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Regional airline Air Canada Jazz is pulling out of Hamilton, the first in a series of decisions to cancel flights and consolidate routes to help battle high fuel prices.

Jazz served noticed yesterday that it will run its final flight from the Ontario city on July 31, said Steve Howse, a spokesman for Hamilton's Munro International Airport

The airline, owned by Halifax-based Jazz Air Income Fund, currently has three round-trips a day between Hamilton and Montreal, and two round trips daily on the Hamilton-Ottawa route.

Dropping Hamilton will free up three 50-seat Bombardier CRJ planes and two 37-seat Dash-8 aircraft for use elsewhere, including at nearby Pearson International Airport in Toronto. Under a "capacity purchase agreement," Jazz is paid by Montreal-based Air Canada to operate a wide range of regional routes.

Mr. Howse said the Hamilton airport will be able to weather Jazz's withdrawal because of service provided by tour operators such as Transat A.T. Inc. and Sunwing Travel Group. Scottish discounter Flyglobespan is also a key Hamilton client, offering flights to Britain.

Analysts say that Air Canada's plans to reduce its worldwide seat capacity were bound to have a ripple effect on Jazz.

The decision to drop Hamilton came one day after Air Canada announced that it will be paring up to 2,000 jobs this fall, part of a cost-cutting strategy to combat soaring fuel prices as the carrier scales back or cancels flights, making it harder for consumers to fly where they want, when they want.

Air Canada now has 28,000 workers. Jazz spokeswoman Debra Williams said 14 Jazz customer service agents will be affected by the Hamilton pullout, but it's too early to discuss the broader impact of Air Canada's capacity cuts on the regional carrier's separate payroll of 5,000 workers.

"Air Canada made the commercial decision to discontinue service to Hamilton," Ms. Williams said. "The last day of operation will be July 31. As a result, Jazz will close its airport operation in Hamilton effective on the same date."

Montie Brewer, Air Canada's chief executive officer, said during an investment webcast yesterday that his airline is cutting costs where possible, including retiring older planes such as eight Airbus A330s.

WestJet Airlines Ltd., founded in 1996, added Hamilton to its route network in 2000. But amid much fanfare, WestJet shifted its eastern hub from Hamilton to Pearson in 2004, entering the lucrative Toronto-Montreal-Ottawa triangle.

Calgary-based WestJet still offers 50 departures a week from Hamilton to destinations such as Calgary, Winnipeg, Edmonton and Moncton.

Upbeat WestJet CEO Sean Durfy said his airline will take advantage of opportunities on routes vacated by rivals.

JAZZ AIR (JAZ.UN)

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