Air Canada Responds to Competition Bureau Cease and Desist Order

In response to a complaint by Canjet Airlines,
the Commissioner of the Competition Bureau today issued a temporary order
against Air Canada`s offering of certain competitive fares on five specific
routes - Ottawa-Halifax, Ottawa-Windsor, Toronto-Windsor, Halifax-St. John`s,
and Halifax-Montreal.  The order requires that Air Canada cease and desist
from offering certain specific discounted fares on those routes on the grounds
that the offering of these fares could possibly constitute an anti-competitive
act and that Canjet could be eliminated as a competitor in the absence of a
temporary order.

Air Canada provides the following response to the Competition Bureau`s

Air Canada intends to vigorously challenge the issuance by the
Commissioner of Competition of the temporary order, both before the
Competition Tribunal and the Quebec Superior Court. The application to the
Competition Tribunal will seek to have the order varied or set aside on the
basis that the conditions required for its issuance may not have been met. The
Challenge before the Quebec Superior Court is to challenge the constitutional
validity of the Commissioner`s jurisdiction to make such an order on his own
initiative without application to an impartial and independent adjudicative
body and without having allowed Air Canada the opportunity to be heard prior
to issuing such an order.

``Pending the outcome of the various legal challenges, we will, of
course, immediately comply with the Commissioner`s temporary order and stop
offering these discounted fares on the five routes in question. Throughout our
dealings with the Commissioner and the Competition Bureau, we have
consistently cooperated with their various requests for information and will
continue to do so,`` said Calin Rovinescu, Executive Vice President, Corporate
Development and Strategy.

``Air Canada`s fare initiative on the five routes in question is entirely
consistent with our long-standing policy of offering competitive pricing in
all markets we serve. The fares we are being ordered to discontinue were
introduced on a limited, flight-specific basis only. We believe that such
initiatives to maintain competitive fares in the marketplace are of benefit to
consumers. It is important to note that on some of the routes carriers other
than Air Canada have fares lower than Canjet.


``Legislation already exists to ensure a competitive marketplace. Air
Canada has committed to act responsibly and to comply with both the spirit and
letter of the legislation governing competition in the marketplace. We believe
that this cease and desist order to be contrary to the spirit and letter of
such legislation.

``It would seem apparent to us that if Canjet is seriously under threat
of being eliminated as a competitor after a little over a month of operations,
it is more as a direct result of their business plan and other carrier
activity than our fare initiative,`` concluded Mr. Rovinescu.