When Air Canada emerged from bankruptcy protection in 2004, its top management decided to replace some of its older planes with new ones. In particular, several relatively small Embraer and Bombardier planes (with fewer than 90 seats) and several large Boeing 777 and 787 (with more than 200 seats) were ordered. These are much more fuel efficient than the planes they replace. However, Air Canada operations are still not as low cost as WestJet’s. An Available Seat Mile costs Air Canada 16-17$ whereas it costs WestJet 11-12$. Recall that WestJet is non-unionized, runs only one type of plane (Boeing 737 which seats 100-150 passengers), and is financially stronger (see the WestJet case at the end of Chapter 2). Discuss the pros and cons of Air Canada’s decision.