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OST-00-8554

Air Canada Regional, Inc.

Hereby applies for an emergency exemption that would enable Air Canada Regional to hold out scheduled foreign air transportation between any point or points in Canada, and any point or points in the United States, and to engage in foreign charter operations pursuant to the Department's charter regulations.  

As the Department is well aware, Air Canada earlier this year acquired Canadian Airlines International Ltd. and Canadian Regional Airlines (1998) Ltd. As part of the acquisition/integration process, Air Canada's regional affiliates -- Air Ontario, Inc, Air Nova, Inc., Air BC Limited, and Canadian Regional -- are undergoing a corporate restructuring pursuant to which the carriers' operations are being consolidated into a single corporate entity, Air Canada Regional, which will hold out service to the public and operate under the trade names of the affiliated carriers. Air Canada Regional, a newly-formed Canadian corporation, hereby applies for an exemption (and any other relief deemed necessary by the Department) so that it may provide scheduled and nonscheduled U.S.-Canada transborder service.

The consolidation of Air Canada's regional affiliates is to be completed on January 1, 2001. Therefore, Air Canada Regional requests that its new authority be granted as soon as possible, and made effective as of January 1, 2001. Given the need for relief on an expedited basis, Air Canada Regional requests that the date for filing answers to this Application be shortened to Wednesday, December 20, with final Department action on this Application to be taken as soon thereafter as possible. Air Canada Regional will serve all carriers by facsimile, and will poll all interested parties to determine whether there are any objections to a shortened answer date and the relief requested.

Counsel:  PA Consulting, Anita Mosner, 703.312.1446

Air Canada Regional, Inc.

Alaska could not determine from Air Canada's Application whether Air Canada is also requesting that the Department amend the Air Canada-United antitrust immunity Order 97-9-21 to reflect the change in corporate structure. Whatever Air Canada's intention rnay be in this regard, Alaska assumes that that issue will be resolved between Air Canada and the Department.

Counsel:  Squire Sandrs, Edward Sauer, 202.626.6651

Air Canada Regional, Inc.

OST-00-8554	December 22, 2000	Reply of Air Canada Regional	U.S.- Canada
		Service List

Alaska Airlines yesterday afternoon filed an Answer to the Application. Alaska's response dealt not with the merits of the Application, but with its stated unhappiness with a longstanding provision of the U.S.-Canada Open Skies Agreement which, in essence, requires that Sixth Freedom services be held out only with a change of flight number. Alaska apparently does not object to the award of relief requested in the above-captioned application. Given that Alaska does not object to this Application, Air Canada Regional requests that the Department promptly grant the relief requested. No other party has objected to the Application. Moreover, the relief requested in the Application is squarely authorized under the 1995 U.S.-Canada Open Skies Agreement.

The instant docket is not an appropriate place to discuss the possible changes to the U.S.-Canada Air Service Agreement urged by Alaska. These issues should be vetted in government-to-government discussions. Nor is a garden-variety licensing application a proper vehicle for examining broad issues such as the state of competition in the transborder market. Indeed, Air Canada Regional is puzzled by the fact that Alaska has chosen this Application -- intended solely to facilitate a routine corporate restructuring that will streamline the way in which Air Canada's longstanding regional services are held out in the marketplace -- as a means of articulating its previously unexpressed aeropolitical concerns. There can be no doubt that Alaska would strenuously object if the shoe were on the other foot. Therefore, the Department should not permit this docket to be used as a soapbox for Alaska to raise issues that are utterly irrelevant to the issues at hand.

Counsel:  PA Consulting, Anita Mosner, 703.312.1446

Air Canada Regional

Exemption from 49 U.S.C. 41301 to engage in scheduled foreign air transportation of persons, property and mail between any point or points in Canada and any point or points in the United States; and charter operations between any point or points in Canada and any point or points in the United States, and other charters pursuant to 14 CFR 212 of the Department's regulations.--Statement of authorization under 14 CFR 212 to the extent necessary to permit the applicant to display the designator code of Air Canada on its proposed services to/from the United States.

On December 21, 2000, Alaska Airlines, Inc. (Alaska) filed an answer to the application. Alaska does not oppose the request and states that it does not want to unreasonably delay the Department's approval of the request. However, it states that, as a result of Air Canada's acquisition of Canadian Airlines International (CAI), Alaska lost its codeshare partner in the U.S.-Canada market, leaving United Air Lines as the only U.S. carrier with extensive access to Canada. Alaska states that this situation makes more problematical the structural impediments which remain in the U.S.-Canada aviation relationship, particularly the bilateral limitation on a U.S. carrier's ability to hold out single flight number sixth-freedom service from/to third-country markets. Alaska believes that the U.S. Government should make clear to the Government of Canada that, in light of the effect of the Air Canada/CAI acquisition, the Government of Canada should remove this flight number restriction, at least in the Canada-U.S.-Mexico market.

In the conduct of these operations, Air Canada Regional must adhere to all applicable provisions of the U.S.-Canada Agreement. In the conduct of these operations, the all-cargo services are subject to the condition that points in the territory of the United States shall not be combined on any same plane scheduled or nonscheduled all-cargo courier service operated with aircraft having a maximum certified takeoff weight greater than 35,000 pounds. In the conduct of the charter operations authorized above, Air Canada Regional may, without prior Department approval, carry charter traffic between the United States and a third country point, provided that such charter traffic is carried on a flight that serves Canada for purposes of carrying traffic between the United States and Canada. Further, in addition to the authority noted above, Air Canada Regional may also conduct operations beyond points in the United States to points in third countries that it holds authority to serve, without local traffic rights between points in the United States and such other points in third countries (ie., on a blind sector basis).

