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Air Canada’s new low cost service will be called Rouge

Dec. 18, 2012, Toronto – Air Canada says its new Rouge low-cost carrier will
begin flying on July 1.

The new airline will fly to Venice in Italy and Edinburgh in
Scotland, two destinations that currently aren't served by Air
Canada.

Rouge will also serve Athens and other destinations in Europe and
the Caribbean from Montreal and 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 pilots will be existing Air Canada pilots who will transfer
to the new fleet that will cater to the leisure market.

The airline says flights to Venice, Edinburgh and Athens start at
"special introductory fares" of $949 round-trip, including all
taxes, fees, charges and surcharges.

Flights to the Dominican Republic and Jamaica will start at $269,
one-way, while Cuba is offered starting at $538 round-trip.

All the introductory fares, which are available until Dec. 25,
are based on Toronto departures.

Details about fares going forward were not immediately available.

Air Canada executives are on hand Tuesday as the
company also hosted a vacation giveaway in Toronto's downtown
Yonge-Dundas Square.

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.

Air Canada is Canada's largest domestic and international airline
and the 15th largest airline in the world, serving more than 33
million passengers last year.

Competitor WestJet (TSX:WJA) is launching a discount regional
carrier in the second half of next year.

WestJet Encore will cater to smaller markets with Bombardier Q400
propeller aircraft.

The company says it will announce the schedule for WestJet Encore
early next year.