Jean-Marc Eustache didn't get into the tourism industry because he likes to travel.

He actually does not enjoy jetting around the world, but he has still managed to build a travel empire.

Eustache is the president and CEO of Montreal-based Transat Inc., which includes 22 divisions and employs 12,000 people in Canada and various countries.

If you're thinking Transat is Air Transat, you're almost right. Air Transat A.T. Inc. is just one of many components of Transat, which has its own fleet of planes and acts primarily as tour operator for outbound Canadians and inbound overseas travellers.

Photo by Peter McCabe, Business Edge


Just don't mention the A-word if you happen to meet Eustache.

"For us, the airline is a tool," says Eustache. "Even if you look at the business of Transat, the airline represents about a third of the business, and two-thirds of the business of Transat is the tour operator. So we are not an airline.

We don't want to be considered as an airline.

"And that's why, also, we have good relationships with the airlines. I have a good relationship with Air Canada and a very good relationship with WestJet. We use WestJet's planes, especially on weekends, because WestJet has got small planes - brand new (Boeing) 737s - that we can use from smaller cities to some destinations. Like, we bring people from Comox (B.C.) to Puerto Vallarta. So it's a good fit, and WestJet doesn't see us as a competitor."

But Transat, which operates 15 planes - including four Airbus 330s with 362 seats and 11 Airbus 310s with 359 seats - still faces many airline-related issues. (Note to future interviewers: It only takes three words to get Eustache talking at length - airport landing fees.)

Eustache, who grew Transat from a student-travel service known as Tourbec and a vacation company named Trafic Voyages, can also relate to the difficulties facing the Canadian Tourism Commission. He sits on the CTC board and executive committee, but don't expect him to kiss up to Ottawa - or slack off on the job.

1. Where were you born and raised?

"I was born in Oran, Algeria, but I didn't stay there very long. After that, I was raised in Algiers, the capital.

My father (an engineer) was in the petroleum business, so I lived in Algeria, but I lived also in Pakistan, in Sudan - I moved a lot. Finally, we went back to Algeria because they found fuel in the desert."

2. What was it like growing up in Algeria?

"My father is French and my mother was Italian. My father was working for the French petroleum company (now Totale). My mother died when I was six years old and my father married a lady that I call my mother, because she has been, really, my mother. She was a French-Canadian from Joliet in Quebec. When the war for independence started to be very strong in Algeria, my second mother, if you will, didn't like that, so she pushed my father to move. On March 15, 1957, we came to Montreal. (The rest of my family) are all living now in France, because my father decided to go back to France in 1967. So he went back with his wife and my brothers and my sister. I wanted to stay in Canada, because I was going to be 18 years old - and I've lived all my life in Canada. I'm a Canadian, not French at all."

3. How old were you when you came to Canada?

"Ten years old. There was still some snow, I remember. We were not used to seeing snow. So I went outside with my sister in pajamas. We were having so much fun. We were staying at my second mother's sister's house. She was getting crazy, seeing these two kids outside in two feet of snow - barefoot."

4. Can you tell me a little bit about your family?

My father, who is 82 years old, is retired. He's writing his third book and he's doing some painting. My mother, who is 82, is also retired. I have one sister and four brothers. I have a girlfriend, but I have no children. The reason is very simple. When I was young, I did not see my father very often. So I decided - very young - that if I worked a lot, I would not have any children, because I did not want anyone to suffer the way that I have suffered. I think it's important when you have kids to take care of them. I'm in the travel business, so even if I don't like to travel, I travel a lot. Very often, I'm not in the house, so I said to myself: I will have no kids."

5. When did you decide on a career in the travel industry?

"I got a (bachelor of arts) in economics, and then I was a researcher. I had nothing to do with tourism. One day, I met someone that offered me an opportunity to get into tourism, because he needed someone that had management skill."

6. How did you get your job at Tourbec?

"That (meeting was) the way I arrived in tourism - at Tourbec. It was by chance, nothing special. There was no reason because, personally, I don't like to travel. I don't like planes. What I liked was the milieu - the work.

