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Agreement between the Government of Canada and the Government of the Republic of Hungary on Air Transport [1999] CATSer 25 (10 June 1999)

E103148 - CTS 1999 No. 30

AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF HUNGARY ON AIR TRANSPORT

THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE REPUBLIC OF HUNGARY, hereinafter referred to as the "Contracting Parties";

BEING parties to the Convention on International Civil Aviation opened for signature at Chicago, on the 7th day of December, 1944;

DESIRING to conclude an agreement on air transport, supplementary to the said Convention,

HAVE AGREED as follows:

ARTICLE I

Definitions

For the purpose of this Agreement, unless otherwise stated:

(a) "Aeronautical authorities" means, in the case of Canada, the Minister of Transport and the Canadian Transportation Agency and, in the case of the Republic of Hungary, the Minister of Transport, Communications and Water Management or, in both cases, any other authority or person empowered to perform the functions exercised by the said authorities;

(b) "Agreed services" means scheduled air services on the routes specified in this Agreement for the transport of passengers and cargo, including mail, separately or in combination;

(c) "Agreement" means this Agreement, any Annex attached thereto, and any amendments to the Agreement or to any Annex;

(d) "Convention" means the Convention on International Civil Aviation opened for signature at Chicago on the seventh day of December 1944 and includes any Annex adopted under Article 90 of that Convention and any amendment of the Annexes or of the Convention under Articles 90 and 94 thereof so far as those Annexes and amendments have been adopted by both Contracting Parties;

(e) "Designated airline" means any airline which has been designated and authorized in accordance with Articles IV and V of this Agreement;

(f) "Tariffs" means any fare rate or charge (including discounts, frequent flyer plans or other benefits affecting the cost of air transportation) for the carriage of passengers (and their baggage) and/or cargo (excluding mail) charged by the airlines, including their agents, and the conditions governing the availability of such fare rate or charge; and

(g) "Territory", "Air services", "International air service", "Airline" and "Stop for non-traffic purposes" have the meaning respectively assigned to them in Articles 2 and 96 of the Convention.

ARTICLE II

Grant of Rights

1. Each Contracting Party grants to the other Contracting Party the following rights for the conduct of international air services by the airline or airlines designated by that other Contracting Party:

(a) the right to fly without landing across its territory;

(b) the right to land in its territory for non-traffic purposes; and

(c) to the extent permitted in this Agreement, the right to make stops in its territory at the points specified for the routes in the Annex to this Agreement for the purpose of taking up and discharging international traffic in passengers and cargo, including mail, separately or in combination.

2. The airlines of each Contracting Party, other than those designated under Article IV of this Agreement, shall also enjoy the rights specified in paragraph 1(a) and (b) of this Article.

3. Nothing in paragraph 1 of this Article shall be deemed to confer on a designated airline of one Contracting Party the right of taking up, in the territory of the other Contracting Party, passengers and cargo, including mail, carried for remuneration or hire and destined for another point in the territory of that other Contracting Party.

ARTICLE III

Change of Aircraft

1. A designated airline of one Contracting Party may make a change of aircraft in the territory of the other Contracting Party or at an intermediate point in third countries on the routes specified in this Agreement under the following conditions:

(a) that the change of aircraft is justified by reason of economy of operation;

(b) that the capacity offered by the designated airline on the aircraft used on the sector of the route more distant from the territory of the Contracting Party designating the airline is not larger than that used on the nearer sector;

(c) that the aircraft used on the sector of the route more distant from the territory of the Contracting Party designating the airline shall operate in connection with the agreed service provided with the aircraft used on the nearer sector and shall be scheduled so to do;

(d) that there is an adequate volume of through traffic;

(e) that the airline shall not represent itself, directly or indirectly and whether in timetables, computer reservation systems, fare quote systems or advertisements, or by other like means, as providing any service other than the agreed service on the relevant specified routes;

(f) that, where an agreed service includes a change of aircraft, this fact is shown in all timetables, computer reservation systems, fare quote systems, advertisements and other like means of holding out the service;

g) that, where a change of aircraft is made in the territory of the other Contracting Party, the number of outgoing flights shall not exceed the number of incoming flights, unless otherwise authorized by the aeronautical authorities of that other Contracting Party or specifically provided for in this Agreement; and

(h) that all operations involving change of aircraft shall be conducted in conformity with Article XI of this Agreement.

