Sky Regional will shut down after Air Canada consolidates its regional flying with Jazz

The future appears uncertain for Sky Regional after Air Canada announced a major shakeup of its regional operations. Canada’s largest airline said Monday it will consolidate all of its regional flying with Halifax-based Chorus Aviation.

As part of the move, Air Canada will transfer 25 Embraer 175 aircraft from Sky Regional to Chorus. The move is contingent on Chorus agreeing to terms with Air Canada’s pilots.

Consolidation will leave Sky Regional’s future up in the air. At its high point, Sky Regional operated more than 100 flights a day on routes in Ontario, Quebec and the Northeastern United States. Its aircraft even reached as far as Houston, Denver, and Atlanta. But Air Canada’s decision leaves the company without aircraft or routes.

No one at Sky Regional responded to a request for comment. But a LinkedIn post from the company’s manager of Airports and Ground Operations, Dave Duffy, said Sky will be winding down effective March 31. This was later confirmed in a statement reported in the Globe and Mail.

Sky Regional’s CEO, Russell Payson, told the paper his airline, started in 2011, was a “Canadian success story.”

“We thank Sky and all of its employees for their effort, dedication and valued partnership,” said Michael Rousseau, President and Chief Executive Officer of Air Canada.

Dash 8-300s to leave Air Canada service

Chorus is one of Canada’s leading aviation companies, amassing a fleet of 161. But because its aircraft all appear in someone else’s colours, most people don’t know the company exists. Through Jazz, Chorus will now be responsible for all of Air Canada’s regional flying.

“Air Canada is consolidating its regional flying with Jazz in response to the ongoing devastating impact of COVID-19 upon the airline industry,” said Richard Steer, Senior Vice President, Operations and Express Carriers. “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.” 

Air Canada estimated the consolidation will save the airline $400 million over the next 15 years. It will also save $193 million in future capital expenses.

While Air Canada will pay Chorus at least $46 million to operate the Embraers, the airline will save $56 million by pushing 19 older De Havilland Dash 8-300 aircraft out of the fleet.

“The Jazz fleet is up-gauging to larger regional jet aircraft and replacing smaller turboprop fleet sooner than contemplated in the previous fleet plan,” said Chorus President and CEO Joe Randell. “The COVID-19 pandemic continues to challenge the aviation industry. With the Jazz fleet operating at a fraction of the capacity it flew a year ago, now is the time to update the CPA to help preserve regional flying and Jazz’s place within it.”

Exclusive operator of 70+ seat regional aircraft

Air Canada cut dozens of routes as a result of the pandemic and the effect on Chorus was huge. Roughly half of Jazz’s staff is off work. Still, the company turned a profit in 2020, thanks in large part to minimum revenue guarantees called a guardrail.

Air Canada is making Chorus its exclusive operator of 70+ seat regional aircraft until 2025. That’s when many insiders expect the industry to recover to 2019 levels. Under its agreement, Chorus must have at least 105 aircraft at Air Canada’s disposal for another four years. In 2026, that number drops to 80.

Chorus leases the rest of its aircraft to airlines around the world. Chorus owns a mix of regional aircraft – Dash 8s, CRJ, ATR, A220 and Embraers. It owns the Dash 8-300s and will look to lease them either as passenger aircraft or freighters.

The deal between Air Canada and Chorus runs until 2035.

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