This document provides a summary of the competition and public interest obligations associated with the Governor in Council’s approval of Air Canada’s proposed acquisition of Transat A.T. Inc.
These obligations would be implemented by way of an Implementation and Monitoring Agreement (Agreement) with the Government of Canada. The Agreement will require Air Canada to appoint an independent Monitor, who will be responsible for overseeing and monitoring Air Canada’s compliance with the Terms and Conditions and the Agreement.
Slot Surrender:
- For a period of up to ten years from the date of closing, at the request of an eligible new entrant, Air Canada will agree to make available a specified number of slots at specified airports on 30 relevant city-pairs (see attached list). These slots would provide access for a number of key European routes. The offer period for this and other related remedies varies by relevant city-pair, with 23 set at ten years, and seven set at five years.
- Slots of both Air Canada and Air Transat on the relevant city-pairs will be available to eligible new entrants.
Infrastructure Access:
- Air Canada will use its reasonable commercial efforts to consolidate its operations at Toronto-Person Airport into Terminal 1 within three years after closing (including relocating Transat’s existing Terminal 3 operations to Terminal 1).
- Should certain airport facilities reasonably necessary for an eligible new entrant to operate service with surrendered slots (including gates and counter space) not be available at Terminal 3 at Toronto-Pearson and Montreal-Trudeau airports, Air Canada will endeavour to facilitate access, including by making its own infrastructure available.
Additional Measures to Support New Entrants:
- For eligible new entrants on the relevant city-pairs (see attached list), Air Canada will enter into agreements for Interlining/Special Prorating; Fare Combinability; Aeroplan Access; and access to Maple Leaf Lounges. Eligible new entrants will direct their requests to enter into such agreements to the Monitor, who will assess eligibility and selection in a commercially reasonable manner. Air Canada will then be required to negotiate, in good faith, and enter into such agreements with the new entrants.
Transat Business:
- For five years following closing, Air Canada will maintain a head office for the Transat brand in Quebec.
Employment:
- For two years following Closing, Air Canada will maintain at least 1,500 full-time active employees employed exclusively in the conduct of the combined leisure travel businesses of Air Canada and Transat.
New Destinations:
- Within five years of closing, Air Canada will launch five new international (including transborder) non-stop routes that were not offered by Air Canada in 2019. Air Canada will operate such routes for a period of at least two consecutive year-round or four consecutive winter or summer International Air Transport Association (IATA) seasons
Maintenance in Canada:
- Within one year following closing, Air Canada will negotiate, in good faith, and agree to enter into agreements regarding the construction and operation of facilities in the Province of Quebec for all airframe overhaul maintenance for Air Canada’s Airbus A330, A320 and A220 aircraft. Airframe overhaul maintenance shall commence within four years after closing, subject to the terms of the relevant agreements and the decisions by independent suppliers to construct the relevant facilities, which will be made based on commercially reasonable volume projections provided by Air Canada, which will themselves be heavily dependent on when the Canadian airline industry is no longer substantially affected by the COVID-19 pandemic.
Air Transport Agreements Measure:
- For five years from closing, Air Canada will consent to the Minister of Transport reallocating capacity granted to Transat under the Air Transportation Agreements with Panama, Israel and Colombia in the event that such capacity is reasonably required by another Canadian carrier.
Price Monitoring:
- For five years from closing, Air Canada will share pricing information with the Government of Canada as a means of monitoring and publishing information regarding pricing post-acquisition. Information will be shared on routes where the Parties previously offered overlapping service to both Europe and sun destinations, and Air Canada will be required to submit the supporting data to allow for verification of the results shared. In accordance with this obligation, the federal government would publish reports on price fluctuations in a manner that would not disclose commercially confidential information. In addition to the pricing disclosure regime created by this condition, provisions in the Agreement allow the Minister to request other information that he/she reasonably requires, from time to time, for purposes in connection with the Agreement.
Appendix 1:
Relevant City Pairs
See table in Appendix 1