Air Canada has completed the transfer of 15 Embraer 175 regional jets from its mainline fleet to Sky Regional Airlines.
Sky Regional began operating the aircraft on behalf of Air Canada Express in March after the two airlines finalised a capacity purchase agreement to fly the 76-seat aircraft in October. The aircraft largely fly on transborder routes from Toronto and Montreal to cities in the Northeast USA, including Boston, New York, Chicago, Philadelphia, Dallas/Fort Worth and Newark.
The regional airline has also been providing service from Billy Bishop Toronto City airport to Montreal with Bombardier Dash 8 Q400 turboprops since May 2011.
Air Canada's president and chief executive Calin Rovinescu told investors that the deal would "meaningfully lower" costs in the third quarter of last year after reaching the deal.
"This is an important step both in Air Canada's regional carrier diversification strategy and our ongoing cost transformation program, given that Sky Regional's cost structure is more in keeping with that of the US regional carriers," said Rovinescu in a release. "It allows Air Canada to reduce the cost of its regional lift and thereby to better compete in the rapidly evolving North American regional markets as low cost operators continue to grow, both in Canada and the United States."