2. The provisions of paragraph 1 of this Article shall:

(a) not affect the ability of a designated airline to change aircraft in the territory of the Contracting Party designating that airline; and

(b) not preclude a designated airline of one Contracting Party authorized to provide air services on the routes specified in this Agreement from selling transportation under its own code on flights of any other airline authorized by the aeronautical authorities of the other Contracting Party to provide such services subject to the regulatory requirements normally applied by the aeronautical authorities to such operations.

ARTICLE IV

Designation

Each Contracting Party shall have the right to designate, by diplomatic note, an airline or airlines to operate the agreed services for such a Contracting Party and to withdraw the designation of any airline or to substitute another airline for one previously designated.

ARTICLE V

Authorization

1. Following receipt of a notice of designation or of substitution pursuant to Article IV of this Agreement, the aeronautical authorities of the other Contracting Party shall, consistent with the laws and regulations of that Contracting Party, grant without delay to the airline or airlines so designated the appropriate authorizations to operate the agreed services for which that airline has been designated.

2. Upon receipt of such authorizations the designated airline may begin at any time to operate the agreed services, in whole or in part, provided that the airline complies with the applicable provisions of this Agreement, in particular, that tariffs are established in accordance with the provisions of Article XIV of this Agreement.

ARTICLE VI

Withholding, Revocation and Limitation of Authorization

1. The aeronautical authorities of each Contracting Party shall have the right to withhold the authorizations referred to in Article V of this Agreement with respect to an airline designated by the other Contracting Party, and to revoke or suspend or impose conditions on such authorizations, temporarily or permanently:

(a) in the event of failure by such airline to comply with the laws and regulations normally applied by the aeronautical authorities of the Contracting Party granting the rights;

(b) in the event of failure by such airline to comply with the laws and regulations of the Contracting Party granting the rights;

(c) in the event that they are not satisfied that substantial ownership and effective control of the airline are vested in the Contracting Party designating the airline or its nationals; and

(d) in the event that the other Contracting Party is not maintaining and administering the standards as set forth in Article VIII and Article IX of this Agreement.

2. Unless immediate action is essential to prevent infringement of the laws and regulations referred to above or unless safety or security requires immediate action under this Article, Article VIII or Article IX, the rights enumerated in paragraph 1 of this Article shall be exercised only after consultations with the aeronautical authorities of the other Contracting Party in conformity with Article XIX of this Agreement.

ARTICLE VII

Application of Laws

1. The laws, regulations and procedures of one Contracting Party relating to the admission to, remaining in, or departure from its territory of aircraft engaged in international air navigation or to the operation and navigation of such aircraft shall be complied with by the designated airline or airlines of the other Contracting Party upon entrance into, departure from and while within the said territory.

2. The laws and regulations of one Contracting Party respecting entry, clearance, transit, immigration, passports, customs and quarantine shall be complied with by the designated airline or airlines of the other Contracting Party and by or on behalf of its crews, passengers and cargo, including mail, upon transit of, admission to, departure from and while within the territory of such a Contracting Party.

3. In the application of its regulations, specified in paragraphs 1 and 2 of this Article, neither Contracting Party shall give preference to its own or any other airline over an airline of the other Contracting Party engaged in similar international air services.

ARTICLE VIII

Safety Standards, Certificates and Licences

1. Certificates of airworthiness, certificates of competency and licences, issued or rendered valid by one Contracting Party and still in force, shall be recognized as valid by the other Contracting Party for the purpose of operating the agreed services provided that such certificates or licences were issued or rendered valid pursuant to, and in conformity with, the standards established under the Convention. Each Contracting Party reserves the right, however, to refuse to recognize, for the purpose of flights above its own territory, certificates of competency and licences granted to its own nationals by the other Contracting Party.

2. If the privileges or conditions of the licences or certificates referred to in paragraph 1 above, issued by the aeronautical authorities of one Contracting Party to any person or designated airline or in respect of an aircraft operating the agreed services, should permit a difference from the standards established under the Convention, and which difference has been filed with the International Civil Aviation Organization, the aeronautical authorities of the other Contracting Party may request consultations in accordance with Article XIX of this Agreement with the aeronautical authorities of that Contracting Party with a view to clarifying the practice in question.

