The pandemic has claimed its first Canadian airline – Sky Regional Airlines Inc. – which says it will shut down at the end of March after Air Canada said it was ending its contract with the company at the end of the month.

Earlier this week Air Canada declared that the “devasting impact” of COVID-19 on aviation had forced it to seek savings by consolidating its Air Canada Express division, operated in partnership with Sky Regional, into Chorus Aviation Ltd.’s Jazz Aviation subsidiary.

Sky Regional, which had operated flights along regional routes in Canada and the US under the Air Canada Express brand, is the first domestic scheduled airline to permanently shut down since the start of the pandemic.

“Sadly, as a result of Air Canada’s decision, we will be forced to shut down our operations, despite our many adjustments in the face of the various travel restrictions imposed by governments, thus far without any sector-specific support,” said chairman and chief executive Russ Payson.

Payson said the company’s 25 Embraer aircraft will be transferred to Air Canada and that its pilots, including those on layoff, will be transferred to Jazz.

The company, which employed 800 people before the pandemic, operated its first flight in 2011 and went on to offer domestic service, as well as flights into US destinations such as Boston, New York, Newark, Philadelphia, Washington, Dallas, and Chicago.

“Over the past decade, we have operated with outstanding service, an impeccable safety record and excellent cost management, which benefited not only our client, but Canadian travellers,” Payson said.

Other airlines have struggled as a lack of travel takes a heavy toll on the aviation industry. Thousands of aviation workers have been laid off this year alone, as the industry calls for a bailout from the federal government.

Regional routes like those serviced by Sky Regional have seen widespread cuts during the pandemic, with airlines looking to cut costs.

Robert Kokonis, president of Toronto-based consulting firm AirTrav Inc., said Air Canada’s decision to end the agreement with Sky Regional likely came as a result of uncertainty around demand for regional aviation after the pandemic.

Kokonis added that the consolidation of Air Canada’s regional flights under Jazz could create an opportunity for smaller carriers to enter new markets where flights have been cut during the pandemic, once demand for travel recovers.

“This might open the door for smaller airlines to start to serve some of those underserved regional routes,”Kokonis said.