Order No. 2010-A-659

December 23, 2010

File Nos. M4210/T386-1
M4210/T386-2
M4210/T386-3

Jazz Air LP, as represented by its general partner, Jazz Air Holding GP Inc. carrying on business as Air Canada Jazz, Jazz, Jazz Air and Thomas Cook Canada (Jazz Air) applied to the Canadian Transportation Agency (Agency) for an exemption to allow for the transfer of licences to Jazz Aviation LP, as represented by its general partner, Aviation General Partner Inc. carrying on business as Air Canada Jazz, Jazz, Jazz Air and Thomas Cook Canada (Jazz Aviation), effective January 1, 2011.

Under Licence No. 972097, Jazz Air is authorized to operate domestic services, small, medium and large aircraft.

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

Under Licence No. 975055, Jazz Air is authorized to operate scheduled international services, small, medium and large aircraft, on the route(s) set out in the Air Transport Agreement between the Government of Canada and the Government of the United States of America signed on March 12, 2007 (Agreement).

Section 58 of the Canada Transportation Act (CTA) provides that a licence issued for the operation of an air service is not transferable.

Pursuant to paragraph 80(1)(c) of the CTA, the Agency may exempt a person from the application of a provision of the CTA where it is of the opinion that compliance with the provision by the person is unnecessary, undesirable or impractical.

Jazz Air's parent company is in the process of converting from an income trust, Jazz Air Income Fund, to a corporation, Chorus Aviation Inc. Jazz Air submits that it will transfer substantially all of its assets, including its employees, fleet, air service operations and contracts, to Jazz Aviation as part of an internal reorganization.

With respect to the requirement to be Canadian, the Agency has determined that it is satisfied, based on the information and documents filed, that Jazz Aviation would meet the Canadian ownership and control requirements as defined in subsection 55(1) of the CTA upon the execution of the proposed transaction.

With respect to the eligibility to hold a licence for scheduled international services, the Agency notes that the Minister of Transport's designation includes and applies to Jazz Aviation to conduct international air services between Canada and the United States of America pursuant to the Agreement.

The Agency also notes that Jazz Aviation has the prescribed liability insurance coverage effective January 1, 2011. The Agency notes, however, that Jazz Aviation does not presently hold a valid Canadian aviation document.

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

To ensure that the proposed restructuring has not changed in any material or substantial way from that reported to the Agency, the Agency has requested and Jazz Air has agreed to file executed copies of certain documents once finalized.

The Agency notes that Jazz Air stated that it is requesting this exemption to avoid interruptions in the services to the public. The Agency has considered the matter and finds that the proposed reorganization, as described by Jazz Air, is in the nature of an internal restructuring and that compliance by Jazz Air with section 58 of the CTA is impractical in the present circumstances.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, exempts Jazz Air from the application of section 58 of the CTA.

Licence Nos. 972097, 975055 and 977160 will be transferred from Jazz Air to Jazz Aviation. However, pursuant to paragraph 28(1)(b) of the CTA, 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.

The Agency directs that the transfer of these licences shall come into force upon the occurrence of both:

1. the execution of the proposed transaction which is expected to be effective on January 1, 2011; and
2. the effective date of issuance by Transport Canada of a Canadian aviation document in respect of the services provided under Licence Nos. 972097, 975055 and 977160, in compliance with the requirement of subparagraphs 61(a)(ii), 69(1)(a)(ii) and 73(1)(a)(ii) of the CTA.

New documents of licence will be issued to Jazz Aviation LP, as represented by its general partner, Aviation General Partner Inc. carrying on business as Air Canada Jazz, Jazz, Jazz Air and Thomas Cook Canada.