Air Canada announces Major Expansion of Passenger and Cargo Services to China

Air Canada today welcomed major enhancements in the Canada-China bilateral air services agreement and applauded the federal government for achieving a framework that will allow for significant growth in passenger and freight transportation in this important market. The new bilateral air agreement will allow for a threefold increase in capacity as well as the addition of more points in China that can be served directly.

With the unveiling of a new bilateral air agreement, Air Canada today announced extensive plans for expansion of its passenger and freight services to China, one of the world's largest and fastest growing economies. Plans for new passenger and shared cargo services include:

- New Toronto-Beijing non-stop service to be increased to daily flights by 2006;
- Daily Toronto-Shanghai non-stop service to begin summer 2006;
- Daily Vancouver-Guangzhou non-stop service to begin summer 2007.

Air Canada is also introducing next month cargo operations between Toronto and Shanghai using an MD-11 freighter with a total cargo capacity of 85 tonnes. This cargo service will be increased to daily flights in 2006.

In addition, Air Canada plans to expand its dedicated cargo operations to China as follows:

- Second daily Toronto-Shanghai freighter service via Vancouver to begin 2006;
- Daily Toronto-Guangzhou freighter service to begin 2007.
- Future plans also include freighter service to Tianjin to serve Northern China.

"This new bilateral air agreement will allow Canada and China to realize tremendous opportunities for growth in air transportation for passengers and freight. We applaud Canada's Minister of Transport, Jean Lapierre, and officials of both governments for achieving a new framework that will allow for strategic growth and positive change in this critically important market," said Montie Brewer, President and Chief Executive Officer.

"With Air Canada's introduction of double daily services via our main hub in Toronto to Shanghai and Beijing, together with our daily non-stop service to Hong Kong, we will provide eastern North America and Latin America with unprecedented ease of access to mainland China and Hong Kong. Moreover, now that Canada will be granted Approved Destination Status, Air Canada is well positioned to meet the significant growth that is expected in tourism between China and Canada in the years to come."

On January 21, 2005, the People's Republic of China agreed to recognize Canada as an officially approved travel destination. Approved Destination Status (ADS) will allow Chinese residents to travel to Canada using a tourist exit visa. Currently, only a limited number of Chinese visitors travelling on business can obtain exit visas to Canada. In 2004, Canada received 77,000 overnight visitors from China, and the World Tourism Organization estimates that by 2020, there will be 100 million Chinese tourists annually.

"The new bilateral air agreement is also excellent news for freight forwarders seeking ways to seize new opportunities for trade with China, one of the world's fastest growing economies that will now be better served than ever by Air Canada's cargo services. We are very excited with the prospect of expanding dedicated freighter services to Shanghai and Guangzhou from our main Toronto hub to meet double digit growth in demand from freight forwarders," concluded Brewer.

With an elapsed time of 13 hours 20 minutes westbound and 13 hours eastbound, Air Canada's new Toronto-Beijing service will save travellers more than three and a half hours in each direction compared to the Vancouver routing. Air Canada will operate the new route using 282-seat A340-300 aircraft.

In response to increased demand on its Vancouver-Shanghai route, during the peak demand season beginning June 1, 2005 Air Canada will replace its 189-seat Boeing 767-300ER service with larger 282-seat A340-300 aircraft.

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