Transat chief executive officer Jean-Marc EustacheCHRISTINNE MUSCHI
Tour operator Transat A.T. Inc. is shelving its traditional goal of delivering last-minute bargains, opting instead to kick off the fall's travel season with lower-priced holiday packages that will likely cost more as the departure date approaches.
"We used to start very high - the price - and after everybody cut their prices, we were putting our price down," said Jean-Marc Eustache, Transat's chairman and chief executive officer. "This year, we'll start aggressively with a strategy of having low prices at the beginning."
With the economy on the mend, Transat anticipates that its tour packages should sell briskly, allowing the company to raise prices as aircraft and hotels fill up, Mr. Eustache said Thursday during a conference call with analysts.
For its fiscal fourth quarter ending Oct. 31, Transat's transatlantic capacity is up 15 per cent from the same period last year, and its capacity to sun destinations is roughly in line with the fourth quarter of 2009.
Sunwing Travel Group's merger last year with Signature Vacations has put pricing pressure on Montreal-based Transat as the sector faces a flood of holiday packages, many of which sell at discounted rates.
Fierce competition in late 2009 and early 2010 forced Transat to chop prices by at least 10 per cent simply to sustain bookings. Other competitors in the industry include Air Canada Vacations, WestJet Vacations and Sunquest Vacations.
"You will not see the prices going down as much as last year, especially during the months of September and October," said Mr. Eustache, who co-founded Transat in 1987.
He noted that Transat will be flexible, taking advantage of a jump in demand for air-only tickets while also catering to everyone from consumers who still have the post-recession blues to high-end travellers seeking posh hotel rooms.
Mr. Eustache made the comments after Transat reported that it had a $20.9-million profit for the third quarter ended July 31, down from $31-million in the year-earlier period, which included large fuel-hedging gains. Transat's adjusted quarterly share profit of 70 cents exceeded analysts' expectations, prompting BMO Nesbitt Burns Inc. analyst Claude Proulx to call it "the best-ever Q3 of the company by far."
Canada's largest tour operator is coming off a poor second quarter, when its profit fell to $6.2-million from $42.2-million in the same period of 2009.
But Transat appears to have turned the corner, enjoying strong bookings so far in the fourth quarter, which tends to be busier than the third. "We see the solid bookings and pricing on Canada-Europe market as positive since they point to strong Q4 results," Mr. Proulx said in a research note.
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