Air Canada Responds to Commissioner of Competition`s Comments on Tango by Air Canada

Air Canada issued the following response to the
Commissioner of Competition`s comments today that Tango by Air Canada was an
anti-competitive weapon which led in part to Canada 3000`s apparent failure.

“The Commissioner of Competition`s allegation that Tango by Air Canada
was in part responsible for Canada 3000`s apparent failure is unfounded,” said
Calin Rovinescu, Executive Vice President, Corporate Development and Strategy.
“Tango was launched seven days ago with only two aircraft and its schedule has
been progressively phased in during its first week of operation. As is typical
with the introduction of a new product with only three weeks of advance
booking time, loads have been quite light. In fact today was the first day of
Tango`s full schedule operations. Furthermore, in a press release issued by
Canada 3000 yesterday, the airline`s chairman said Canada 3000`s problems were
clearly due to the sudden downturn in the North American economy and, in
particular to deterioration in air travel since September 11.

“To be viable Air Canada must be fully competitive in this evolving and
difficult environment for the airline industry. In launching Tango, we have
reassigned existing aircraft within the context of overall reduced capacity in
response to the changing marketplace and increased demand for no-frills, low-
fare travel. Tango provides our customers with the low-fare product they want
while matching, not undercutting our competitors` fares.

“It is impossible to see how matching fares can be an uncompetitive act
as alleged by the Commissioner. The role of the Competition Bureau is to
foster competition in the Canadian marketplace, not to support individual
competitors,” concluded Mr. Rovinescu.
On October 15, 2001, the Competition Tribunal adjourned until next spring
the hearing on pricing behaviour in the Canadian airline industry in order to
allow all parties the benefit of time to evaluate the impact of the events of
September 11th.