MONTREAL, Sept. 6 /CNW/ - Air Canada announced today that effective
January 2003, it will discontinue service to certain small communities to
coincide with the expiry of its three-year commitment to the Minister of
Transport to provide such service. As a condition of its acquisition of
Canadian Airlines in early January 2000, Air Canada committed to the Minister
that communities previously served by Air Canada or Canadian Airlines or their
wholly-owned subsidiaries would continue to be served until January 4, 2003.
That commitment has been fulfilled.

Effective January 4, 2003, Air Canada Jazz will discontinue service to
three communities: Yarmouth, Nova Scotia; St. Leonard, New Brunswick; and
Stephenville, Newfoundland. Effective January 8, 2003, Air Canada Jazz will no
longer operate between Goose Bay-St.John`s; Goose Bay-Deer Lake; Deer Lake-
St.John`s and Deer Lake-Wabush. Service will continue to be provided to Air
Canada`s network of 68 communities in Canada by Air Canada, Air Canada Jazz
and commercial partners.

These changes are in addition to service realignments in Western Canada
made earlier this year to communities whereby routes were transferred by Air
Canada Jazz to smaller local airline operators. These communities include
Comox, Campbell River and Dawson Creek in British Columbia and Lloydminster in
Alberta.

“Our commitment to continue service to small communities for three years
was a significant undertaking, particularly in view of the difficult
environment the airline industry has operated within for the past two years,”
said Calin Rovinescu, Executive Vice President, Corporate Development and
Strategy. “Air Canada Jazz`s short haul regional service has been negatively
impacted by the economic downturn, increased industry-related charges such as
security fees, airport user charges and fees and insurance rates. The
situation has been compounded by regulations that have hindered our ability to
be price competitive on certain routes. As a result, some services that were
marginally viable are no longer sustainable for the airline and will be
discontinued. We are, however, open to working with communities and
governments to assist in resolving the issue of air transportation to
communities affected,” he concluded.

In accordance with the Canada Transportation Act, the airline has
provided 120 days notice of its intention to terminate service to these
communities. While route performance is monitored on an ongoing basis, no
other changes to the Air Canada Jazz route network are planned at this time
beyond the airline`s normal schedule adjustments.

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