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Startup XPO Airlines aims for Asian market Add to ...

Fledgling XPO Airlines Inc. plans to operate flights between Canada and Asia, hoping to fill a market vacated last month by Singapore Airlines and also take advantage of reduced seat capacity on Air Canada's transpacific routes.

XPO's departures would be offered initially from Vancouver, with plans to add Toronto later. It is seeking to tap into demand for charter flights to and from Asian destinations, likely starting with South Korea and then expanding into Japan.

The goal is to launch by the end of 2009 or early 2010, subject to financing from private equity and other investors.

The new company is being headed by Ontario financier James Hultquist-Morrissey and several staff who formerly worked at transatlantic discounter Zoom Airlines, which was shut down last August by Scotland's Boyle brothers, the majority owners of Ottawa-based Zoom.

Mr. Hultquist-Morrissey had toyed with the idea of reviving the Zoom brand name, but now figures there is too much baggage attached to it, opting for XPO, which is short for Cross Pacific Ocean.

He said the transpacific market isn't as cutthroat as transatlantic competition, but noted that Oasis Hong Kong Airlines Ltd. offered service between Vancouver and Hong Kong for less than 10 months, before cancelling its discount flights in 2008.

XPO doesn't intend to fly to Hong Kong initially, said Mr. Hultquist-Morrissey, who added that his group is undeterred by high fuel prices and the recession.

Canadian Transportation Agency spokesman Marc Comeau confirmed Tuesday that XPO has filed an application for "non-scheduled international service for large aircraft." The regulatory agency is awaiting more information from XPO to complete the application.

The International Air Transport Association cautioned Tuesday that revenue from business class and first class sank 35 per cent to 40 per cent in the first quarter for global carriers, but Mr. Hultquist-Morrissey said XPO is aiming to be a "premium-value carrier" that delivers better-quality economy seats and service.

Singapore Airlines halted its service in late April between Vancouver and Singapore, via Seoul. And Air Canada slashed its transpacific seat capacity by 23.3 per cent in the first four months of 2009, compared with the same period last year.

Earlier this year, Mr. Hultquist-Morrissey said he was considering acquiring the leases of Zoom's 269-seat Boeing 767s, but he has shifted his strategy to target other 767s.

His management team is looking to hire roughly 150 people to get started, including pilots, flight attendants, ground crew and dispatchers.

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