3. Each Contracting Party may request consultations concerning the safety standards maintained by the other Contracting Party relating to aeronautical facilities, aircrew, aircraft, and operation of the designated airlines. If following such consultations, one Contracting Party finds that the other Contracting Party does not effectively maintain and administer safety standards and requirements in these areas that at least equal the minimum standards which may be established pursuant to the Convention, the other Contracting Party shall be notified of such findings and the steps considered necessary to conform with these minimum standards, and shall take appropriate corrective action. In the event the other Contracting Party does not take such appropriate action within a reasonable time, the provisions of Article VI shall apply.

ARTICLE IX

Aviation Security

1. Consistent with their rights and obligations under international law, the Contracting Parties reaffirm that their obligation to each other to protect the security of civil aviation against acts of unlawful interference forms an integral part of this Agreement.

2. Without limiting the generality of their rights and obligations under international law, the Contracting Parties shall in particular act in conformity with the provisions of the Convention on Offences and Certain Other Acts Committed on Board Aircraft, signed at Tokyo on September 14, 1963, the Convention for the Suppression of Unlawful Seizure of Aircraft, signed at The Hague on December 16, 1970, the Convention for the Suppression of Unlawful Acts Against the Safety of Civil Aviation, signed at Montreal on September 23, 1971, and the Protocol for the Suppression of Unlawful Acts of Violence at Airports Serving International Civil Aviation, signed at Montreal on 24 February 1988 and any other multilateral agreement governing aviation security binding upon both Contracting Parties.

3. The Contracting Parties shall provide upon request all necessary assistance to each other to prevent acts of unlawful seizure of civil aircraft and other unlawful acts against the safety of such aircraft, their passengers and crew, airports and air navigation facilities, and any other threat to the security of civil aviation.

4. The Contracting Parties shall act in conformity with the aviation security provisions established by the International Civil Aviation Organization and designated as Annexes to the Convention on International Civil Aviation to the extent that such security provisions are applicable to the Contracting Parties; they shall require that operators of aircraft of their registry, operators of aircraft who have their principal place of business or permanent residence in their territory, and the operators of airports in their territory act in conformity with such aviation security provisions.

5. Each Contracting Party agrees that its operators of aircraft may be required to observe the aviation security provisions referred to in paragraph 4 above required by the other Contracting Party for entry into, departure from, or while within the territory of that other Contracting Party. Each Contracting Party shall ensure that adequate measures are effectively applied within its territory to protect the aircraft and to inspect passengers, crew, carry-on items, baggage, cargo and aircraft stores prior to and during boarding and loading.

6. Each Contracting Party shall give sympathetic consideration to any request from the other Contracting Party for reasonable special security measures to meet a particular threat.

7. Each Contracting Party shall have the right, upon not less than sixty (60) days notice, to assess the security measures being carried out by aircraft operators in the territory of the other Contracting Party in respect of flights arriving from, or departing to its territory. The administrative arrangements for the conduct of such assessments shall be agreed between the aeronautical authorities and implemented without delay so as to ensure that assessments will be conducted on the dates requested.

8. When an incident or threat of an incident of unlawful seizure of civil aircraft or other unlawful acts against the safety of such aircraft, their passengers and crew, airports or air navigation facilities occurs, the Contracting Parties shall assist each other by facilitating communications and other appropriate measures intended to terminate rapidly and safely such incident or threat thereof.

9. When a Contracting Party has reasonable grounds to believe that the other Contracting Party has departed from the provisions of this Article, the first Contracting Party may request immediate consultations with the other Contracting Party. Failure to reach a satisfactory agreement shall constitute grounds for the application of Article VI of this Agreement.

ARTICLE X

Use of Airports and Aviation Facilities

1. Airports, airways, air traffic control and air navigation services, aviation security, and other related facilities and services that are available in the territory of one Contracting Party shall be provided without preference to any airline over an airline of the other Contracting Party engaged in similar international air services.

2. The setting and collection of fees and charges imposed in the territory of one Contracting Party on an airline of the other Contracting Party for the use of airports, airways, air traffic control and air navigation services, aviation security, and other related facilities and services shall be reasonable and not unjustly discriminatory. Any such fees and charges shall be assessed on an airline of the other Contracting Party on terms not less favourable than the most favourable terms available to any airline engaged in similar international air services at the time the fees or charges are imposed.

