Air Canada recently proposed a plan of initiating a discount carrier in the following year, but it has been shut down by the union representing flight attendants. The plan was aimed to for further expansion of the company and to take control of some of the market space currently held by companies such as Transat, Sunwing, Sunquest, and WestJet Airlines. Air Canada has used a low-cost airline in the past called Zip Air Inc. and it is believed to be one of their primary options for this plan. However, it is understandable that the union turned down the plan because I believe that this operation would pose a threat to the jobs of Air Canada’s mainline staff.

I believe that WestJet has the competitive edge over Air Canada because they already have a low-cost carrier and their costs are 30% lower. If Air Canada is able to initiate this plan, the chances of it being successful are high because Canadians have the desire to pay the lowest possible fare when travelling. However, failure to launch their discount carriers may force Air Canada to downsize their company to reduce their total costs. CUPE members will vote on the revamped copy of the agreement next week.

Article:   The Globe and Mail

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