Airline Start-Ups: Air Canada looks again at the LCC option

After losing market share to growing low cost competitors, Air Canada is planning to fight back by launching its own low cost carrier (LCC) to serve major holiday destinations in the Caribbean, Europe and Mexico. Air Transat, Sunwing Airlines and Westjet have all been expanding in the Inclusive Tour holiday market at the flag carrier's expense. Subject to gaining the agreement of its unions, particularly the ACPA pilots union, the new subsidiary is to launch for the coming winter season. The initial fleet would be four Boeing 767s and six Airbus A319s, configured with single class, all economy and/or two class, economy and premium economy seating arrangements. A fleet of up to 50 aircraft by 2015 is envisioned, made up of 20 767s and 30 A319s, with all but 10 of the A319s sourced from the mainline fleet. Air Canada has twice launched LCCs in the past, creating Tango in 2001 and Zip in 2002. Both LCCs were phased out in 2004, as the carrier achieved the cost savings it needed to make, prior to emerging from bankruptcy protection in September that year. Another former Air Canada subsidiary, Jazz Air, began operating IT holiday charters last year, taking over a contract from the now defunct Skyservice to fly on behalf of tour operator Thomas Cook Canada. Jazz Air operated six Boeing 757s transferred from Thomas Cook's UK-based fleet in the 2010/11 winter season but is expected to operate up to 11 757s this coming winter. Competition in the Canadian winter sun market looks like being tougher than ever in 2011/12.

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