DAVID KNIBB SEATTLE RootsAir will launch full-service flights early next year as an alternative to Air Canada, just as Air Canada scores success on three labour issues that clear the way for its own growth plans.

Toronto-based RootsAir, a division of charter operator Skyservice Airlines, has concluded a C$35 million ($23 million) private placement that completes its initial capitalisation. Russell Payson, head of the carrier, says RootsAir needs less capital than other startups because it is affiliated with Skyservice, which has been an operating airline for 14 years.

Skyservice has agreed to an initial public offering next year to improve liquidity for the new RootsAir investors. The IPO only includes Skyservice's charter operation.

RootsAir initially planned to start in November, but delayed its launch until February-April, largely because it will target business travellers, who are more likely to travel during that period.

Nonetheless, the carrier already finds itself defending its business plan against skeptics who question how well a full-service startup can compete against Air Canada. RootsAir promises to offer more perks at lower fares than Air Canada, and to interline with foreign airlines serving Canada. It claims it is close to signing codeshare agreements with eight carriers and interline agreements with 20 more.

Meanwhile, Air Canada could become a more formidable rival following three major wins on the labor front. Its pilots have ratified a new contract, reservation and check-in agents have tentatively agreed to a contract extension, and the Canada Industrial Relations Board has declared Air Canada a common employer for its own employees and those of Canadian Airlines.

These victories clear the way for further integration of Canadian and Air Canada's work forces, launch of an integrated CRS and plans for a discount carrier. It now appears that Air Canada may also merge Canadian into Air Canada.

Source: Airline Business