3. Each Contracting Party shall encourage consultations between its competent charging bodies and the airlines using the services and facilities, or where practicable, through airlines' representative organizations. Reasonable notice shall be given to users of any proposals for changes in user charges to enable them to express their views before changes are made.

ARTICLE XI

Capacity

1. There shall be fair and equal opportunity for the designated airlines of both Contracting Parties to operate the agreed services on the specified routes.

2. In operating the agreed services, the designated airlines of each Contracting Party shall take into account the interest of the designated airline or airlines of the other Contracting Party so as not to affect unduly the services which the latter provide on the whole or part of the same routes.

3. The agreed services provided by the designated airlines of the Contracting Parties shall bear reasonable relationship to the requirements of the public for transportation on the specified routes and shall have as their primary objective the provision, at a reasonable load factor, of capacity adequate to meet the current and reasonably anticipated requirements for the carriage of passengers and cargo, including mail, between the territory of the Contracting Party which has designated the airline and the countries of ultimate destination of the traffic.

4 Provision for the carriage of passengers and cargo, including mail, both taken up and discharged at points on the specified routes in the territories of States other than that designating the airline shall be made in accordance with the general principle that capacity shall be related to:

(a) traffic demand to and from the territory of the Contracting Party which has designated the airline;

(b) traffic demand of the area through which the airline passes after taking account of other transport services established by airlines of the States comprising the area; and

(c) the demand for through airline operation.

5. Capacity to be provided on the agreed services in excess of the entitlements set out in this Agreement may from time to time be agreed between the designated airlines of the Contracting Parties, subject to the approval of the aeronautical authorities of both Contracting Parties. In the absence of agreement between the designated airlines, the matter shall be referred to the aeronautical authorities of the Contracting Parties which will endeavour to resolve the problem, if necessary, pursuant to Article XIX of this Agreement.

6. Increases to capacity established in accordance with the provisions of paragraph 5 of this Article shall not constitute a change in capacity entitlements. Any change to capacity entitlements must be agreed between the Contracting Parties.

7. The aeronautical authorities may require the filing for approval, of schedules or timetables not later than thirty (30) days or such lesser period as those authorities may require, prior to the operation of the agreed services. Approval shall not be withheld provided that the schedule or timetable is in conformity with the Annex to the Agreement.

8. Subject to paragraph 5 of this Article and the approval of the aeronautical authorities, supplementary flights to meet temporary demand may be filed no less than three (3) days before operation.

ARTICLE XII

Data Provision

1. The aeronautical authorities of each Contracting Party shall provide, or shall cause their designated airlines to provide to the aeronautical authorities of the other Contracting Party, upon request, periodic or other statements of data as may be reasonably required for the purpose of reviewing the operation of the agreed services, including data showing the initial origins and final destinations of the traffic.

2. The aeronautical authorities of both Contracting Parties shall maintain close contact with respect to the implementation of paragraph 1 of this Article including procedures for the provision of information.

ARTICLE XIII

Customs Duties and Charges

1. Each Contracting Party shall, to the fullest extent possible under its national law and on a basis of reciprocity, exempt the designated airline or airlines of the other Contracting Party from import restrictions, customs duties, excise taxes, inspection fees and other national duties and charges on aircraft operated on international air services, fuel, lubricating oils, consumable technical supplies, spare parts including engines, regular aircraft equipment, aircraft stores (including liquor, tobacco and other products destined for sale to passengers in limited quantities during the flight) and other items intended for use or used solely in connection with the operation or servicing of aircraft of that airline as well as printed ticket stock, air waybills, any printed material which bears the insignia of the company printed thereon and usual publicity material distributed without charge by that airline.

2. The exemptions granted by this Article shall apply to the items referred to in paragraph 1 of this Article:

(a) introduced into the territory of one Contracting Party by or for a designated airline of the other Contracting Party;

(b) retained on board aircraft of a designated airline of one Contracting Party upon arriving in or leaving the territory of the other Contracting Party; and

(c) taken on board aircraft of a designated airline of one Contracting Party in the territory of the other Contracting Party.

Whether or not such items are used or consumed wholly within the territory of the Contracting Party granting the exemption, provided such items are not alienated in the territory of the said Contracting Party.

3. The regular airborne equipment, as well as the materials and supplies normally retained on board the aircraft of a designated airline of either Contracting Party, may be unloaded in the territory of the other Contracting Party only with the approval of the Customs authorities of that territory. In such case, they may be placed under the supervision of the said authorities up to such time as they are re-exported or otherwise disposed of in accordance with Customs regulations.

