Decision No. 599-A-2007

November 28, 2007

File No. M4835-35-1

Lan Airlines S.A. carrying on business as Lan Airlines (hereinafter Lan Airlines), on behalf of itself and American Airlines, Inc. (hereinafter American Airlines) and American Airlines, Inc.'s affiliate American Eagle Airlines, Inc. (hereinafter American Eagle), has applied to the Canadian Transportation Agency (hereinafter the Agency) for the approval set out in the title. The application was received on November 20, 2007.

Lan Airlines 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 an approval at least 45 days before the first planned flight.

The Agency notes that this application is a renewal of the approval granted by Decision No. 639-A-2004 dated November 25, 2004.

Under Licence No. 980029, Lan Airlines is authorized to operate a scheduled international service in accordance with the Agreement between the Government of Canada and the Government of the Republic of Chile on Air Transport signed on December 4, 2003 (hereinafter the Agreement).

Under the terms of the Agreement, code sharing between designated airlines and third-country carriers is permitted. That is, while providing services between Canada and Chile, the designated airlines may code share on each other's flights, or on flights operated by a carrier of a third country.

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 Lan Airlines 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 Lan Airlines be exempt from the application of subsection 8.2(2) of the ATR.

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 requested, Lan Airlines has requested approval for an indefinite period. The Agency is not prepared to consider granting the approval for an indefinite period. In light of the provisions of the Agreement, the Agency considers that a term of three years would be appropriate.

Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the CTA and section 8.2 of the ATR, hereby approves the use by Lan Airlines of aircraft and flight crew provided by American Airlines and American Eagle, and the provision by American Airlines and American Eagle of such aircraft and flight crew to Lan Airlines, to permit Lan Airlines to provide its scheduled international service on licensed routes between Chile and Canada by selling transportation in its own name on flights operated by American Airlines and American Eagle between points in Chile and points in the United States of America and between points in the United States of America and points in Canada, from November 28, 2007 to November 27, 2010, subject to the following conditions:

1. Lan Airlines shall continue to hold the required licence authority.
2. Lan Airlines shall apply its published tariffs, in effect, to the carriage of its 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.
3. The air service approved herein shall only be provided as long as a code-sharing agreement providing for such services remains in effect.
4. Air transportation using Lan Airlines' code on flights operated by American Airlines and American Eagle between points in the United States of America and points in Canada shall not be sold separately and shall only be available to traffic carried on a continuous journey under Lan Airlines' code between Chile and Canada, unless fifth freedom rights are exercised pursuant to Condition No. 5 below.
5. Fifth freedom rights may be exercised only to the extent permitted for code-sharing by the Agreement, i.e., only at Miami and New York subject to limitations specified in the Agreement. Lan Airlines, American Airlines and American Eagle shall give advance notice to the Agency of any flights where fifth freedom rights will be exercised.

Lan Airlines, American Airlines and American Eagle are reminded of the continuing requirement to comply with sections 8.2 and 8.5 of the ATR.

Lan Airlines and American Airlines are further reminded to provide the Agency with a copy of any new agreement or amendments to their commercial agreement, including any new or amended annex, without delay.

The approval granted herein does not exempt Lan Airlines, American Airlines and American Eagle from the requirements of other legislative acts or regulations, including those of Transport Canada.

Members

• John Scott
• J. Mark MacKeigan