Air Canada is entering the low-cost leisure travel market with the launch of its new Rouge airline in the hopes of reclaiming the market share it has lost to domestic and international competitors, Canada's largest airline said Tuesday.
The new airline will begin flying on July 1 from Toronto to Venice, Italy, and Edinburgh, Scotland, two destinations that currently aren't served by Air Canada. It will also serve Athens from Toronto and Montreal.
Air Canada's existing flights to Cuba, the Dominican Republican, Jamaica and Costa Rica will be flown by the discount carrier from Toronto.
The destinations are areas where demand for travel has been growing, said Ben Smith, Air Canada's chief commercial officer.
"With the introduction today of Air Canada Rouge, Air Canada enters today's growing leisure travel market on a truly competitive basis," he said.
"Air Canada Rouge will leverage the strengths of Air Canada's extensive network, operational expertise and frequent flyer reward program in order to offer Canadians great value for their vacation travel."
The airline said flights to Venice, Edinburgh and Athens will start at special introductory fares of $963 round-trip, including all taxes, fees, charges and surcharges.
Flights to the Dominican Republic and Jamaica will start at $272, one-way, while Cuba is offered starting at $545 round-trip.
All the introductory fares, which are available until Dec. 25, are based on Toronto departures.
The discount carrier will begin operations with two Boeing 767-300ER and two Airbus A319 aircraft that will be released from Air Canada's mainline fleet.
Additional planes will be added as Air Canada starts to take delivery of new Boeing 787 Dreamliner aircraft in 2014, ramping up to 50 planes.
It plans to hire 200 flight attendants and pilots for the new low-cost carrier. The pilots will be existing Air Canada pilots who will transfer to the new fleet that will cater to the leisure market.
Air Canada pilots complained during labor negotiations earlier this year that the airline's launch of a low-cost carrier could threaten their job security and working conditions. In the end, a federal arbitrator chose Air Canada's final offer that included provisions allowing the airline to create a budget carrier.
Air Canada is the 15th largest airline in the world, serving more than 33 million passengers last year.
Canadian competitor WestJet is also launching a discount regional carrier in the second half of next year. WestJet Encore will cater to smaller markets with Bombardier Q400 propeller aircraft.