Air Canada 2007 Annual Report Download - page 86

2007 Air Canada Annual Report
86
C) NATURE OF OPERATIONS
Air Canada is Canada’s largest domestic and international airline and the largest provider of scheduled passenger services in
the Canadian market, the Canada-US transborder market as well as the international markets to and from Canada. Certain
of the scheduled passenger services offered on domestic and Canada-US transborder routes are provided by Jazz through
the Jazz CPA. Through Air Canada’s global route network, virtually every major market throughout the world is served either
directly or through the Star Alliance network. In addition, Air Canada provides certain charter services.
Air Canada and Air Canada Cargo provide air cargo services on domestic, US transborder and international fl ights. Air Canada
Cargo is a major domestic and US transborder air cargo carrier and uses the entire cargo capacity on aircraft operated by
Air Canada and Jazz on domestic and transborder routes. Air Canada offers cargo services on its international fl ights and
currently uses one chartered all freighter aircraft to supplement Canada-Europe services.
Air Canada Ground Handling Services provides passenger handling services to Air Canada, Jazz and other airlines with a
primary focus on Canadian stations. Services covered include passenger check-in, gate management, baggage and cargo
handling and processing, cabin cleaning, de-icing as well as aircraft ramp services.
Air Canada Vacations is one of Canada’s leading tour operators. Based in Montreal and Toronto, Air Canada Vacations is a
100% subsidiary of Air Canada and operates its business in the outgoing leisure travel market (Caribbean, Mexico, Europe,
South America and USA) through developing, marketing and distributing vacation travel packages and services through a
network of independent travel agencies in Canada as well as Air Canada Vacations website, aircanadavacations.com.
Jazz is the largest regional airline and the second largest airline in Canada, after Air Canada, based on fl eet size and number
of routes operated. Pursuant to the Jazz CPA, Jazz provides service to Air Canada’s customers in lower density markets
and in higher density markets at off-peak times throughout Canada and to certain destinations in the United States. Jazz
focuses on fl ight operations and customer service and Air Canada is responsible for scheduling, marketing, pricing and related
commercial activities of the regional operations. Under the Jazz CPA, Air Canada records expenses based upon fees relating to
fl ight operations performed, passengers carried and other items covered by the agreement. Prior to May 24, 2007 these inter-
company transactions were eliminated in these consolidated fi nancial statements. The segment previously referred to as the
“Air Canada Services” segment recorded the revenue on fl ights operated under the Jazz CPA in Passenger revenue. However,
since all distributions from Jazz are made to Jazz Air Income Fund, all income from Jazz was allocated to the non-controlling
interest in the Consolidated statement of operations. Distributions for the period ended May 24, 2007 of $54 are refl ected as
a reduction of the non-controlling interest on the balance sheet. As noted above under B), effective May 24, 2007, the results
and fi nancial position of Jazz are no longer consolidated within Air Canada.