Air Canada in late July "unbundled" its premium cabins to offer customers Basic options, the carrier acknowledged on a Wednesday morning earnings call.
The move follows similar actions by Air Canada joint-venture partners United Airlines and Lufthansa Group.
The airline now offers Basic, Standard and Latitude fare options for its Premium Economy and Business Class cabins, according to its website, each with different restrictions and inclusions.
- A Business Class Basic fare is nonrefundable and not eligible for a future travel credit. An anytime change costs C$200, and same-day airport changes are not permitted, nor is same-day airport standby.
- Business Class Standard also is nonrefundable. An anytime change fee is C$100 to C$120. A same-day airport change is permitted for free, and same-day airport standby is free on select routes.
- Business Class Latitude is the most flexible of the fare options, being fully refundable. Anytime changes costs the fare difference only, and same-day airport change and standby each are included.
- The travel experience features among the three fares are the same, save for the Basic category, for which one checked bag is allowed versus two for the other fares, and a per-segment fee applies for advance seat selection. Access to Maple Leaf lounges still is included, and there are no differences in loyalty and rewards among the fares.
The features are similar for the Premium Economy fares, with the exception of the lounge access. Premium Economy Basic does not include lounge access. Travelers with Premium Economy Standard and Latitude fares can pay C$49 to C$94.80 for access.
Air Canada chief commercial officer Mark Galardo said of customers' buying behavior toward the new fares, "We're not even a week in market with that product. We have seen initial results from our joint-venture partners. United [and] Lufthansa already have started the unbundling process for premium cabins. The initial results are pretty interesting. However, it's still way too early to really give you proper commentary on this."
Meanwhile, Galardo also noted that premium revenue increased 11 percent year over year for the second quarter, while corporate revenue was up 19 percent. Air Canada expects to continue to see double-digit percentage year-over-year revenue growth rates for the corporate segment from September through the rest of the year, equally split among domestic, transborder and transatlantic segments, he said.
Aeroplan Equity Investment
Blackstone and La Caisse are leading a C$2.5 billion, 25 percent minority equity investment in Air Canada's Aeroplan loyalty program, valuing the program at C$10 billion, the carrier announced Tuesday. The investor group also includes PSP Investments and British Columbia Investment Management Corp.
Air Canada retains full control over Aeroplan's strategy, operations and day-to-day management through its controlling interest, according to the carrier, and Aeroplan members, partners and employees should experience no changes from the transaction.
Proceeds from the investment will be used toward the repayment of an upcoming US$1.2 billion bond maturity and to accelerate share repurchases, according to the carrier.
Air Canada Q2 Metrics
Air Canada reported second-quarter passenger revenue of nearly C$5.6 billion, up from C$5 billion reported a year prior. Total revenue was nearly C$6.3 billion, a second-quarter record, up from C$5.6 billion in Q2 2025. The net loss for the period was C$178 million compared with a net gain of C$186 million a year prior.
Capacity in Q2 increased 0.3 percent year over year, 0.2 percentage points below the lower end of the carrier's second-quarter guidance, mainly due to weather-related disruptions. Fuel costs for the quarter were nearly C$1.33 per liter compared with 88 cents a year prior.
Air Canada recaptured about 50 percent of the fuel expense increase in the second quarter, according to CFO John Di Bert, and the carrier expects to recapture more than 60 percent of those costs in the third quarter and above 100 percent in the fourth quarter.
Di Bert added that Air Canada's outlook reflects the same themes that supported its second-quarter performance: "constructive demand trends across the network, resilient premium and corporate demand, continued progress on fuel recapture and disciplined cost execution."
Full-year capacity is projected to increase 2.25 percent to 3.25 percent year over year. Fuel costs are expected to be C$1.38 per liter for the third quarter or US$3.70 per gallon, and for the fourth quarter about C$1.29 per liter or US$3.50 per gallon.
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