August 14, 2019 / 10:13 AM / 4 days ago

Air Canada sees A220 jet delivering boost for key U.S. transit traffic

MONTREAL (Reuters) - Air Canada said on Wednesday it will launch a direct Seattle-Montreal service in May 2020 with its new A220-300 jets, as the carrier eyes new routes to expand its share of lucrative international transit traffic to and from the United States.

FILE PHOTO: Air Canada airplanes are pictured at Vancouver's international airport in Richmond, British Columbia, Canada, February 5, 2019. REUTERS/Ben Nelms

Airbus SE’s smallest commercial jet, expected to enter Air Canada’s fleet in December with its first delivery, will help the carrier open new routes and increase capacity to cities that lack enough traffic to warrant a larger plane, Canada’s largest carrier said.

“The economics that come with this aircraft allow Air Canada to open new routes that you couldn’t serve profitably,” Mark Galardo, the Montreal-based carrier’s vice president of network planning, said in an interview.

Air Canada will use the fuel-efficient 137-seat jet, developed by Bombardier Inc, to help attract U.S. passengers flying through its Canadian hubs, Galardo said.

The Montreal-Seattle route, starting May 4, will allow U.S. passengers to connect to destinations in Europe and North Africa.

“Part of our business case for the route is having some Seattle-to-Europe traffic (connect) via Montreal,” Galardo said.

Air Canada also said it will begin A220 service on May 4 between Toronto and San Jose, California.

The so-called sixth-freedom right of an airline to carry passengers or cargo from a second country to a third country, provided it touches down in its home country, is key to Air Canada’s international growth strategy because of Canada’s limited population.

The carrier said in February it aimed to expand its market share of U.S. international transit traffic to 2% from a current estimated 1.3%, although it had not set a target date. Hitting the target would generate an additional C$675 million ($510.36 million) in annual revenue, Air Canada said during an investor day presentation.

Galardo declined to say what proportion of passengers on Air Canada’s international flights come from the United States.

Delta Air Lines is the A220’s largest customer, having ordered 95 jets, which have about 110 to 130 seats.

Air Canada, which ordered 45 A220 jets, expects to have 10 to 11 planes in service by the summer of 2020, Galardo said.

The jets will be used to replace existing aircraft and will not help Air Canada secure capacity in the wake of the Boeing 737 MAX grounding. The carrier has taken its 24 grounded MAX jets out of its schedule until Jan. 8, 2020.

Reporting by Allison Lampert; Editing by Denny Thomas, Richard Chang and Will Dunham

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