Order No. 2004-A-412

September 29, 2004

September 29, 2004

IN THE MATTER OF applications by Air Canada, on behalf of Jazz Air Inc. carrying on business as Air Nova, Air Alliance, Air Ontario, AirBC, Canadian Regional and Air Canada Jazz, for 1) an exemption from the application of section 58 of the Canada Transportation Act, S.C., 1996, c. 10 in order to allow the issuance of licences to Jazz Air Limited Partnership, as represented by its general partner, Jazz Air General Partner Inc. carrying on business as Air Canada Jazz and 2) an exemption from the application of section 64 of the Canada Transportation Act with respect to the proposed discontinuance by Jazz Air Inc. carrying on business as Air Nova, Air Alliance, Air Ontario, AirBC, Canadian Regional and Air Canada Jazz's of its entire operations, including all domestic services effective September 30, 2004.

File Nos. M4210/A939-1
M4210/A939-2
M4210/A939-3


Under Licence No. 972097, Jazz Air Inc. carrying on business as Air Nova, Air Alliance, Air Ontario, AirBC, Canadian Regional and Air Canada Jazz (hereinafter Jazz Air Inc.) is authorized to operate a domestic service, small aircraft, a domestic service, medium aircraft, and a domestic service, large aircraft.

Under Licence No. 975055, Jazz Air Inc. is authorized to operate a scheduled international service, small aircraft, a scheduled international service, medium aircraft, and a scheduled international service, large 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, Jazz Air Inc. is authorized to operate a non-scheduled international service, small aircraft, a non-scheduled international service, medium aircraft, and a non-scheduled international service, large aircraft, to transport traffic on a charter basis between Canada and any other country.

Pursuant to its applications, Air Canada, on behalf of Jazz Air Inc., 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 Jazz Air Inc. to Jazz Air Limited Partnership, as represented by its general partner, Jazz Air General Partner 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 Canadian Transportation Agency (hereinafter 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 as part of Air Canada's Plan of reorganization, compromise and arrangement (hereinafter the Plan), the employees, operations and assets of Jazz Air Inc. will be transferred to a newly-created limited partnership, Air Canada Jazz. Jazz Air Inc. will then be wound up and dissolved. On September 30, 2004, Jazz Air Inc. will discontinue its entire operations, including all domestic services in Canada. On that same date, Air Canada Jazz will offer the publicly available air services by operating services provided by Jazz Air Inc. to all points and between points in Canada as of the date immediately prior thereto.

The Agency has carefully reviewed this matter and, as the proposed transfer of employees, operations and assets from a company to a limited partnership is in the nature of an internal corporate restructuring, the Agency is of the opinion that compliance by Jazz Air Inc. 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 Jazz Air Inc. from the application of section 58 of the CTA.

With respect to section 64 of the CTA, given that in the present circumstances, the corporate restructuring will result in the continuation of services without change on September 30, 2004, the Agency is of the opinion that section 64 of the CTA does not apply.

Notwithstanding the foregoing, the new entity Jazz Air Limited Partnership, as represented by its general partner, Jazz Air General Partner Inc. carrying on business as Air Canada Jazz, needs to comply, on an ongoing basis, with the licensing requirements of the CTA.

With respect to the requirement to be Canadian, the Agency, in Decision No. LET-A-247-2004 dated September 3, 2004, determined that it was satisfied that based on the information and document filed, Air Canada Jazz would meet the Canadian ownership and control requirements as defined in subsection 55(1) of the CTA upon emergence from the proceedings under the Companies' Creditors Arrangement Act, R.S.C., 1985 c. C-36, as amended.

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 in a letter dated April 4, 1995 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 (hereinafter the Agreement).

The Agency notes that Air Canada Jazz holds a valid Canadian aviation document and has prescribed liability insurance coverage effective September 30, 2004.

Accordingly, Licence Nos. 972097, 975055 and 977160 are hereby transferred from Jazz Air Inc. carrying on business as Air Nova, Air Alliance, Air Ontario, AirBC, Canadian Regional and Air Canada Jazz to Jazz Air Limited Partnership, as represented by its general partner, Jazz Air General Partner Inc. carrying on business as Air Canada Jazz.

Pursuant to paragraph 28(1)(a) of the CTA, the Agency directs that the transfer of these licences shall come into force on September 30, 2004.

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