Air Canada to launch new low-cost airline

The Globe discovered Air Canada’s plan while investigating negotiations between the company and a labour union:

The country’s largest airline is actively drawing up a business plan to launch a low-cost carrier (LCC) with four Boeing 767s and six Airbus A319s, with the potential to increase that fleet to 50 planes, according to a letter of understanding attached to the tentative labour pact between the company and the Air Canada Pilots Association.

“The mandate of the LCC will be limited to the market segment seeking low-cost air travel,” according to the letter. “The LCC is not intended to replace mainline routes the company considers financially viable. The LCC’s success and viability depends on the parties’ ability to fulfill this mandate on a competitive basis.”

The project is the latest sign of the airline’s aggressiveness as it claws its way back from the financial difficulty it got into during the recession. In addition to the new discount carrier, Air Canada recently said it would return to Billy Bishop Toronto City Airport, a decision aimed at recapturing market share among business travellers that it has lost to upstart Porter Airlines Inc.

There’s no word yet on when the airline will launch, or what exactly Air Canada passengers can expect on these flights, except that the first class section will be removed in order to make room for more passengers. (Air Canada declined to comment to the Globe or to The Informer.) We’re expecting half-cans of off-brand pop, packets of pretzels and lineups at all the washrooms. Then again, if our suspicions are confirmed, how would clients differentiate between the regular Air Canada and its budget line?

Kidding aside, we applaud AC’s tentative first steps toward making North Americans less jealous of Europe’s thriving low-cost airline industry.

• Air Canada to launch cut-rate carrier [Globe and Mail]