Throughout its first decade, Air Transat had been working hard to grow its business and soar above its competitors.
But as CBC-TV’s business program Venture reported back in 1997, the airline tourism business was “no holiday,” even for established players like the Montreal-based company.
“Thin margins and lately, price wars,” said reporter Tassie Notar, when explaining the challenges of the industry to Venture viewers. “Difficult decisions must be made.”
The program sat down with Jean-Marc Eustache, the head of Transat A.T. Inc., to get a sense of where he wanted to take the company in the years to come.
“I would like to be one of the five or six biggest organizations in the world in tourism,” Eustache told Venture.
The company had taken steps to make that happen, including by acquiring strategic stakes in a handful of tour operators in France and Canada. Transat was also looking to acquire a business in Britain at that time as well.
‘Grow or get swallowed up’
“The package tour business has always been a rough ride. You usually only hear about it when somebody goes under,” Notar told viewers, explaining why such moves were necessary.
“These days, it’s become so competitive that you have to be big just to survive. And you have to keep getting bigger. Grow or get swallowed up — that’s what it’s all about.”
According to Venture, Transat’s two main competitors — Sunquest Vacations and Signature Vacations — had each been purchased by international companies in recent years.
Clout needed to compete
Leo Desrochers of Sunquest Vacations explained that the bigger the company, the more advantages it had for taking on its competition.
“With size, you acquire properties, you acquire cruise ships, you acquire airline seats at a cost that the smaller players can’t possibly achieve,” he told Venture.
Over at Signature Vacations, Martha Chapman said the company was able to use its size to influence businesses to provide it with preferential rates.
“A lot of it is boiling down to clout,” said Chapman.
Clout is something Transat was building, as the company already controlled the planes it flew, as well as a baggage company and travel agencies that it operated.
“It’s really a leisure group and the airline, for us, is a tool,” said Eustache, predicting that Transat would eventually own hotels as well.
Notar said that control helped the company hold down its costs and maximize its profits.
And the moves Transat had been making seemed to be allowing the company to pilot its own route to success, according to Venture.
“A few years ago, Transat was a takeover target. Now it’s Transat that’s in a takeover mode,” said Notar.