Order No. 2006-A-33

January 20, 2006

File Nos. M4210/A1000-1
M4210/A1000-3
M4210/A1000-2

Under Licence No. 972097, Jazz Air Limited Partnership, as represented by its general partner, Jazz Air General Partner Inc. carrying on business as Air Canada Jazz (hereinafter the previous Air Canada Jazz) is authorized to operate a domestic service, small aircraft, and a domestic service, medium aircraft.

Under Licence No. 975055, the previous Air Canada Jazz is authorized to operate a scheduled international service, small aircraft, and a scheduled international service, medium aircraft, pursuant to the Air Transport Agreement between the Government of Canada and the Government of the United States of America signed on February 24, 1995, between points in Canada and points in the United States of America.

Under Licence No. 977160, the previous Air Canada Jazz is authorized to operate a non-scheduled international service, small aircraft, and a non-scheduled international service, medium aircraft, to transport traffic on a charter basis between Canada and any other country.

Pursuant to its applications, the previous Air Canada Jazz is seeking: (1) an exemption from the application of section 58 of the Canada Transportation Act (hereinafter the CTA), in order to allow the transfer of licences from the previous Air Canada Jazz to Jazz Air LP, as represented by its general partner, Jazz Air Holding GP Inc. carrying on business as Air Canada Jazz (hereinafter Air Canada Jazz); and, (2) an exemption, pursuant to paragraph 80(1)(c) of the CTA, from the application of section 64 of the CTA, regarding the requirement to give prior notice of any proposal to discontinue a domestic service.

Section 58 of the CTA provides that a licence issued for the operation of an air service is not transferable.

Section 64 of the CTA provides that a notice must be given when a licensee proposes to discontinue or to reduce the frequency of certain domestic services.

Pursuant to paragraph 80(1)(c) of the CTA, the Agency may, by order, on such terms and conditions as it deems appropriate, exempt a person from the application of any of the provisions of Part II of the CTA or of a regulation or order made under that Part where the Agency is of the opinion that compliance with the provision by the person is unnecessary, undesirable or impractical.

The Agency notes that on or about January 30, 2006, Jazz Air LP, a limited partnership established under the laws of the Province of Quebec, will acquire all or substantially all of the assets of Jazz Air Limited Partnership in consideration for, amongst other matters, the issuance of the limited partnership units in Jazz Air LP. Jazz Air Limited Partnership will then hold all of the units of Jazz Air LP, except for the unit held by Jazz Air Holding GP Inc. Both Jazz Air Limited Partnership and Jazz Air General Partner Inc. will subsequently be liquidated and, as a result, the units of Jazz Air LP, among other matters, will be transferred to ACE Aviation Holdings Inc. (hereinafter ACE). Jazz Air Income Fund, an unincorporated, open-ended trust established under the laws of the Province of Ontario, will use the proceeds of the Offering to indirectly acquire an interest in the outstanding units of Jazz Air LP and shares in the capital of Jazz Air Holding GP Inc., a corporation incorporated under the Canada Business Corporations Act. After completion of the Offering, ACE will continue to hold a controlling interest in Jazz Air LP and Jazz Air Holding GP Inc.

The Agency has carefully reviewed the proposed corporate restructuring and, having examined and considered all of the Canadian ownership and control in fact evidence filed in respect of these applications, is satisfied that Air Canada Jazz will be Canadian as defined in subsection 55(1) of the CTA.

Given the nature of the proposed restructuring and the transfer of employees, operations and assets from the previous Air Canada Jazz to Air Canada Jazz, the Agency is of the opinion that compliance by the previous Air Canada Jazz with section 58 of the CTA is impractical in the present circumstances. Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, hereby exempts the previous Air Canada Jazz from the application of section 58 of the CTA.

The Agency will ensure that the proposals are consummated as proposed and have not changed in any material or substantial way from that reported to the Agency. To this end, the Agency orders the previous Air Canada Jazz to file with the Agency, upon signing, all the final closing documents including final and signed agreements and other documentation implementing these proposals.

With respect to section 64 of the CTA, given that there will be no interruption of services, the Agency is of the opinion that section 64 does not apply.

Notwithstanding the foregoing, Air Canada Jazz needs to comply, on an ongoing basis, with the licensing requirements of the CTA.

With respect to the eligibility to hold a licence for scheduled international service, the Agency notes that Air Canada Jazz has been designated by the Minister of Transport to conduct international air transportation between points in Canada and points in the United States of America pursuant to the provisions of the Air Transport Agreement between the Government of Canada and the Government of the United States of America signed on February 24, 1995.

The Agency also notes that Air Canada Jazz has the prescribed liability insurance coverage. The Agency notes, however, that Air Canada Jazz does not presently hold a valid Canadian aviation document.

The Agency is therefore satisfied that Air Canada Jazz meets the requirements of section 61 and subsections 69(1) and 73(1) of the CTA, with the exception of the valid Canadian aviation document.

Paragraph 28(1)(b) of the CTA provides that the Agency may in any order direct that the order or a portion or provision of it shall come into force on the happening of any contingency, event or condition specified in the order.

Licence Nos. 972097, 975055 and 977160 will be transferred from Jazz Air Limited Partnership, as represented by its general partner, Jazz Air General Partner Inc. carrying on business as Air Canada Jazz to Jazz Air LP, as represented by its general partner, Jazz Air Holding GP Inc. carrying on business as Air Canada Jazz. The Agency directs, however, pursuant to paragraph 28(1)(b) of the CTA, that this transfer will come into effect on the closing date of the restructuring of Jazz Air Limited Partnership on or about January 30, 2006, if Air Canada Jazz files a valid Canadian aviation document that satisfies the Agency that it meets the requirement of subparagraphs 61(a)(ii), 69(1)(a)(ii) and 73(1)(a)(ii) of the CTA.

New documents of licence bearing Licence Nos. 972097, 975055 and 977160 will be issued to Jazz Air LP, as represented by its general partner, Jazz Air Holding GP Inc. carrying on business as Air Canada Jazz.