Air Canada picks "Rouge" as name of low-cost carrier

Tue Dec 18, 2012 2:04pm EST
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TORONTO (Reuters) - Air Canada's ACb.TO new low-cost carrier will begin flying to European and Caribbean vacation spots next year under the name "Rouge", the airline said on Tuesday of the service it hopes will provide a springboard for sustained profitability.

Montreal-based Air Canada, the country's biggest airline, is launching Rouge at a time when Canadians have a growing number of options for vacation travel. It will compete with Transat TRZb.TO, WestJet Vacations (WJA.TO: Quote) and Sunwing Travel Group.

"The Air Canada Leisure Group will be well positioned in the highly competitive but growing leisure segment in Canada, with its strong value proposition and competitive cost structure," said Michael Friisdahl, who is heading up the new venture, at a launch event in Toronto.

Rouge will offer cheap flights to tourists visiting the Caribbean and Europe, starting July 1, 2013 - not June, as was previously announced.

Tickets went on sale on Tuesday for flights to Venice, Italy; Edinburgh, Scotland; Athens, Greece; Cuba; the Dominican Republic; Jamaica and Costa Rica.

The fight for share of the vacation market has become more important for Air Canada as main rival WestJet prepares to launch Encore, its Canadian regional airline. Encore promises to undercut Air Canada fares on domestic short-haul flights.

Rouge will expand to other destinations for next winter, said Chief Commercial Officer Ben Smith. As Air Canada takes delivery of Boeing (BA.N: Quote) 787 Dreamliner aircraft starting in 2014, it will funnel more planes into Rouge.

The airline plans to reach 50 Rouge aircraft in three to five years, Smith said. He said the venture is expected to be profitable in the "short, medium and long term".

Air Canada has reported a string of quarterly net losses in recent years, weighed down by non-operating items such as losses on foreign exchange and interest expenses.   Continued...