MONTREAL — A rebranded Air Canada regional service is set to take flight Sunday with the launch of Air Canada Express flights between Montreal and Billy Bishop Toronto City Airport.
Originally Air Canada Express flights will be operated by Sky Regional, which will provide contracted service between the country’s two largest cities with five slightly used Q400 turboprop aircraft.
But the Air Canada Express brand will gradually be applied to the fleet of Jazz planes operated by Chorus Aviation (TSX:CHR.B), a former Air Canada subsidiary that was spun off several years ago and recently renamed.
Air Canada (TSX:AC.B) said Jazz’s 120 planes will get new colours as they come in for maintenance, as will the 15 new Bombardier Q400’s on order.
The change will eliminate the Jazz brand, which itself was created a decade ago to unify service offered by regional airlines such as Air Ontario, Air BC, Air Nova and Canadian Regional Airlines.
Air Canada, the country’s largest airline, has contracts with other carriers providing regional service.
Air Georgian in Ontario, Exploits Valley Air Services in Newfoundland and Labrador, and Central Mountain Air in Alberta and British Columbia will all gradually be branded Air Canada Express.
Non-unionized Sky Regional is the latest addition. It has 30 flight attendants and 30 pilots, about 20 per cent who had retired from mainline carriers. Its fleet of Q400s was acquired from Frontier Airlines, a Denver-based carrier owned by Republic Airways Holdings Inc.
“In the U.S. and in Europe, a lot of big airlines use multiple carriers for their regional feed. We were looking to expand that as well,” Ben Smith, Air Canada’s chief commercial officer, said Wednesday.
Air Canada is looking at the viability of a low-cost carrier and is holding talks with its labour unions.
Smith said bookings for the new service to the Billy Bishop airport located on one of the islands near Toronto’s downtown lake shore is running as planned. About 60 per cent of passengers are expected to be corporate customers.
To compete with Porter Airlines, the new service will also offer beverages and food. And passengers will be able to fly into the island airport, for example, but out of Pearson International Airport where Air Canada has its main hub.
As a result, some customers are expected to shift from Pearson to Billy Bishop Airport, which is Porter’s home base.
“We also expect to regain some of the customers that we lost to the competition,” he said during an interview inside a repainted Express plane.
As is the case with new service, Air Canada is offering promotional fares to introduce the public to the new service.
But competition between Toronto and Montreal from Porter and from WestJet (TSX:WJA) ensures low prices, he added.
The lowest advanced one-way fare between the two cities is $119 plus about $66 in taxes and fees. But fares typically start at about $189 plus fees.
Air Canada has engaged in a lengthy battle to return to the island airport about a decade after being evicted by the owner of the terminal, which also owns Porter Airlines.
It eventually obtained 30 slots from the Toronto Port Authority and has applied for 16 slots no longer wanted by Continental Airlines. Should it gain those slots, service could be added to Ottawa or New York, said Smith.
But Porter Airlines CEO Robert Deluce said it too would like to receive those slots to expand its network further.
Deluce said he sees the arrival of Air Canada’s new service as an opportunity to poach some customers for its 16 destinations.
“Porter has pretty good opportunity to turn some of those passengers who might well be loyal customers of another carrier into Porter fans and that’s what we’re going to work on doing,” he said from Windsor, Ont., the newest Porter destination.
Passengers who have never flown from the airport may also appreciate the food and beverage perks that Air Canada Express is also providing.
“Imitation is a form of flattery,” he said.
Meanwhile, Smith said there remains “heavy interest” from Japanese tourists visiting Canada this summer, despite the earthquake and tsunami.
The airline has maintained its daily flights from Toronto and Vancouver to Japan and reintroduced seasonal service from Calgary despite a dip in overall demand.
On the Toronto Stock Exchange, Air Canada shares closed down two cents to $2.36 in Wednesday trading.