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Air Canada to launch LCC

13-Apr-2011 11:46 AM

Air Canada announced plans to launch a discount carrier as a competitive answer to low-cost rivals such as WestJet, Air Transat and Sunwing Vacations (Bloomberg/The Globe and Mail/The Canadian Press/Reuters, 12-Apr-2011). Air Canada hopes to use a fleet of up to 50 A319s and B767s for its new LCC venture and plans to create 462 new pilot jobs by 2015. Air Canada’s LCC would service vacation spots in Mexico, the Caribbean and Europe however it will not be replacing mainland routes Air Canada considers financially viable. Shares of Canadian tour operators fell after the announcement of the plans.

Air Canada is also seeking to switch its new hires into a defined contribution pension plan as part of ongoing labour talks. Under the proposed defined contribution pension the amount received will vary based on the performance of the investments held by each member of the plan. All new pilots hired after 01-Apr-2011 will be on the new plan. Other labour developments include asking Air Canada pilots to approve a tentative agreement that includes a letter of understanding to create a new wage rate for a discount carrier.