The two major Canadian carriers are preparing their unprofitable regional operations for a shake-up, as Canada's low-cost startup carriers threaten to expand their influence.

Even before Air Canada has completed a review of the future of its five regional carriers, it has been approached by a potential purchaser for one and it has begun to transfer routes out of another into an independent operator.

First Air is considering a purchase of North West Territorial Air from Air Canada, which will say only that the ball is in First Air's court. Air Canada insists there are no plans to sell any of the other four regionals - Air BC, Air Ontario, Air Alliance and Air Nova - but it is examining its options. These include transferring less profitable routes to independent carriers or consolidating the four regionals into one company.

British Columbia based Central Mountain Air has already said it will fly its new fleet of 10 Beech 1900s on behalf of Air Canada, and Air BC is transferring five routes to the lower cost company.

Air Canada says the review was prompted by 'competitive issues as well as recent labour difficulties'. The latter include a two-month pilots strike costing US$23 million.

Meanwhile, Canadian Airlines is warning that it will close its Quebec regional, Inter-Canadien, by August unless it finds a buyer or partner.

At the same time, startups WestJet and Greyhound are intensifying the pressure on Canada's majors by adding aircraft and new routes. In late June WestJet is scheduled to challenge Canadian directly by starting to hub some east-west flights from Calgary. And a former Air Ontario president plans to launch a low-cost Ontario-based airline called Vistajet.


Source: Airline Business