Order No. 2002-A-237

June 28, 2002

File No. M4210/A931-1

Air Canada Regional Inc. carrying on business as Air Nova, Air Alliance, Air Ontario, AirBC, Canadian Regional and Air Canada Jazz (hereinafter Air Canada Regional Inc.) filed with the Canadian Transportation Agency (hereinafter the Agency) the application set out in the title. The application was received on May 6, 2002.

Under Licence No. 972097, Air Canada Regional Inc. is authorized to operate a domestic service, small aircraft, a domestic service, medium aircraft and a domestic service, large aircraft.

Air Canada Regional Inc. submits that it has incurred substantial financial losses in connection with its scheduled air service between Vancouver and Campbell River, particularly the past twelve months. Therefore, in order to minimize these losses and ensure its financial survival, Air Canada Regional Inc. is required to discontinue its non-stop scheduled air services between Vancouver and Campbell River.

Air Canada Regional Inc. further submits that the proposed discontinuance of services between Vancouver and Campbell River will not result in a reduction, as compared to the week before the proposal is to take effect, of at least 50 percent of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services since, as of July 1, 2002 , Pacific Coastal Airlines Inc. will be increasing its frequency of services between those two points. Air Canada Regional Inc. adds that the service will also be provided on Air Canada's designator code with respect to on-line connecting traffic.

Further, Air Canada Regional Inc. points out that ferry transportation with inter-city bus service is available between several communities on the Vancouver Island and the Mainland, including Comox and Powell River.

With respect to the discontinuance of service at Campbell River, Air Canada Regional Inc. states that this community will continue to be served by Pacific Coastal Airlines Inc. and Corilair Charters Limited. There will still therefore be more than one licensee offering at least one flight per week to that point.

In addition, Air Canada Regional Inc. states that it has notified the Mayor, Member of the Legislative Assembly, Member of Parliament and President of the Chamber of Commerce for Campbell River.

Subsection 64(1) of the Canada Transportation Act (hereinafter the CTA) provides that where a licensee proposes to discontinue a domestic service or to reduce the frequency of such a service to a point to less than one flight per week and, as a result of the proposed discontinuance or reduction, there will be only one licensee or no licensee offering at least one flight per week to that point, the licensee shall give notice of the proposal in prescribed form and manner to such persons as are prescribed.

Pursuant to subsection 64(1.1) of the CTA, if a licensee proposes to discontinue its year-round non-stop scheduled air service between two points in Canada and that discontinuance would result in a reduction, as compared to the week before the proposal is to take effect, of at least percent of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services between those two points, the licensee shall give notice of the proposal in the prescribed form and manner to the prescribed persons.

The Agency has thoroughly investigated the level and frequency of air service at Campbell River that will be offered after July 1, 2002. The Agency finds that following the discontinuance of Air Canada Regional Inc.'s services between Vancouver and Campbell River, there will not be a reduction, as compared to the week before the proposal is to take effect, of at least 50 percent of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services between these points. Therefore, the Agency finds that subsection 64(1.1) of the CTA does not apply.

The Agency also finds that, as of a result of Air Canada Regional Inc.'s discontinuance of service at Campbell River, there will still be more than one licensee offering at least one flight per week to this point. Therefore, the Agency finds that subsection 64(1) of the CTA does not apply.