Order No. 2006-A-111

March 10, 2006

File No. M4210/A74-2

On March 8, 2006, Airline Tariff Publishing Company, Agent, on behalf of Air Canada, filed with the Canadian Transportation Agency (hereinafter the Agency) a revision to the carrier's NTA(A) Tariff No. 458, effective April 22, 2006, amending Rule 27, International Fuel Surcharges, to extend the application of currently effective fuel surcharges to tickets issued on or before September 30, 2006. Air Canada's currently effective fuel surcharges apply to tickets issued on or before March 31, 2006. Air Canada has also applied to advance the effective date of the tariff filing to the earliest possible date.

In a letter dated March 8, 2006 in support of its tariff filing, Air Canada advises that fuel costs have continued to escalate by unforeseen and unavoidable amounts, and that the surcharge is an attempt to recuperate the increased cost of fuel. The carrier advises that it will react to market prices of fuel and, if warranted, will revisit the amount of the surcharge on a regular basis. Air Canada submits that it does not intend to adopt a permanent fuel surcharge for international carriage, and that it instructs all of its Customer Service Agents to advise customers of extra taxes and surcharges. In addition, Air Canada notes that the fuel surcharge is clearly displayed on its Web site and advises that travel agencies are notified of the proposed fuel surcharge, including the effective date and duration of the carrier's imposed surcharge.

The Agency has previously noted that there has been a proliferation of surcharges in the aviation industry. The Agency is concerned that the ever-increasing use of surcharges limits consumers' ability to compare advertised air fares, as the advertised price does not usually disclose the true price that the consumer will have to pay at the time of purchase. Accordingly, the Agency is of the opinion that air carriers should make every effort to incorporate surcharges into air fares and avoid such surcharges. If surcharges are used, however, they should only be a temporary measure, which air carriers use to respond to unforeseen and unavoidable increases in their costs.

The Agency has carefully reviewed and considered Air Canada's tariff filing, along with the information contained in Air Canada's letter of March 8, 2006, and is of the opinion that compliance by Air Canada with subsection 115(1) of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter ATR) is impractical in this case. Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the Canada Transportation Act, S.C., 1996, c. 10, hereby exempts Air Canada from the application of subsection 115(1) of the ATR to permit Air Canada to file the tariff revisions, as proposed, on not less than one day's notice. The carrier, if it chooses, may revise the expiry date to October 31, 2006 to be consistent with the end of the IATA season. Special Permission No. 99570 is therefore assigned to this effect.

The Agency may review this matter sooner than the expiry date if there is a significant change in the circumstances that prompted the fuel surcharge. The Agency expects Air Canada to also monitor fuel prices and to reduce or cancel the surcharge should fuel prices decline significantly.