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Transat Comments on International Air Transportation Policy

Transat A.T. Inc., one of the world's largest integrated tourism companies and Canada's holiday travel leader, has filed its submission in response to the Government of Canada's consultation on Air Transportation Policy launched on October 25, 2006. Transat agrees in principle with the Government's efforts to further liberalize Canada's international air policies, to the extent that the current economic and tax policy framework is overhauled. Transat also shares the Government's objective to secure new market development and traffic growth opportunities for the airline industry, as well as provide new services and enhanced competition to Canadian customers. However, Transat strongly states it is imperative that
certain fundamental principles be recognized and firmly integrated into the Government's overall approach.

Among others, Transat points to the fact that a sound economic and tax policy framework is essential for the Canadian air transport industry to thrive and be globally competitive. Uncontrollable third-party imposed costs which, in some cases, have increased astronomically over the last decade, are the single greatest threat to the viability, competitiveness and ultimate success of Canada's air carriers, the brief explains. For example, Transat highlights the impact of enormous airport fee increases across the country over the last decade. While it costs a major European airline approximately $3,500 each time it lands an Airbus A330 at its Paris-Charles de Gaulle hub and uses the terminal facilities, Air Transat must pay almost $11,000 to do the same thing with its own Airbus A330s at its main Toronto-Pearson base. In such a situation, because these two airports represent the vast majority of network airport system costs incurred by these respective air carriers, it becomes evident that the European carrier then enjoys a substantial airport cost advantage and can use this to unfairly cross-subsidize its operations on Canada-France services.

"While the government proposes more open and free air transport markets, the current economic and tax framework, including airport rents and various tax policies, is actively working to distort competition to the detriment of Canadian air carriers. In the context of a more liberalized system, a significant overhaul of such framework is more than in order," said Jean-Marc Eustache, President and Chief Executive Officer of Transat A.T. Inc. Transat A.T. Inc.'s brief, submitted on November 8, 2006 is available on the Company's website.