Decision No. 590-A-2002

October 31, 2002

File No. M4835-2-17Docket No. 021176AG

Air Canada, on behalf of itself and El Al, has applied to the Canadian Transportation Agency (hereinafter the Agency) for the approval set out in the title. The application was received on September 6, 2002. On October 24, 2002, Air Canada advised that the proposed start date was changed to November 1, 2002.

Air Canada has also requested an exemption from the application of subsection 8.2(2) of the Air Transportation Regulations (hereinafter the ATR), which requires the filing of an application for approval at least 45 days before the first planned flight.

Air Canada submits that the code-sharing arrangements are necessary to provide and maintain the best possible competitive air services between Canada and Israel from the perspective of public convenience, frequency, cost and quality of service.

Under Licence No. 020136, Air Canada is authorized to operate a scheduled international service, large aircraft, in accordance with the Agreed Minute between Canada and Israel signed on September 19, 2002 (hereinafter the Agreed Minute).

Under Licence No. 020135, El Al is authorized to operate a scheduled international service consistent with the Agreed Minute.

With respect to the request for an exemption from the application of subsection 8.2(2) of the ATR, the Agency has considered the request and is of the opinion that compliance by Air Canada with subsection 8.2(2) of the ATR is impractical in this case. Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the Canada Transportation Act (hereinafter the CTA), hereby orders that Air Canada be exempt from the application of subsection 8.2(2) of the ATR.

The Agency notes that under the terms of the Agreed Minute and subject to normal regulatory requirements, Air Canada may sell transportation under its own code on flights operated by El Al and one third country airline on any routing to, from and beyond cities in Israel. Air Canada may also carry traffic under the code of El Al. Additionally and also subject to normal regulatory requirements, El Al may sell transportation under its own code on flights operated by Air Canada and one third country airline on any routing to, from and beyond cities in Canada. El Al may also carry traffic under the code of Air Canada.

The Agency has reviewed and considered the application and the material filed in support thereof and is satisfied that it meets the remaining requirements of section 8.2 of the ATR.

With respect to the duration of the approval, the Agency is of the view that as the licences expire on March 29, 2003 concurrently with the entitlements for scheduled air services in the Agreed Minute, it would be inappropriate to consider approval of the application beyond the expiry date of the licences.

Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the CTA and section 8.2 of the ATR, hereby approves the use by Air Canada of aircraft and flight crew provided by El Al, and the provision by El Al of such aircraft and flight crew to Air Canada, to permit Air Canada, while providing its scheduled international air services between Canada and Israel, to sell transportation in its own name on flights operated by El Al between points in Canada and points in Israel.

Additionally, the Agency hereby approves the use by El Al of aircraft and flight crew provided by Air Canada, and the provision by Air Canada of such aircraft and flight crew to El Al, to permit El Al, while providing its scheduled international air services between Canada and Israel, to sell transportation in its own name on flights operated by Air Canada between points in Canada and points in Israel, between points in Canada and points in the United States of America and between domestic points in Canada.

This approval is effective from the date of this Decision until March 29, 2003, and is subject to the following conditions:

1. Air Canada and El Al shall continue to hold the required licence authority.
2. The air services approved herein shall only be provided as long as a code-sharing agreement between Air Canada and El Al providing for such services remains in effect.
3. Air Canada and El Al shall apply their published tariffs, on file with the Agency and in effect, to the carriage of their traffic. In particular, nothing in any commercial agreement between the air carriers relating to limits of liability shall diminish the rights of passengers as stated in such tariffs.

Air Canada and El Al are reminded of the continuing requirement to comply with sections 8.2 and 8.5 of the ATR.

Air Canada and El Al are further reminded to provide the Agency with a copy of any amendments to their code-sharing agreement or of any new or amended annex.

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