Air Canada Comments on Jazz Benchmark Arbitration

Air Canada provides the following statement on yesterday’s decision in the arbitration relating to the benchmarking provisions of its Capacity Purchase Agreement (’CPA’) with Jazz Aviation LP (Jazz), a wholly owned subsidiary of Chorus Aviation Inc. The arbitration relates to the method and calculations Air Canada and Jazz are to use to compare the rate of growth of Jazz’s controllable unit costs to those of a group of comparable operators.

The arbitration panel ruled that although Jazz’s unit costs increased faster than the comparable operators, the result of the 2009 Benchmark exercise was to maintain the current 12.5 per cent controllable mark-up as per the August 1, 2009 amendment to the CPA. As provided for in the CPA, the parties will commence negotiations in 2014 to set the CPA rates for the next three-year period 2015-2017. The term of the CPA expires on December 31, 2020. In line with Air Canada’s priority for cost reduction and sustainable profitability, Air Canada will both work with Jazz to explore cost reduction initiatives and continue to pursue its regional airline diversification strategy that includes the Request for Proposal (RFP) process underway for certain existing U.S. regional transborder routes.

Air Canada is Canada’s largest domestic and international airline serving more than 175 destinations on five continents. Canada’s flag carrier is among the 20 largest airlines in the world and in 2012 served close to 35 million customers. Air Canada provides scheduled passenger service directly to 60 Canadian cities, 49 destinations in the United States and 67 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America. Air Canada is a founding member of Star Alliance, the world’s most comprehensive air transportation network serving 1,328 destinations in 195 countries. Air Canada is the only international network carrier in North America to receive a Four-Star ranking according to independent U.K. research firm Skytrax that ranked Air Canada in a worldwide survey of more than 18 million airline passengers as Best Airline in North America in 2013 for the fourth consecutive year. For more information, please visit:

Source / Author: Air Canada