Air Canada says its new Rouge low-cost carrier will begin flying on July 1.
The new airline will fly to Venice in Italy and Edinburgh in Scotland, two destinations that currently aren't served by Air Canada.
Rouge will also serve Athens and other destinations in Europe and the Caribbean from Montreal and Toronto.
The destinations are areas where demand for travel has been growing, said Ben Smith, Air Canada's chief commercial officer.
"With the introduction today of Air Canada Rouge, Air Canada enters today's growing leisure travel market on a truly competitive basis," he said.
"Air Canada Rouge will leverage the strengths of Air Canada's extensive network, operational expertise and frequent flyer reward program in order to offer Canadians great value for their vacation travel."
The pilots will be existing Air Canada pilots who will transfer to the new fleet that will cater to the leisure market.
The airline says flights to Venice, Edinburgh and Athens start at "special introductory fares" of $949 round-trip, including all taxes, fees, charges and surcharges.
Flights to the Dominican Republic and Jamaica will start at $269, one-way, while Cuba is offered starting at $538 round-trip.
All the introductory fares, which are available until Dec. 25, are based on Toronto departures.
Details about fares going forward were not immediately available.
Air Canada (TSX:AC.B) executives are on hand Tuesday as the company also hosted a vacation giveaway in Toronto's downtown Yonge-Dundas Square.
The discount carrier will begin operations with two Boeing 767-300ER and two Airbus A319 aircraft that will be released from Air Canada's mainline fleet.
Additional planes will be added as Air Canada starts to take delivery of new Boeing 787 Dreamliner aircraft in 2014, ramping up to 50 planes.