Decision No. 112-A-2004

March 10, 2004

File No. M4835-2-5

Air Canada, on behalf of itself and Lufthansa and its affiliates and subsidiaries, has applied to the Canadian Transportation Agency (hereinafter the Agency) for the approval set out in the title. The application was received on February 13, 2004.

This application is a renewal of the approval granted by Decision No. 136-A-2001 dated March 23, 2001, as amended by Decision No. 720-A-2003 dated December 30, 2003.

Under Licence No. 975040, Air Canada is authorized to operate a scheduled international service on the route(s) set out in the Agreement between the Government of Canada and the Austrian Federal Republic on Air Transport signed on June 22, 1993 (hereinafter the Canada-Austria Agreement).

Under Licence No. 990026, Air Canada is authorized to operate a scheduled international service on the route(s) set out in the Agreement between the Government of Canada and the Government of the Kingdom of the Netherlands relating to Air Transport signed on June 2, 1989, as amended (hereinafter the Canada-Netherlands Agreement).

The Agency notes that under the terms of the Canada-Austria Agreement and the Canada-Netherlands Agreement, designated airlines are permitted to offer services through codesharing with other airlines, including airlines of third countries. The Agency also notes that Air Canada is permitted to exercise fifth freedom rights between intermediate points and the Netherlands.

With respect to the duration of the approval, the Agency is of the view that an approval for a term of three (3) years would be appropriate.

The Agency has reviewed and considered the application and the material filed in support thereof and is satisfied that it meets the requirements of section 8.2 of the Air Transportation Regulations (hereinafter the ATR).

Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the Canada Transportation Act and section 8.2 of the ATR, hereby approves the use by Air Canada of aircraft and flight crew provided by Lufthansa and its affiliates and subsidiaries, and the provision by Lufthansa and its affiliates and subsidiaries of such aircraft and flight crew to Air Canada, to permit Air Canada, while providing its scheduled international air services between Canada and Austria and Canada and the Netherlands, to sell transportation in its own name on flights operated by Lufthansa and its affiliates and subsidiaries between Frankfurt, Germany and Vienna, Austria and between Frankfurt and Amsterdam, Netherlands, from March 28, 2004 to March 27, 2007, subject to the following conditions:

1. Air Canada shall continue to hold the required licence authorities.
2. The air services approved herein shall only be provided as long as a commercial agreement between Air Canada and Lufthansa and its affiliates and subsidiaries, providing for such services remains in effect.
3. Air transportation using Air Canada's code on Lufthansa and its affiliates and subsidiaries' flights between Frankfurt and Vienna shall not be sold separately and shall only be available to Air Canada's traffic carried on a continuous journey between Canada and Austria.
4. Air Canada shall apply its published tariffs, on file with the Agency and in effect, to the carriage of its traffic. In particular, nothing in any commercial agreement between the air carriers relating to limits of liability shall diminish the rights of passengers as stated in such tariffs.

Air Canada and Lufthansa and its affiliates and subsidiaries are reminded of the continuing requirement to comply with sections 8.2 and 8.5 of the ATR.

Air Canada and Lufthansa and its affiliates and subsidiaries are further reminded to provide the Agency with a copy of any amendments to their commercial agreement or of any new or amended annex, upon signature.

The approval granted herein does not exempt Air Canada and Lufthansa and its affiliates and subsidiaries from the requirements of other legislative acts or regulations, including those of Transport Canada.