Order No. 2006-A-669

December 20, 2006

File No. M4210/A74-4-38

Air Canada has applied to the Canadian Transportation Agency (hereinafter the Agency) for the exemption set out in the title. The application was received on December 12, 2006.

Section 59 of the Canada Transportation Act (hereinafter the CTA) states that no person shall sell, cause to be sold or publicly offer for sale in Canada an air service unless, where required under Part II of the CTA, the person holds a licence under that part in respect of that service.

Under Licence No. 990050, Air Canada is authorized to operate a scheduled international service, medium aircraft, a scheduled international service, large aircraft, and a scheduled international service, all-cargo aircraft, in a manner consistent with the Supplementary Confidential Memorandum on Air Services between the Canadian Trade Office in Taipei and the Civil Aeronautics Administration of the Ministry of Transportation and Communications in Taipei signed on February 25, 1999, as amended (hereinafter the Memorandum).

Condition No. 2 of the said licence states:

The authority granted herein shall terminate on March 31, 2007.

Air Canada also requests that the Agency not require it to notify all passengers on the availability display screen of computer reservation systems and on its own internal reservation system before reservations that its scheduled international service between Canada and Taiwan beyond March 31, 2007 is subject to government approval. According to Air Canada, the "subject to government approval" notice would have a negative impact on its ability to sell seats beyond March 31, 2007 and would jeopardize the viability of its Canada-Taiwan service. Air Canada also submits that compliance with section 59 of the CTA is undesirable if the travelling public is to be able to take advantage of its services between Canada and Taiwan.

The Agency has carefully reviewed and considered the application and is of the opinion that in order for the service to be viable, Air Canada must be able to continue selling seats without interruption. Therefore, the Agency finds that compliance by Air Canada with section 59 of the CTA is impractical in the present circumstances.

With respect to whether the requirement to indicate on reservation systems that its scheduled international service between Canada and Taiwan beyond March 31, 2007 is subject to government approval, the Agency notes that Licence No. 990050 has been renewed on an annual basis in accordance with the terms of the Memorandum.

The Agency is of the opinion that, in this case, it is not necessary for passengers to be notified that the scheduled international service is subject to government approval.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, hereby exempts Air Canada from the application of section 59 of the CTA, effective from the date of this Order, thereby permitting Air Canada to sell, cause to be sold or publicly offer for sale in Canada a scheduled international service, medium aircraft, a scheduled international service, large aircraft, and a scheduled international service, all-cargo aircraft, between Canada and Taiwan for travel beyond March 31, 2007, without holding the required licence, subject to the following conditions:

1. The exemption authorized herein does not relieve Air Canada from the requirement to hold a licence in respect of the service to be provided and, accordingly, no flights shall be operated until the appropriate licence authority has been granted.
2. Air Canada shall arrange to provide alternative air transportation by an appropriately licensed air carrier, at no additional cost for all passengers who have made reservations with Air Canada or, if such arrangements are not acceptable to the passenger, to provide a full refund of all monies paid by the passenger, should the scheduled international licence not issue.

The exemption authorized herein is valid until March 31, 2007.

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