By:  Paul Gretch

Air Canada Regional, Inc.

On December 29, 2000, the Department issued an exemption which authorized Air Canada Regional to provide scheduled air service in the U.S.-Canada market. The Department also issued a Statement of Authorization which permits Air Canada Regional, a wholly-owned subsidiary of Air Canada, to display the Air Canada "AC" airline designator code on its transborder flights. The authority was conditioned upon Air Canada Regional's providing the Department with 30 days' prior notice of code-share arrangements in any new city-pairs, and giving the Department 10 days' notice if it terminates any or all of its code-share services with Air Canada. For the reasons set forth below, Air Canada Regional hereby petitions the Department either to promptly waive the aforementioned condition, or to amend the Statement of Authorization issued on December 29h to remove the applicable reporting conditions.

The notice requirement recently imposed upon Air Canada is unnecessary and unworkable. U.S. carriers which serve the transborder market in conjunction with their regional affiliates are not subject to any regulatory approvals for their code-sharing arrangements, let alone a reporting requirement such as the one recently imposed upon Air Canada Regional. For example, American Eagle, a wholly owned subsidiary of American which operates in the Canada-U.S. market using the "AX airline designator code, would not be obliged to notify the Department if it were to introduce scheduled service between Washington and Toronto (in fact, American Eagle has just done so). Indeed, U.S. carriers need no prior authorization whatsoever in order to code-share with each other, either domestically or in transborder markets.

Air Canada Regional questions the fairness of being subject to this notice requirement while its U.S. competitors are wholly exempt from such requirements. From a practical standpoint, an American/American Eagle transborder code-share is a "franchise" arrangement that is no different than a code-share arrangement between Air Canada and Air Canada Regional. Yet, solely because of its status as a foreign airline, Air Canada Regional will be forced to file notices each time it chooses to enter or exit a new transborder market.

The notice requirement also is unworkable. Commuter services such as those operated by Air Canada Regional are often introduced on very short (i.e., less than 30 days') notice, and withdrawn equally as quickly. Simply put, this requirement will impede Air Canada Regional's ability to introduce new services and/or adjust its schedules as quickly as the market might demand. Given the impediments imposed by this requirement, Air Canada Regional would urge the Department to rule quickly upon this Petition.

Counsel:  PA Consulting, Anita Mosner, 703.312.1446

Air Canada Regional

By NOAT on December 29, 2000, the Department granted Air Canada Regional an exemption from 49 USC section 41301 to conduct scheduled, combination services between Canada and the United States (and to conduct certain U.S. charter operations) and a Statement of Authorization under 14 CFR Part 212 to the extent necessary to permit the applicant to display the designator code of Air Canada on its proposed scheduled services to/from the United States. The code-share conditions associated with the grant of this authority included the requirement that the carrier(s) must notify the Department before it/they begin or cease any code-share service under this code-share authorization. Air Canada Regional requests that the subject code-share authority in this Docket be amended to eliminate this notice requirement.

By:  Paul Gretch

Air Canada Regional

Hereby applies for renewal of an exemption, first issued for a one-year period on December 29, 2000, that would enable Air Canada Regional to continue to hold out scheduled foreign air transportation between any point or points in Canada, and any point or points in the United States, and to engage in foreign charter operations pursuant to the Department's charter regulations. Air Canada Regional also requests that the Department renew for an indefinite period its Statement of Authorization to display the "AC" airline designator code on any or all of its operations.

Air Canada Regional was created pursuant to a corporate restructuring under which all of Air Canada's regional operations were consolidated into a single corporate entity, Air Canada Regional. The predecessor airlines were: Air Ontario, Air Nova, AirBC and Canadian Regional.

Counsel:  ECLAT Consulting, Anita Mosner, 703.294.5890

Jazz Air, Inc. d/b/a Air Canada Jazz / Canadian Airlines International Ltd. / Time Air, Inc. d/b/a Canadian Regional

We represent Jazz Air Inc. d/b/a Air Canada Jazz, which is the successor foreign air carrier resulting from a series of consolidations among Canadian carriers. We request that the Department include in Docket OST-2000­8554 the attached letter relating to the registration of a name change from Air Canada Regional, Inc. to Jazz Air Inc. d/b/a Air Canada Jazz and the registration of the following trade names for Jazz Air Inc. - Air Alliance, AirBC, AirNova, Air Ontario, and Canadian Regional.

In addition, we request that the Department dismiss the following applications, as the applicants no longer require the relief requested. As a result of the above-referenced consolidations, both airlines no longer exist.

• Application of Canadian Airlines International Ltd. dated August 18, 1999 seeking renewal of its statement of authorization (Docket OST-1996-1147); and

• Application of Time Air Inc dated August 18, 1999 seeking renewal of exemption authority and renewal of its statement of authorization (Docket OST-1996­1148).

Counsel:  Hogan & Hartson, Sophie Chen, 202-637-5565

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