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Air Canada Express launches

Sky Regional will begin contracted service between the country's two largest cities with five slightly used Q400 aircraft obtained from the regional arm of Frontier Airlines.

But the fleet of Jazz planes operated by Chorus Aviation will gradually get the new moniker as well.

Air Canada said Jazz's 120 planes will get new colours as they come in for maintenance, as will the 15 new Bombardier Q400's on order.

The change will eliminate the Jazz brand, with itself was created a decade ago to unify service offered by regional airlines such as Air Ontario, Air BC, Air Nova and Canadian Regional Airlines.

Canada's largest airline currently has contracts with several other carriers providing regional service, including Air Georgian,
Exploit Valley Air in Newfoundland and Labrador and Central Mountain Air.

Non-unionized Sky Regional is the latest addition. It has 30 flight attendants and 30 pilots, some of whom had retired from
mainline carriers.

"In the U.S and in Europe, a lot of big airlines use multiple carriers for their regional feed. We were looking to expand that as well,'' Ben Smith, Air Canada's chief commercial officer, said Wednesday.

In addition to creating a unified regional service, Air Canada is looking at the viability of a low-cost carrier and is holding
discussions with its labour unions.

Smith said bookings for the new service to the airport located on the Toronto islands near the downtown is running as planned. About 60 per cent of passengers are expected to be corporate customers, who often prefer last-minute bookings.

To compete with Porter Airlines, the new service will also offer beverages and food. And passengers will have the flexibility to fly into the island airport, for example, but out of Pearson International Airport.

As a result, some customers are expected to shift from Pearson to Billy Bishop.

"We also expect to regain some of the customers that we lost to the competition,'' he said during an interview inside a repainted Express plane.

As is the case with new service, Air Canada is offering promotional fares to introduce the public to the new service.

But competition between Toronto and Montreal from Porter and from WestJet ensures low prices, he added.

Air Canada has engaged in a lengthy battle to return to the island airport about a decade after being evicted by the owner of the terminal, which also owns Porter Airlines.

It eventually obtained 30 slots from the Toronto Port Authority and has applied for 16 slots no longer wanted by Continental
Airlines. Should it gain those slots, service could be added to Ottawa or New York, said Smith.

Meanwhile, Smith said there remains "heavy interest'' from Japanese tourists visiting Canada this summer, despite the
earthquake and tsunami.

The airline has maintained its daily flights from Toronto and Vancouver to Japan and reintroduced seasonal service from Calgary despite a dip in overall demand.