What Is An Airline Capacity Purchase Agreement

Capacity purchase contracts are a big deal in the United States. They ensure that regional routes work for large airlines, which creates the risk of operating regional routes and allows for a higher degree of flexibility. In Europe, however, the idea of purchasing capacity has not taken off, at least not on a US scale. Here`s what`s good about CPAs and why European airlines should use these types of services. MONTREAL, Jan. 14, 2019 /CNW Telbec/ – Air Canada today announced an agreement to amend and extend the Capacity Purchase Agreement (CPA) with Jazz Aviation LP, a wholly-owned subsidiary of Chorus Aviation Inc., under which Jazz currently operates certain Air Canada Express regional flights. The changes were intended to provide Chorus with long-term stability, confirm Jazz as Air Canada`s largest express airline in the future, and enable the growth of Chorus` leasing business through Air Canada`s equity investment and the predictability of Jazz`s cash flows from LPC`s operations through 2035. The changes will strengthen the strength and competitiveness of the Air Canada Express brand and its regional network from coast to coast to coast, allowing Air Canada to achieve significant CPA savings while maximizing network and fleet flexibility compared to the current agreement. “We are very pleased to have reached this win-win agreement with Jazz and Chorus, which gives us long-term stability, greater competitive cost certainty and the flexibility to modernize the regional fleet for the benefit of our customers. The changes will allow us to offer regional services in a more cost-effective manner so that we can compete more effectively by deploying the aircraft best suited to a particular regional market and generating additional traffic to serve our international network,” said Calin Rovinescu, President and Chief Executive Officer of Air Canada. “Further evidence of Air Canada`s commitment to a successful, long-term partnership, we will invest $97.26 million in Chorus following the effectiveness of the PCA changes. In addition to aligning our common interests, we believe this represents exceptional value for Air Canada shareholders.

Of course, there are many reasons for European airlines to adopt CPAs. It remains to be seen whether they will ever reach the depth of dependence on this service that we see in the United States. Mark Dunnachie, sales manager EMEA and Russia at aircraft manufacturer ATR, believes it is time for European airlines to reap the benefits of the CPA. He noted how the idea had circulated a few years ago and that the general consensus was that the market was not yet ready. .