Order No. 2003-A-617

December 12, 2003

File No. M4820-2-C8

By Decision No. 651-A-2003 dated November 20, 2003, the Canadian Transportation Agency (hereinafter the Agency), pursuant to subsection 78(2) of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA), amended Licence No. 970075 to the extent necessary to permit Lineas Aereas Costarricenses, S.A. doing business as LACSA (hereinafter LACSA) to operate a total of four round-trip flights per week on the agreed routing San José-San Salvador-Havana-Toronto, using B767, A320 or equivalent type of aircraft, from November 8, 2003 to November 30, 2003 only. In its application, LACSA was seeking authority to do so until the end of the 2003/2004 IATA winter season. By that same Decision, LACSA was also permitted to exercise fifth freedom rights at San Salvador and Havana.

On December 8, 2003, Air Canada filed with the Agency a letter supporting LACSA's request for a fourth weekly frequency to Canada, with fifth freedom traffic rights between Toronto and Havana, for the period from December 8, 2003 to January 27, 2004 inclusively. Air Canada further indicated that this support is given on the understanding that reciprocal rights with respect to the operation of a fourth weekly frequency will be granted to Air Canada for the same period, that Air Canada's provisional permit to operate its three weekly Toronto/San José flights is extended to its original expiry date of February 28, 2004, and that assurance be given that Air Canada's permanent permit will be issued before the provisional permit expires.

Pursuant to an Agreed Minute signed on November 22, 1996 (hereinafter the Agreed Minute), it was agreed: "...that the total capacity/frequency available for direct, own-equipment services between Central America and Canada by an airline or airlines designated by the Governments of Costa Rica, El Salvador, Guatemala and Nicaragua will be a minimum of three flights per week using B767, A320 or equivalent type aircraft."

The Agency notes that pursuant to Article XI (Capacity) of the Agreement between the Government of Canada and the Government of the Republic of Costa Rica on Air Transport initialled ad referendum on November 22, 1996, the capacity to be provided on the agreed services in excess of the capacity entitlements: "...may from time to time as necessary be agreed between the designated airlines of the Contracting Parties, subject to the approval of the aeronautical authorities of both Contracting Parties."

In response to the application which was decided by Decision No. 651-A-2003, Air Canada objected to the approval of LACSA's application and the Agency decided to only approve the operation of the fourth weekly flight until November 30, 2003. As Air Canada no longer objects to the operation of this extra flight until January 27, 2004, the Agency will now reconsider the matter.

Pursuant to section 32 of the CTA, the Agency may review, rescind or vary a decision made by it if, in the opinion of the Agency, since the issuance of the decision, there has been a change in the facts or circumstances pertaining to the decision.

The Agency has carefully reviewed and considered the matter and finds that, pursuant to section 32 of the CTA, there has been a change in the facts or circumstances pertaining to Decision No. 651-A-2003 since it was issued.

Accordingly, the Agency, pursuant to section 32 of the CTA, hereby varies Decision No. 651-A-2003 dated November 20, 2003 to the extent necessary to permit LACSA, pursuant to section 77 of the CTA, to operate a total of four round-trip flights per week on the agreed routing San José-San Salvador-Havana-Toronto, using B767, A320 or equivalent type of aircraft, from the date of this Order until January 27, 2004, subject to the following conditions:

LACSA shall also obtain the approval of the other aeronautical authorities involved.

LACSA shall file with the Agency, within thirty days after the end of December 2003 and after January 27, 2004, statistics showing, on a flight-by-flight basis, the passenger capacity and the origin and destination passenger traffic carried between each city served in Canada and each of San José, San Salvador and Havana.

LACSA is reminded that, with respect to the exercise of fifth freedom rights at San Salvador and Havana, the Agreement requires that "Saleable fifth freedom seats shall not exceed fifty percent of aircraft capacity averaged over each IATA season."

The authority granted herein does not constitute a change in capacity entitlement in the Agreement.

The authority granted herein does not exempt LACSA from the requirements of other legislative acts or regulations, including those of Transport Canada.

This Order shall form part of Licence No. 970075 and shall remain affixed thereto as long as it is in effect.