As the COVID-19 pandemic continues to batter Canada’s aviation sector, Sky Regional Airlines, a mid-sized airline based in Toronto, has announced that it is shutting down operations after losing its Air Canada Express contract to Chorus Aviation-owned Jazz.
Sky Regional employs roughly 650 workers and operates 25 Embraer E175 planes branded as Air Canada Express.
“Sadly, as a result, we will be forced to shut down our operations, despite our many adjustments in the face of the various travel restrictions imposed by governments, thus far without any sector-specific support,” said Russell Payson, founder and chief executive officer of Sky Regional, in a March 2 report in the Globe and Mail. “I am extremely proud of Sky Regional’s record, and its outstanding, innovative and dedicated team; and it is hard to reconcile the tragedy of today’s announcement given the strength and success of our organization.”
The airline will cease operations on March 31 and transfer its fleet of jets to Halifax-based Jazz.
Consolidating regional service
The news follows Air Canada’s announcement on Monday (March 1) that Jazz Aviation will become the sole operator of regional air services offered by Air Canada Express.
Under its amended agreement with Chorus (which owns Jazz), Air Canada will transfer the operation of its Embraer E175 aircraft to Jazz – a move that, in turn, pushed out Sky Regional, which previously operated the fleet.
"Air Canada is consolidating its regional flying with Jazz in response to the ongoing devastating impact of COVID-19 upon the airline industry. This necessary realignment of our regional services will help Air Canada achieve efficiencies and reduce operating costs and cash burn by consolidating its regional operations with one provider," said Richard Steer, senior vice-president, operations and Express Carriers, in a statement on Monday.
Steer specified that this alignment of regional services will allow Air Canada to gain in efficiency, reduce operating costs and slow down the depletion of its capital by consolidating its airline activities regional under a single supplier.
Air Canada expects a cost reduction of $400M over the 15 years of the contract ($43M per year until 2026 and $18M annually thereafter).
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