Halifax-based Jazz retiring small Dash 8 fleet in airline consolidation

Halifax-based Jazz will take over all regional flights for Air Canada Express in an industry consolidation that couldlimit service long term to smaller communities after the pandemic.

Jazz a subsidiary of Chorus Aviation will fly more aircraft and use bigger jets,but retire its fleet of smaller planes that serve rural airports.

The announcementMonday is part of a revised "capacity purchase agreement" with Chorus that Air Canada saidwill save it $400 million over 15 years.

Chorus will become the sole operator of Air Canada Express and a fleet of 25 Embraer175 regional jets.

Air Canada is dropping Ontario-based Sky Regional.

'Ongoing devastating impact of COVID-19'

"Air Canada is consolidating its regional flying with Jazz in response to the ongoing devastating impact of COVID-19 upon the airline industry," Air Canada said in a news release.

"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."

As part of the reworked agreement with Air Canada, Chorus will remove all19 Dash 8-300sfrom its fleet in 2021. Chorus will continue to fly its 39 Dash 8 - 400 that hold 78 seats.The removal of the smaller fleet will likely have a long-term impact in service to small markets, saidthe Atlantic Canada Airports Association.

Routes into the region have already been slashed as air travel all but collapsed underpandemic restrictions.

"We're always concerned to see 50-seat aircraft exit the market. This is something that was happeningpre-pandemic, as well, but now we seem to be seeing it at an accelerated pace," saidMonette Pasher, the association's executive director.

"I think post-pandemic, the reality of air travel is going to be quite different. And we might see larger planes and a lot less frequency."

Half of Chorus workforce furloughed

She said keeping the contract with Air Canada is "great news" for Halifax-based Chorus, where 50 per cent of the workforce was furloughed in January.

In a statement to CBCNews, Air Canada spokesperson Pascale Dery said "by streamlining the regional fleet, this agreement will position Air Canada to operate more competitively with a single provider as traffic returns following the pandemic.

"That said, we continue to evaluate and adjust our route network as required in response to the trajectory of the pandemic and travel restrictions."

Chorus declined interviews on the deal, saying it is waiting for a response fromAir Line Pilots AssociationInternational, the union representingpilots at Chorus and Sky.

Chorus said in its release the revised agreement is conditional on Jazz reaching a deal with the union.

If this condition is satisfied, the capacity purchase agreementwill be amended on a retroactive basis to Jan. 1, 2021.

Aviation consultant 'not surprised' by move

Calgary aviation consultant Rick Erickson said he was not surprised to see Air Canada's deal with Chorus.

"Air Canada and Jazz go back a long ways," he said in an interview from Calgary.

Consolidation was inevitable, he said, given the loss of businessand the absence of targeted federal government support.

"The U.S. has had two tranches of $25 billion each that have gone to their airlines. Canada has done nothing," he said.

"So when you see this sort of inter-industry agreement, I'm not surprised."