Jazz follows US regionals into new business model in CAD100 million deal

In a deal that is expected to generate approximately CAD100 million in additional annual revenues, Jazz Air is following its US counterparts in evolving to a new business model, one that diversifies operations beyond the feeder model. The company has announced a deal with Thomas Cook Canada Inc to provide service next Winter with no less than six B757-200 aircraft and perhaps as many as 11 from Canadian gateways during the winter season (November through April).

"Growing and diversifying our business remains a top corporate priority; our agreement with Thomas Cook is a strong start that delivers value to all of our stakeholders," said Jazz President and Chief Executive Officer Joseph Randell. "We are thrilled to be partnering with one of the world's largest leisure travel groups, and it's our employees who have brought us to this important milestone. The opportunity to enter into this strategic partnership provides the potential for additional benefits for all stakeholders with minimum risk".

The move comes after Republic Airways Holdings, a regional feeding most US mainline carriers, acquired both Midwest and Frontier to launch its own branded operations last year. In addition, SkyWest is branching out beyond its traditional clients and now feeds AirTran at Milwaukee after a similar deal with Midwest was cancelled. The deal sees Jazz replacing the now defunct SkyService Airlines which went belly up over the weekend.

The Jazz/Thomas Cook deal spreads Jazz’s wings to the Caribbean, Mexico and Central America. The airline must now get regulatory approval to add and operate the B757 with the Thomas Cook Airlines brand. The Jazz fleet, operating as an Air Canada feeder airline, currently consists of 16 Bombardier CRJ 705s, 48 CRJ-100/200s, 28 Dash 8-300s, and 36 Dash 8-100s, serving 80 destinations in North America – more than any other Canadian carrier. Its 4,900 employees serve more than 8.8 million passengers annually earning CAD1.4 billion in revenues last year. 

Effective 01-Nov-2010, the deal could extend another four years beyond the 2010/2011 Winter season, if the two companies can agree before 30-May-2010 on terms for the third, fourth and fifth Winter seasons. The aircraft will gain the Thomas Cook branding from Jan-2010. Thomas Cook operates 93 aircraft worldwide in charter operations. The aircraft will be leased to Jazz Air LP from Thomas Cook Airlines Ltd. The plan is to brand the service as 'Thomas Cook' beginning in Jan-2011.

"We're extremely proud to be partnering with Jazz to offer our passengers high-quality in-flight services as part of the full Sunquest vacation experience," said Michael Friisdahl, CEO of Thomas Cook North America. "Jazz is recognized and respected across Canada and has the highest on-time performance among Canadian carriers. They share our values emphasizing safety, service, integrity and environmental responsibility. Through the combined operational and financial strength of Thomas Cook and Jazz, we will offer Sunquest customers innovative and dependable vacation packages."

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More