Air Canada (AC, Montréal Trudeau) is re-assessing how to reposition Air Canada rouge (RV, Toronto Pearson) as a narrow-body leisure-focused – and perhaps even ultra-low-cost - carrier amid heightened competition in the Canadian domestic market, says Executive Vice-President and Chief Commercial Officer Lucie Guillemette.

"We're in a little bit of a transition period here. So, in the immediate term, you know the fact that Rouge is assigned to a narrow-body aircraft is very helpful for us. But we are now in the process of really, really relooking at the mission of Rouge and how we best want to proceed in the years to come," she said during Air Canada's Investor Day on March 30, 2022.

In an earlier presentation, she said Rouge figured strongly in Air Canada's strategy to succeed in the leisure market because leisure and VFR travel had become increasingly important in the domestic market during the pandemic.

"We took the opportunity to refocus Rouge for now exclusively as a narrow-body operator and focus on leisure from eastern Canada. This is a highly competitive space, and Rouge is important for Air Canada going forward. Focusing on the Airbus narrow-body fleet gives us additional cost advantages, simplification, and reduces our overall seasonality impact as many of Rouge's aeroplanes will be approaching their end-of-life towards the midpoint of the decade.

"We are currently assessing the various alternatives of how best to position Rouge not only in the leisure space but possibly even in some ultra-low-cost market segments. Our assessment includes fleet distribution, product, and overall brand positioning. So we foresee strong opportunities for Rouge to take a greater role going forward," she said.

Defending its domestic leadership by leveraging Rouge's position in the leisure market was one of six key pillars of Air Canada's commercial strategy, Guillemette said. With a narrow-body fleet of about 40 aircraft, the focus would be on North American markets, reducing seasonality, and higher seat density, her presentation read.

According to the ch-aviation fleets advanced, Rouge operates an Airbus fleet of fourteen A321-200s, five A320-200s, and twenty A319-100s.

During the investor talk, Guillemette several times referred to the highly-competitive domestic market, where it faces new entrants such as ultra-low-cost carrier Flair Airlines and WestJet budget subsidiary Swoop. Lynx Air and Canada Jetlines are waiting in the wings.

"As domestic competition intensifies, our extensive network, the strength of our hub, and the breadth of our offering will continue to be key differentiators for us," Guillemette said.