Air Canada Reaches Québec Agreement

Air Canada is pleased to announce an agreement
in principle with the Government of Québec for the continued provision of
service by Air Canada Jazz throughout its Québec network, including the
introduction of Québec-wide low, flexible, one way Internet-only fares
designed to stimulate local travel.

The three year agreement ensures Québec customers will have access to
low, flexible Internet-only fares for half of the local traffic capacity
between regional communities and both Québec and Montréal. The reduced fares,
which represent savings of up to 70 per cent off regular fares and had been
currently available on a trial basis in select markets outlined below, will be
extended throughout Québec. The fares will be available exclusively on the
Internet at www.aircanada.ca, www.flyjazz.ca, and www.destina.ca. Four
different one way Internet-only fares based on ten, five, three or one day
advance booking will be available, all with the flexibility of no Saturday
night stay requirement and most with the opportunity for same-day standby and
no change fees.

Existing intra-Québec Air Canada Jazz low, flexible, one way Internet-
only fares are currently available from Québec, Montréal, Bagotville, Val-
d`Or, Rouyn-Noranda, Mont-Joli, Sept Iles and Gaspé. The low, flexible, one
way, Internet-exclusive fares will be extended Québec-wide to all existing
routes served by Air Canada Jazz. A further announcement including route and
fare details including the first date tickets are available for purchase will
be made shortly.

Air Canada Jazz will continue to offer its usual range of fares available
toll free through Air Canada Reservations at 1-888-247-2262, www.aircanada.ca,
www.flyjazz.ca, www.destina.ca or through travel agencies.

Under the agreement the Government of Québec has agreed to purchase
approximately $2.5 million in additional tickets annually for travel by
Government and Government agencies.

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In addition, at the Government`s request, Air Canada has committed to
maintain service between Québec and Mont-Joli and between Mont-Joli and Gaspé
until February 2003, pending review of a continuation of service between these
communities by a smaller regional carrier.

“We are pleased to have concluded this agreement with the Government of
Québec, which we anticipate will help ensure service in these markets remains
viable,” said Calin Rovinescu, Executive Vice President, Corporate Development
and Strategy. “By offering exclusively Internet-booked fares, Air Canada
lowers its operational costs and assures marketplace continuity, and our
customers have the opportunity to travel with low, flexible fares that are
easily and conveniently purchased via the Internet,” he concluded.

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