Convinced that the traditional full service model is "broken", Air Canada has unveiled plans for yet another niche airline - Elite, an all business-class brand it may launch by mid-2003.

Air Canada plans to convert Airbus A-319s into 40-seat aircraft flying at peak hours on domestic long-haul routes such as Toronto-Vancouver. Robert Milton, Air Canada's chief executive, says Elite is "fully designed", but he wants to see some upturn in business travel before launching it. That could come earlier in Canada than elsewhere because the Canadian economy is well ahead of the USA and most other developed nations.

With Tango, Jetz, Jazz and Zip, Air Canada already has more sub-brands than any other airline in the world. Milton seems unfazed by warnings about the obstacles to spawning airlines within an airline. He is already thinking about yet another spin-off - a low-cost international leisure airline.

The impetus for Elite differs from Air Canada's other units' typical cost-saving rationale. Tango and Zip were specifically designed to cut costs and offer lower fares. Elite's appeal would be at the market's high end, where service is more important than price.

Source: Airline Business