The Rise And Fall Of Air Canada’s Budget Carrier Zip

From Simple Flying – link to source story

by Justin Hayward | January 2, 2022

The early 2000s were a peak time for low-cost airlines. There was growing competition in Europe and North American especially, with many new airlines starting service. In Canada, Air Canada launched subsidiary airlines to operate low-cost flights. Zip operated from 2001 to 2004, mostly competing directly on routes with WestJet.

Zip Air was one of the first Canadian budget airlines, operating up to 20 Boeing 737-200 aircraft. Photo: Aero Icarus via Wikimedia

Launching Zip in 2002

By the late 1990s, legacy airlines in Canada were under pressure from new low-cost airlines. WestJet, in particular, had expanded rapidly since its launch in 1996. Air Canada’s response to this competition was to launch subsidiary airlines to offer lower fares and the new no-frills unbundled fare concept. This left it free to maintain full service on Air Canada – similar to how it still operates today with Air Canada Rouge, although unbundled fares have now become mainstream, of course.

Air Canada launched its first low-cost subsidiary Air Canada Tango in 2001. This was based in Toronto and operated to many domestic destinations, as well as the southern United States and Mexico, with a strong leisure and holiday focus.

Air Canada Tango launched just before Zip. Photo: Ken Fielding via Wikimedia

Zip followed in 2002 to compete more directly with WestJet. It focussed on alternative services on many key routes, including Abbotsford, Calgary, Edmonton, Vancouver, Saskatoon, Regina, and Winnipeg. It was based in Calgary. Zip flew its first flight in September 2002, from Winnipeg to Calgary.

Boeing 737s on domestic routes

Zip only ever operated the Boeing 737-200. These were all from the main Air Canada fleet. Some of its first aircraft were transferred over from Air Canada Tango (it moved to become an Airbus A320 operator only), with more aircraft joining from the main fleet. At its peak in 2003, it operated 20 737-200s. These were all configured the same, with 118 passengers in an all-economy cabin.

Like WestJet (and as pioneered in North America by Southwest Airlines), Zip introduced the model of charging for all additional services (including baggage and limited catering). This may seem standard these days for regional flights, but at the time, it was a new move for legacy airlines.

Several of Zip’s 737s were in a more traditional livery. Photo: Ken Fielding via Wikimedia

Bold branding

Zip certainly stood out for its branding. Although it was a subsidiary of Air Canada, it distanced itself more from the Air Canada brand, unlike Air Canada Tango. Several aircraft were painted in bright, often neon colors, and had an image of a bee flying along the lower edge of the fuselage. Others remained white with just a colored tail. It also used the three-letter ‘Zip’ branding inside the aircraft, placing the word ‘yum’ on napkins and ‘yuk’ on the sick bags.

Another of Zip’s 737s in bold colors. Photo: John Davies via Wikimedia

Ending service in 2004

Zip operated domestic routes, focussed on key WestJet markets, until 2004. It then ceased operations. Just like Air Canada Tango (which ceased operations the same year), it was not a failure. It has succeeded in gaining market share in its target markets, and operations were then merged into the main Air Canada brand. Air Canada adopted lower-cost and unbundled fares into its offering, starting the trend that continues in fares today.

The 737-200 aircraft were retired from Air Canada when Zip ended service. Most ended service in 2003, but the last remained registered in the fleet until April 2004.

Air Canada operated up to 38 737-200s, retiring them with Zip Air in 2004. Photo: Aero Icarus via Wikimedia

This marked the end of a long relationship between Air Canada and the 737-200 – it had operated the type since the 1970s. It then became an all-Airbus narrowbody operator until the 737 MAX entered service in 2018.