Air Canada (AC, Montréal Trudeau) expects to cut costs by up to 15 percent over the medium term as a result of new fuel-efficient planes, the launch of a low-cost carrier, Air Canada rouge (AC, Toronto Pearson), and other cost-cutting measures. The Canadian carrier said its capacity would rise between 9 and 11% in 2014 through the addition of five new B777-300(ER)s and seven B787-8s and the launch of rouge, due in July. Additionally, the transfer of several EMB-175s to Sky Regional Airlines (RS, Montréal Trudeau) would help help lower its overall cost per available seat mile by up to 15 percent. The extra capacity will allow Air Canada to greatly expand its international business which, it hopes, will transform it into a sustainably profitable airline in the long run. Internally, deals have also been struck with the airline's various unions which will result in the elimination of its pension fund deficit come 2020.

WestJet (WS, Calgary) is keen on establishing operations out of Toronto City Centre should slots open up. Speaking during the recent handing over ceremony held at Bombardier (BBA, Montréal Trudeau) for the first two of twenty Dash 8-400s destined for nascent subsidiary, WestJet Encore (WJE, Calgary), airline CEO, Gregg Saretsky, said the arrival of the new turboprops now gave Westjet the means to serve the airport where jet traffic is prohibited except on MEDEVAC flights. Air Canada (AC, Montréal Trudeau) and Porter Airlines (PD, Toronto City Centre) are the only two scheduled airlines serving the airport at present. Saretsky added that Encore's low prices should also create new traffic despite stiff competition from Air Canada's regional partner Jazz Air (QK, Halifax).

Etihad Airways (EY, Abu Dhabi Int'l) last week signed a codeshare deal with Air Canada (AC, Montréal Trudeau), a move that has been greeted with some surprise given the previously frosty ties between Canada and the United Arab Emirates that arose over visa fees. The bilateral dispute originally stemmed from the UAE's discontent at Emirates (EK, Dubai Int'l) and Etihad Airways (EY, Abu Dhabi Int'l) being granted only 6 flights per week between them (to Toronto Pearson) by Transport Canada, the government regulatory authority. The two carriers lobbied to obtain rights to increase the frequency and number of destinations (including Vancouver Int'l and Montréal Trudeau) against strong objections by Air Canada, and Transport Canada. When this failed, the UAE applied pressure in the form of exorbitant visa fees and other bureaucratic hurdles. However, earlier this month, the UAE scrapped the visa fee for Canadian citizens, two years after increasing it to USD250, thereby paving the way for Emirates and Etihad to get their desired daily services. Analysts expect the deal could pave the way for a liberalization of Canada's protectionist aviation policy regarding the granting of added frequencies to foreign airlines.

Sky Regional Airlines (RS, Montréal Trudeau) has taken over its first of fifteen EMB-175s C-FEKJ (c/n 17000109) from Air Canada (AC, Montréal Trudeau) and now operates the aircraft on its behalf as Air Canada Express. Sky Regional will eventually take over all of the remaining fourteen aircraft as well. The first aircraft is based at Toronto Pearson and used for two weekdaily round-trips from to Boston and one daily rotation to Philadelphia Int'l. Sky Regional will also operate some weekend services from Toronto to Ottawa Int'l and Saskatoon on behalf of Air Canada.

Jazz Air (QK, Halifax) parent Chorus Aviation has lost one of its key shareholders earlier this week when Fairfax Financial Holdings has sold its 27.6% stake in Chorus at the Toronto Stock Exchange. Fairfax is controlled by Canadian-Indian investor Prem Watsa. Jazz Air operates 129 regional aircraft, both turboprops and regional jets on behalf of Air Canada (AC, Montréal Trudeau) as Air Canada Express.