7. What was it like working at Tourbec?

"In 1977, Tourbec was the travel agent for the students in Quebec. It was the same thing as CUTS (Canadian University Travel Services.) Now, CUTS is all over Quebec. Tourbec went bankrupt and a partner and I bought the Tourbec name and we started from scratch in 1979."

8. Why did you decide to start Trafic Voyages in 1982?

"Trafic Voyages was a tour operator that specialized mainly on France. Why we started, the tour operator was very simple. It was because Tourbec had its own product. It was a travel agency selling its own product and not buying from other tour operators. We had these buyers - mainly hoteliers and car-rental companies - that were asking us to sell more of their products, so we had to decide in '82: Do we want to open a lot of travel agencies? Or do we want to start a tour operator? It was too difficult to start a lot of travel agencies all over Quebec. It would have taken a lot of money and, also, a lot of people - people with skill."

9. How did Trafic Voyages evolve into Transat?

"Trafic Voyages was using the planes of Quebec Air, which at the time was owned by the Quebec government. We were looking at the model of what was happening in Europe and we saw a company, named Thompson Holidays in Great Britain, that was owned by a Canadian gentleman named Gord Thompson. We thought we should do the same thing in Canada. In the meantime, Quebec Air was sold to Michel Leblanc, who changed the name of Quebec Air to Ent Air Canadien, and he sold the planes to Nation Air. This was in '86. So, finally, we had no planes and we didn't know what to do. Looking at the model that we wanted to start and seeing that we couldn't find the planes, we decided to start our own airline.

"We went public in 1987, raising about $8 million and starting Air Transat. We bought a tour operator that specialized on the Caribbean, named Multitour Inc. We (renamed) the tour operator Air Transat Holidays, the airline was named Air Transat and the public company became Transat."

10. What was your vision for Air Transat in its early days?

"At that time, we felt that we needed to be a vertically integrated vacation company. That's the model that we saw in Europe. We needed to have the planes. That's why we decided to go with the big plane, the (Lockheed) 10-11 - and not like most of the others that had the Airbus 320, like you have today, or Boeing 737. To do Europe, you need to have a range of planes. The Lockheed 10-11 was a big plane and we had to do the big destinations in the south, in the Caribbean - Puerto Vallarta, Fort Lauderdale and places like that. We were, at that time, the only one like that in North America. In Europe, we were not the first one. We did not invent anything. Really, we did what was happening in Europe ... The idea was, because we have two seasons in Canada, in winter, people go to the Caribbean, Mexico or the south. People from (Western Canada) go to Hawaii. In the summer, mainly, people go to Europe or travel in Canada. The other idea was to be as strong in the winter as in the summer ... So the idea was: In the winter, we'll go to the Caribbean, Mexico, (and) Florida, and in the summer we'll go to Europe."

11. How did your vision for Transat change as the company moved forward?

"It's always the same. You grow and you want to become bigger. Also, you see what your peers are doing and you want to develop yourself. As a public company, it's even worse, because you have investors. You have the investors pushing you to be bigger and to make more money. You have two choices: You sell the company or you become bigger and bigger. That's why we decided to grow. Today, we're doing a little more than $2.5 billion worth of business (per year). But we have a strategic plan where we're going for business of $4 billion and we're making a profit between two and three per cent net, after tax, most of the time. I would like to do that in the next four years. We are No. 1 in Atlantic Canada, in Quebec and in Western Canada, where we have approximately 35 per cent (of market share.) The Ontario market, which is the biggest market, is 50 per cent of all the leisure markets in Canada. We have the same size (of market share) as a competitor named Sunquest, about 25 per cent. Because we're not profitable enough in the Ontario market, we have decided that, in approximately three years, we will have approximately 35 per cent of the market - and we'll be more profitable. So the vision today is to grow in Canada - and mainly in Ontario - and to continue to do our development in Europe. We've just bought a company a few months ago named Canadian Affairs, which was our biggest competitor and which has an office in Vancouver. They are selling Canada from all over the U.K. - and not just the air seats, but also the products. We are the No. 1 in France to Canada (trips) - by far - and now we are looking at other markets, mainly Italy and Spain. On the other side, we want to go into the hotel business, to be fully integrated, because we've got the airline, we've got the tour operator, we have the travel agencies, we have what we call destination services. We use a lot of hotels, mainly in Mexico and in the Caribbean, and we would like to have a minority partnership with someone for part of the hotels that we're using. Also, we want to develop the Internet business, because it's coming more and more (popular) in Canada."

