This week we look at what's happening in the Canadian airspace, examine the rise of premium economy and give you the latest in aircraft news.

The Canadian Airspace

Given its characteristics, the Canadian airspace has always been a unique market, presenting a number of challenges and possibilities. Over the last few months we've experienced the culmination of that with new entrants, growing airlines and mergers and acquisitions.

One of the latest developments has been the ongoing sales process of Air Transat. Air Canada announced its intention to buy Air Transat's parent company Transat AT for $520 million. The deal is still pending shareholder approval, but would keep the Air Transat brands while merging the two companies.

Another familiar Canadian aviation name Westjet has gained clearance to enter into a U.S. - Canada transborder joint venture with Delta. The Canadian Competition Bureau (CCB) issued a no-action letter confirming that it does not intend to challenge the proposed joint venture agreement between WestJet and Delta Air Lines, but is still subject to regulatory approval from the Department of Transportation in the United States.

According to a release from Westjet, "the new joint venture will enable Delta and WestJet to deepen their existing partnership with expanded codesharing, reciprocal elite frequent flyer benefits, optimized growth across the U.S.-Canada transborder networks, and co-location at key hubs with initiatives designed to deliver a more seamless guest experience. The partners will also begin implementing joint sales and marketing activities and increase belly cargo cooperation."

The Rise of Premium Economy

Of late, one of the most lucrative fare classes for airlines is premium economy. According to The Points Guy, "for the airlines, premium economy is generally incredibly cost effective. On average, an airline is able to charge two to three times the cost of a lower-fare economy class ticket, yet its increased costs are very minimal. Premium economy seating doesn’t significantly reduce the seating capacity in the cabin."

A number of airlines are investing in premium economy. For instance, Emirates is introducing premium economy to their A380 fleet in 2020 and Lufthansa showed off its new premium economy seat.

Speaking of Lufthansa, maybe the best case for premium economy is that the carrier is generating 33% higher revenue per square meter compared to economy.

Aircraft News

The big attention grabber of the Paris Air Show was the Airbus 321XLR, which received no shortage of commentary. One of the best pieces published was by Courtney Miller. In his article written for VisualApproach.io, he outlines how the A321XLR can replace wide-body aircraft across the Atlantic.

He draws comparisons between the 1990 U.S. Transcontinental market to today's Transatlantic market. Among other things, the A321XLR will allow airlines to saturate underserved routes.

In other Airbus news, the aircraft manufacturer forecasts the need for 7,000 A220s in the next 20 years, specifically referencing the demand for aircraft with a seat range of 100-150 seats. The A220 has a range of 110-160, depending on configuration.

With new aircraft entering the market, that means that others are being phased out. The latest is American Airlines announcing the final revenue flight of the McDonnell Douglas MD-80.

Another exit happening involves Bombardier. With the sale of its regional jet business to Mitsubishi, the company will no longer be involved with commercial aviation.

And finally, it wouldn't be aircraft news without something from the 737 MAX. The U.S. Federal Aviation Administration discovered a new flaw during a simulator test. It's not clear if the issue is related to software or hardware.

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