Air Canada Rouge Grows Again, Swaps Its Fleet

Air Canada held its investor day this week, and it had a 162-slide presentation going through all of its plans. While the main goal of this plan was presumably to help analysts with insomnia to finally get some sleep, there were also some real nuggets of information in there. To me, the most interesting of all was about the airline’s plans for its low-cost subsidiary Rouge.

Rouge has had something of a tortured history. And by that, I mean it has tortured anyone who has had to sit in regular economy on those Airbus narrowbodies with their 29-inch pitch. Really, Rouge was built as a labor exercise, but unlike what the US carriers did, Rouge actually had a labor cost advantage. For that reason, it has had staying power.

The airline started flying in 2013 with a negotiated cap of 25 Airbus narrowbodies, 25 Boeing 767-300ERs and a thousands of weird hats. These airplanes were cast-offs from Air Canada which were densified. Rouge grew fast toward that cap with service starting from the Toronto hub and almost immediately being followed by Montréal. Those remained the most important markets for the airline as it built up its footprint heading south to warmer climes plus flights over the Pond with those 767s.

By 2017, that cap was changed to allow the narrowbody fleet to grow along with mainline to a higher number. You can see where narrowbody flying starts growing in 2018 below and when the 767s start phasing out.

Air Canada Rouge Departures by Fleet Type

^{Data via Cirium}

In the early days, Vancouver grew in prominence in the Rouge network. It pushed into leisure routes to places like Las Vegas and Honolulu, but inexplicably it was also sent on key business routes to Los Angeles and San Francisco. That plan never made any sense, and the LA/SF flights were gone within two years.

In July 2019, the airline’s route map looked like this.

^{Map via Cirium}

This map underwent an extreme makeover during the pandemic. The 767s disappeared, and so did all flying over the Atlantic. The more recent map focuses solely on shorter-haul flying in the Toronto and Montréal markets. Here’s what that looked like in July 2024:

^{Map via Cirium}

This is now going to change yet again, and the big headline is that a new third base is coming. Meet the new base, same as the old base… Vancouver is back, baby.

Air Canada says it will open a Rouge base in Vancouver by 2026 at the latest. On slide 71, it showed this map with all the potential opportunities for new routes in the system.

^{via Air Canada}

There is no Europe in the plan, and that makes sense because the widebodies that disappeared during the pandemic are not coming back. But you will notice some relatively long flights on here. That brings us to the new fleet plan.

Air Canada’s investor deck says it has 41 airplanes in the Rouge fleet today, but this Air Canada page says there are 18 A319s, 15 A321s, and 5 A320s. Regardless, all of these are going to disappear, mummified in maple syrup and fed to the polar bears. In their place, Rouge will now get the entire Air Canada 737-8 MAX fleet.

This may seem kind of strange. After all, the MAX had opened up some new and interesting routes for Air Canada, including Toronto – Shannon. Next year, Montréal – Porto is scheduled. But if those routes are going to work, they’ll need to be transferred to another airplane. And that other airplane is either a widebody or the incoming A321XLR. The latter is where I’d put my money. That airplane is better suited to these longer flights anyway.

There will eventually be 53 MAXs in the Rouge fleet which is no insignificant growth plan from where it stands today. From Vancouver, those will be good airplanes to fly to Hawaiʻi and Latin America. And while we don’t know how many seats they’ll have on them just yet, we do know that Air Canada says these aircraft will have 20 percent lower unit costs than the Airbus Rouge fleet. So it lowers the bar to make the airline profitable.

As a customer, this doesn’t seem like good news on the surface, but it all depends on what these airplanes do. Will they replace mainline on existing routes or just create new route opportunities? If it’s the latter, then it’s nice to have that choice. It may even result in some destinations that don’t exist from Vancouver today. But we won’t know for probably a year what’s in the plan.

In the meantime, get those knees ready for the squeeze. What’s bad news for knees, however, is at least good news for your ears. You can take solace in the fact that the MAX is quieter than the Airbuses that ply the skies today.