Air Canada’s new low-cost airline

At an investment conference in Montreal, Air Canada chief financial officer Michael Rousseau said the airline will release more details of the airline in the next few weeks. “It is a very exciting initiative, not just for Air Canada, but our employees as well because it does provide growth opportunities for us,” he said.

Last month, Air Canada, the country’s largest airline, announced the launch of this new more affordable option for travellers heading to holiday destinations in North America, Europe and the Caribbean. The low-cost carrier, which will operate under a different name and have a separate management team, is slated to become a 50 airplane operation.

So far, details about the airline have been sparse, which has some speculating that Air Canada may be bringing in a sponsor or another airline as a partner.

Rousseau noted that the airline has been studying different low cost models, which are usually either wholly owned or partner based.

“The model will be 100 per cent (owned), separate leadership. It will have a separate management group because we want to ensure that we maintain the low-cost mentality,” he said.

Air Canada’s current flights to holiday destinations in the United States and the Caribbean will likely flip to the discount airline, since these leisure markets don’t make as much money for the main carrier as the airline would like.

Originally, there were issues surrounding the new airline, as pilots opposed the start-up since it would pay less than what they earn at the main carrier, but a federal arbitrator imposed a new labor agreement on the pilots. Air Canada, which employs some 27,000 people worldwide, has since announced it will be hiring about 1,100 employees over the coming year to cover the company’s workforce needs, including those for the new carrier.

Along with the lowering labour costs, the discount carrier will be able to offer cheaper fares by adding more seats into their Boeing 767s and 30 Airbus A319s. The planes will be fitted with 20 per cent more seats, raising the number of passengers to 275 per plane.

The major carrier is also anticipating the arrival of its first Boeing 787 airplane in 2014, which will allow the carrier to economically serve far flung markets like India.

Sources: Huffington Post, Reuters, The Canadian Press

Photo © JetlinerImages

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