12. What was it like trying to raise money for your company in the 1980s and 1990s?

"When we went public in '87, it was a good time. We had the (tax-savings) program in Quebec (which granted tax rebates to investors that bought stock in qualified companies.) We were one of the last ones, because we did the (IPO) ourselves in April '87. If you remember, there was a (market) crash in the fall of '87. Everything crashed. So we didn't have any problems raising money. The big problem that I had after that was 9/11, in 2001. It was a really big shock."

13. How did your company change following 9/11?

"That's a very interesting question, because about a year before we were saying to ourselves, 'It's time to change, because we cannot do the same thing the same way. We have to do things differently. We have to be more efficient and we have to change the (airplane) fleet.' At that time, we had four different tour operators selling Europe and the Caribbean ... It was madness, really. So when 9/11 happened, it gave us the opportunity to do what we wanted - to change completely, because we had to do things fast. I decided to change the fleet. At that time, we had two types of planes - the L10-11 and the Boeing 757. We changed the fleet completely to Airbus 330 and Airbus 310. I downsized the fleet. We used to have 24 planes and we went down to 14. We decided to put together the tour operators and just have two brands. The Air in Air Transat Holidays disappeared to become Transat Holidays. We put together World of Vacations, Regent Holidays and Nolitours, and it became Nolitours. I brought all the tour operators into one big office, called Transat Tours Canada. Now, we have just one accounting system, one human resources department, one operations department, one IT department, one legal department.

"We used to have four (of each.) Within two weeks, we laid off 25 per cent of our people from all over the company. We also cut managers' salaries by five to 20 per cent. I was so upset, because I was always thinking about the cash and I was seeing it going down. In less than four months, we blew about 70 million bucks. So I raised cash twice. The first time was $22 million. The second time was $57 million. I was afraid that if there were another terrorist attack somewhere, the only one that would survive would be the one with the cash. If you remember, Canada 3000 went down because they didn't move fast enough, and everybody was having problems. Six months later, I started to rehire everybody that I laid off. I brought back the salaries to their normal points. We raised that money in a debenture, and a year and a half ago I gave back the money - with the interest and everything - to everybody that invested in Transat. So 9/11 was a major shock in the tourism industry, but at the same time we re-invented Transat, the structure, the processes, the way we were doing things, and we changed completely the company that we were - and that's what we are today."

14. What are your views on airport fees?

"I think we're going crazy. Our governments are not reasonable. I'm not talking about this (Conservative) one, because the other (Liberal) one is the one that started first, so I'm not doing politics there. They are charging too much at the airport. There is not control at all, especially if you look at Toronto ... the Taj Mahal. It's a very nice airport. (But) Canada is still a small country, and we should live with what we can live with. Those (airport operators) are not under control, and they think that they can charge anything. So at the end of the day, the consumer pays everything. Everything. Not just the airport (improvement fee), but NAV Canada, security, you name it. People don't understand (that fees increase the cost of the plane ticket.) They are mad at us when we're selling the ticket."

15. What will the effect be on your company if Canada gets approved-destination status from China?

"It's something that we are very interested in. Already, we have our own incoming (Chinese) tour operator. We are doing some business - but very little - with the Chinese when they come to Canada. In France ... we already sell China to the French, but we don't receive Chinese in France. We have some landing rights for Air Transat from the Canadian and Chinese governments. Right now, it is not necessary for us to go there, because there's no tourism, really. It's business people. So it's really between Air Canada and the Chinese airline."

