After the failures of Song and Ted just a few years after their inception, I did not expect another North American legacy carrier to gamble with a low-cost division. Yet Air Canada announced ambitious plans today for their own discount carrier that will serve leisure destinations in Europe, Mexico, and the Caribbean.
The low-cost division will start small, with four Boeing 767s and six Airbus A319s, but expects to grow to a fleet 50 aircraft (20 767s and 30 A319s) if business remains steady.
In a letter to the Air Canada’s Pilot Association, the airline explained:
The mandate of the LCC will be limited to the market segment seeking low-cost air travel…The LCC is not intended to replace mainline routes the company considers financially viable.
Perhaps, but in the same letter Air Canada outlined plans to slash pilot pay on these routes. I get the sense that a desire to lower labor costs is a notable factor driving this new subdivision.
Let’s be clear: there is a place for "low-cost" leisure carriers. Although I highlighted the failures of Song and Ted (not to mention Zoom and Flyglobespan), Air Transat, Condor, and JetStar have done very well. It is this success that Air Canada hopes to mimic.
The new division will not feature a business class cabin–only economy and premium economy. Details about what a "premium economy" product would be like on Air Canada have not been announced. There is also no word yet whether Aeroplan or Star Alliance miles could be earned on these flights. Those questions need to be answered before this news can be fully analyzed.
More info here.