in-flight amenities, such as Wi-Fi, complimentary meals and beverages, and entertainment.
Over the years, Air Canada has received several prestigious awards. For example, Best Business Class in North America, Best Airline Staff in Canada, and Best Airline Cabin Cleanliness in North America to name but a few in this regard.
Weaknesses of Air Canada
Weakness is a key area of discussion in this SWOT analysis of Air Canada. Though Air Canada is one of the twenty largest airlines in the world, it is not as widely known as some of its competitors in the international arena. Likewise, it also receives a huge volume of customer complaints every year.
Another weakness is Air Canada’s limited presence in the US market. Compared to some of the competitors, it operates only a limited number of routes to and from the US. This limits its potential to tap into the lucrative US market.
Air Canada faced some technical difficulties in the past. Computer issues temporarily shut down its web and mobile check-ins and call centre operations.
Opportunities for Air Canada
The first opportunity is the growing demand for air travel. Air travel has been steadily increasing in recent years, and the trend is expected to continue in the coming years. This provides Air Canada with an opportunity to tap into the growing demand for air travel and increase its revenues.
Air Canada has seized a number of opportunities recently. Toronto to Mumbai, Montreal to Algiers, and Vancouver to Frankfurt are some of the international routes launched in the recent years. Introducing further routes in the international markets is worth exploring.
Air Canada’s plan to acquire 30 ES-30 electric regional aircraft from Heart Aerospace is great. It is expected that this revolutionary regional aircraft will enter service in 2028. It will be flying on battery power which are expected to give the airline substantial operational savings and benefits (Air Canada, 2023).
Inbound tourism witnessed significant increases in recent years in Canada. Millions of tourists visit the country every year. Likewise, domestic tourism is also great as staycations are very popular with Canadians. This is a great opportunity for Air Canada to penetrate further into its domestic market.
Air Canada can also focus on diversifying its revenue sources and reducing its dependence on the Canadian market. This should help it mitigate the risk of downturns in the Canadian economy.
Threats to Air Canada
Threat is the last element to address in the SWOT analysis of Air Canada. Threats may emanate from several sources. For example, the biggest threats to Air Canada are its competitors.
Air Canada faces a number of competitors both in the domestic and the international markets. WestJet, Air Transat, Sunwest Aviation, & Provincial Airlines are some of the competitors, particularly in the domestic market.
In international markets, Air Canada competes with some of the biggest names in the aviation industry e.g. British Airways, American Airlines, Emirates Airlines, & Qatar Airways to name but a few. Apart from competition, economic lockdown is another massive threat to any airline, not Air Canada only.
The rising cost of fuel can significantly increase Air Canada’s operating costs and make it difficult for it to remain profitable. Likewise, the rising cost of labour can increase its operating costs as well.
Lawsuits and fines can also be very costly. Air Canada is subjected to a range of regulations and compliance requirements, which can increase its costs and failure to abide by the requirements may be financially challenging as well.
For instance, Air Canada has agreed to a $4.5 million deal to settle a U.S. government investigation into claims that thousands of air passenger refunds were delayed (Shepherdson & Lampert, 2021).
Summary of SWOT analysis of Air Canada
To conclude, Air Canada has several strengths, such as its strong brand recognition, extensive network, customer service, cost-effective operations, and focus on safety and security. However, it also has some weaknesses, such as its high-cost structure, limited presence in the US market, and dependence on the Canadian market.
Air Canada also has several opportunities, such as the growing demand for air travel, and diversification. At the same time, it also faces some threats, such as the increasing competition in the aviation industry, and the increasing cost of fuel.
Air Canada should leverage its strengths and opportunities to boost its growth and profitability. It should also minimize its weaknesses and threats by expanding its presence in the US market and diversifying its revenue sources.
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Last Update: 14 February 2023
References:
Air Canada (2023) Corporate Profile, available at: https://www.aircanada.com/ca/en/aco/home/about/corporate-profile.html (Accessed 12 February 2023)
Shepherdson, D., and Lampert, A. (2021) Air Canada agrees to $4.5 mln settlement over delayed U.S. passenger refunds, available at: https://www.reuters.com/business/aerospace-defense/air-canada-agrees-45-million-settlement-over-delayed-us-passenger-refunds-2021-11-22/ (accessed 10 February 2023)
Statista (2023) Number of passengers carried by Air Canada from 2011 to 2019, available at: https://www.statista.com/statistics/689833/passenger-traffic-air-canada/ (accessed 12 February 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
