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Transat welcomes new international air policy; Economic and tax policy framework overhaul now an urgent necessity

Montreal, November 28, 2006

Transat A.T. Inc., one of the world’s largest integrated tourism companies and Canada’s holiday travel leader, 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. "For the moment, we remain unconvinced, as the government has not defined what it will do with regard to the significant competitive disadvantages faced by Canadian air carriers," said Jean-Marc Eustache, President and Chief Executive Officer.

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. This view was also shared by a recent study issued by the Montreal Economic Institute, which essentially arrived at the same conclusion. 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.

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 Mr. Eustache.

Transat A.T. Inc.'s brief to the government, submitted on November 8, 2006 is available on the Company's website.

About Transat A.T. Inc.
Transat A.T. Inc., with its head office in Montreal, is an integrated company specializing in the organization, marketing, and distribution of holiday travel. The core of its business consists of tour operators in Canada and France. Transat is also involved in air transportation, value-added services at travel destinations, as well as in distribution through travel agency networks. Transat is listed on the Toronto Stock Exchange (TSX:TRZ.B; TRZ.A).


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