### u.s.Department of Tronsportation Office ofthe Secretory ofTronsportation
November 12, 2013 1200 New Jersey Ave, SE Washington, DC 20590

Mr. Daniel Magny Senior Counsel, Air Canada Air Canada Centre - P.O. Box 7000 Station Airport Dorval, Quebec H4Y 1J2 Dear Mr. Magny: I am responding to your letter of June 6, 2013, requesting confirmation and acknowledgement that Air Canada's existing grant of antitrust immunity includes its new subsidiary, Air Canada rouge. Inyour letter, you state that Air Canada rouge is a wholly owned and controlled subsidiary that isduly authorized to provide foreign air transportation in the United States-Canada market. You further state that Air Canada rouge may operate flights on behalf of Air Canadathat fall within the geographic scope of the Air Canada-lufthansa-United Transatlantic Joint Venture, which has been approved and given agrant of immunity bythe U.S. Department of Transportation ("Department). You note that the Department's grant of antitrust immunity to Air Canada and its partners included majority-owned affiliates that were in existence at the time the immunity was granted in 2009. On behalf of the Department, Ican confirm that Air Canada's antitrust immunity includes Air Canada rouge, asthe entity exists today. The creation of Air Canada rouge asa new, wholly-owned and controlled subsidiary, operating with aircraft and assets sourced from Air Canada, does not represent asignificant competitive change from the arrangements approved by Order 2009-7-10 in July 2009. Unlike an acquisition of a new airline entity, or a partnership with a minority-owned affiliate, the joining of Air Canada rouge to the alliance should not necessarily require a new application, motion, or detailed competitive review. Through this letter, the Department considers Air Canada rouge to be a covered affiliate. I am placing acopy of your June 6, 2013 letter, and this response letter, in Docket DOT-OST-2008-0234 sothat interested parties and the traveling public are apprised of Air Canada rouge's status.

- 1 -Sincerely,

Todd M. Homan Director, DOT's Office of Aviation Analysis
cc: Thomas Newton Bolling, Representative of United Airlines Arthur Mollins, Representative of Lufthansa AG

-2-Daniel M.gny

SeniorCounsel, International. AllianCes and Regulatory Affairs BndManaging Attorney

BYEMAlL
Mr.Todd Homan Director OfficeofAviation Analysis Department ofTransportation 1200New Jersey Avenue, S.E. Washington, DC 20590 ,Rc: Air Canada rouge DearMr. Homan: 

# AIR CANADA@

Air Canada Centre P.O. Box 7000. Station Airpon Dorvnl, Quebec H4Y 112 Direct: (514) 422-5727 F.esimile: (514) 422.5839
June 6th, 2013

Air Canada, on behalf ofthe immuni7..cdStarAlliance partners! (the "Star CaITiers"), is writing to request the Department's confirmation that its newly created wholly owned subsidiary, Air Canadarouge, is amajority owned affiliate that willbe considered byDOT to be covered by the grant of antitrust immunity under Order 2009-7-10.1 We would appreciate the Department's confirmation ofthis letter and acknowledgement that such grant ofimmunity covers Air Canada rouge'consistent with the inclusion ofthe Star ,Carriers' other majority owned affiliates within the immunity granted \?ythat Order. On April 26, 2013, Air Canada rouge applied' for a foreign air carrier permit and related exemption that would enable it to provide scheduled and charter foreign air transportation of perSons, property, and mail as provided for in the U.S.-Canada Open Skies Agreement, which the Department granted on May 22, 2013.3 Air Canada rouge is wholly owned by Air Canada, which means Air Canada has exclusive authority to control the business plans, decisions, and activities of Air Canada rouge. Air Canada rouge will operate flights on behalf of Air Canada

The Star Carriers consist ofAirCanada, Austrian, Brussels Airlines, LOT, Lufthansa, SAS, Swiss, TAP and United. Common names arc usedfor airlines.

2 "Order 2009-7-10" refers toOrder 2009-7-10 as amended by Orders 2011-11-16 (extending antitrust immunity to Brussels Airlines) and2012-6-21 (terminating antitrust 

## immunitywithbtni).

3 

### See Docket DOT-OST-2013-0087.

A\lr"'IlI<l~II\...etMC..un v.:l.>. """'!l1l"tov tlCSt"'VlllNlAU.l~otCe Jl,qpursuant to.acapacity purchase agreement and Air Canada will market and sell such flights
.. an.d perform all key commercial functions. These service will include routes within the geographic scopeofthe Air Canada-Lufthansa. Group-United Transatlantic Joint Venture (the "Transatlantic JointVentUre"), sothese functions will.be encompassed within the Transatlantic Joint Venture. Aii'Canada itselfhasantitrust iInmunity with the other Star Carriers immunized by Order 2009- 7-10; the same immunity isrequired for affiliates whose business plans, decisions, and activities are controlled by Air Canada. The Department's confirmation that Air Canada rouge is a majority owned .affiliate ofAir Canada included within the antitrust immunity granted

# bl Order 2009-7-10 is, therefore, appropriate and consistent with the terms of that order. The Department's confirmation will assUre Air Canada that the business plans, decisions, and activities ofAir Canada rouge - all of which Air Canada controls

- will be covered by the same antitrust immunity held byAir Canada thatisnecessary toachieve these public benefits. For these reasons, the Star Carriers request the Department's confirmation that the antitrust immunity granted to Air Canada by Order 2009-7-10 includes its wholly owned subsidiary Air Canadarouge. Respectfully submitted,

DanielMagny SeniorCounsel, International, Alliances andRegulatory Affairs &Managing Attorney AirCanada
cc:Thomas Newton Bolling (United) ArthurMolins (Lufthansa)

4 The Star Carriers also notethattwo affiliates thatalready eJdsted and were.wholly 

### ownedbyLufthan.sawhen the Department issued Order 2009-7-10

- AirDolomitiand Germanwings

- are covered by the grantofantitrust immunity under that order. I