16. How will the 2010 Winter Olympics affect your company?

"Always remember that we are not in business travel, we are in tourism. We have two flights in the winter from London to the Rockies with our tour operator, Canadian Affairs. With the Winter Olympics, that gives us a chance to do some flying and to offer products to the French, to the Germans and to the British to Vancouver. So that's Part 1 of our interest. Part 2, we own a landing company at the airport. It takes care of the passengers at the counter, puts the luggage in the planes, cleans the planes and things like that. This company, Handlex, is in Montreal at Dorval, in Toronto and is brand new in Vancouver. This company is taking care of Air Transat in Vancouver, but in Montreal and Toronto we're taking care of about 21 companies. So this company will grow and we just hired about 80 people in Vancouver. I'm sure that there will be development in Vancouver because of the Olympics. I think it's good for Canada and it's good for Vancouver as a tourism destination in the world."

17. What plans do you have for upgrading Air Transat's fleet of planes?

"That's a complicated question. It's going to be time in three or four years to change the fleet. We're doing a lot of studies and we're working with Airbus and Boeing. (But) it's really too early to make a decision."

18. What destinations do you see as growth opportunities for your firm?

"We're looking for sure at Mexico as well as the Dominican Republic, Jamaica and Central America - Costa Rica and Panama."

19. You also sit on the board of the Canadian Tourism Commission (CTC). Many tourism operators say that the CTC could do a much better job marketing Canada as a destination for overseas travellers. What's your view?

"I'm not just on the board, I'm also on the executive committee. Saying that, I'm the biggest incoming tour operator, so I'm interested in what the CTC is doing ... I think the CTC is doing a great job. The only problem we have is not enough cash. We have about $89 million from the (federal) government and we raise from our side one-to-one dollars from the private sector. So when the CTC invests one dollar in marketing, the partner that it's doing the marketing with has invested at least one dollar ... Give us $200 million and you'll see what we can do."

20. If you could not work in the travel industry anymore, what would you do?

"I don't know, because the only thing I did for the past 28 years is work. I've worked six or seven days a week for that company that I've built with my two partners and all my people. It's not because working is hard for me. I wake up at four o'clock in the morning on weekdays to start work. Weekends, I work Saturday morning and the beginning of the afternoon. Sunday, same thing. For me, it's not work. I'm 58. I love it."

Jean-Marc Eustache

* Title: Chairman/president/CEO, Transat Inc.

* Born/raised/age: Oran, Algeria/Algiers, other parts of Africa, Montreal/58.

* Family: Single, no children.

* Career: Eustache began his career in the tourism industry in 1977 at Tourbec, a youth and student tourism specialist, before founding Trafic Voyages - the predecessor of Transat A.T. - in 1982.

* Moonlighting: Eustache is a member of the board of directors and executive committee of the Canadian Tourism Commission, which promotes Canadian destinations to overseas markets, and also sits on the boards of Quebecor Inc., the Cercle des présidents du Québec (CEO Network of Quebec), Université du Québec à Montréal Foundation and Espace Go theatre group.

* Awards: 2006 Trophée Grand Ulysse from Tourisme Montréal; Ernst & Young's 2005 Entrepreneur of the Year Award for Quebec; La Presse's CEO of the Year award for 2004; the Prix Performance 2000 awarded by the management network of Université du Québec à Montréal; Cubanacan's 2000 Award of Excellence; World Travel Market's 1996 Global Award; Transport Canada's 1992 Award of Excellence; and, also in 1992, the Industry Distinction award from the Quebec branch of the Association of Canadian Travel Agencies (ACTA).

* Passion: Working seven days a week.

Transat A.T. Inc.

* Brass: Jean-Marc Eustache, chairman of the board, president and CEO; Philippe Sureau, president, distribution; Lina De Cesare, president, tour operators.

* Profile: Transat includes 22 divisions and employs 12,000 people in Canada and various countries. It is the parent company of Air Transat, a Montreal-based airline that operates in conjunction with tour operators in Canada and overseas.

* Stats: The company currently has annual revenues of $2.5 billion per year and is seeking to boost its business to $4 billion per year in the near future.

* Recent Stock Price (Toronto): $27.90. 52-week range, $17.30-$28.17.

* Website: www.transat.com

* HQ: Place du Parc, 300 Léo-Pariseau Street, Suite 600 Montreal, H2X 4C2

* Phone/Fax: (514) 987-1660/ (514) 987-8089.

(Monte Stewart can be reached at monte@businessedge.ca)