4. Baggage and cargo in direct transit across the territory of either Contracting Party shall be exempt from customs duties and other similar charges.

ARTICLE XIV

Tariffs

1. The tariffs for carriage on agreed services to and from the territory of the other Contracting Party shall be established by the designated airlines, due regard being paid to all relevant factors including cost of operation, characteristics of service, reasonable profit, the tariffs of other airlines and other commercial considerations in the marketplace.

2. The tariffs referred to in paragraph 1 of this Article shall be agreed between the designated airline or airlines, through coordination with each other. Each designated airline shall be responsible only to its own aeronautical authorities for justification of its tariffs. If the designated airlines are unable to reach agreement on a proposed tariff either airline may refer the matter to its aeronautical authorities, for resolution in accordance with paragraph 6 of this Article.

3. The tariffs referred to in paragraph 1 shall be filed, where required, with the aeronautical authorities of the Contracting Parties and received by those authorities at least thirty (30) days before the proposed effective date; a shorter period may be accepted by the aeronautical authorities.

4. Designated airlines shall be permitted to sell transportation on the agreed services in accordance with tariffs upon filing, provided that all sales are for transportation commencing not earlier than the proposed effective date and that all advertising and sales, tickets or other travel documents clearly indicate that the tariffs are "subject to government approval".

5. If the aeronautical authorities of one Contracting Party are dissatisfied with a proposed tariff, they shall notify the aeronautical authorities of the other Contracting Party and the designated airline concerned within fifteen (15) days from the date of receipt of the proposed tariff. In the event that a shorter period for the filing of a tariff is accepted by the aeronautical authorities, they may also agree that the period for giving notice of dissatisfaction be less than fifteen (15) days.

6. If a notice of dissatisfaction has been issued pursuant to paragraph 5 of this Article, or if the matter has been referred to aeronautical authorities in accordance with paragraph 2, the aeronautical authorities of both Contracting Parties may consult in an effort to determine the tariff by agreement between themselves. Such consultations, which may be through discussion or by correspondence, shall begin within fifteen (15) days of receipt of a request for consultations, unless otherwise agreed between the aeronautical authorities.

7. No tariff shall come into effect if the aeronautical authorities of either Contracting Party are dissatisfied with it.

8. The airline(s) of each Contracting Party shall have the right to match, on a timely basis, for carriage between the territories of both Contracting Parties any publicly available lawful tariff on scheduled services, on a basis which would be broadly equivalent in terms of routing, applicable conditions and standard of service. Similarly, the designated airline(s) of each Contracting Party shall have the right to match, on a timely basis, tariffs for carriage between the territory of the other Contracting Party and any third country, provided that the resulting tariff does not undercut the tariffs of the third and fourth freedom airlines in that market.

9. When tariffs have been established in accordance with the provisions of this Article, those tariffs shall remain in force until new tariffs have been established in accordance with the provisions of this Article. Nevertheless, a tariff shall not be prolonged by virtue of this paragraph for more than twelve (12) months after the date on which it would otherwise have expired.

10. The aeronautical authorities of both Contracting Parties shall endeavour to ensure that the tariffs charged and collected conform to the tariffs accepted or approved by them and are not subject to rebates.

ARTICLE XV

Sales and Transfer of Funds

1. Each designated airline shall have the right to engage in the sale of air transportation in the territory of the other Contracting Party directly and, at its discretion through its agents. Each designated airline shall have the right to sell transportation and any person shall be free to purchase such transportation in local and any freely convertible currency subject to national laws and regulations.

2. Each designated airline shall have the right to convert and remit abroad, on demand, funds obtained in the normal course of its operations. Conversion and remittance shall be permitted without restrictions at the foreign exchange market rates for current payments prevailing at the time of submission of the request for transfer, and shall not be subject to any charges except normal service charges collected by banks for such transactions.

ARTICLE XVI

Taxation

1. The Contracting Parties shall act in accordance with the relevant provisions of the Convention between the Government of Canada and the Government of the Republic of Hungary on the Avoidance of Double Taxation and the Prevention of Fiscal Avoidance with Respect to Taxes on Income and Capital, signed at Budapest on April 15, 1992 as modified by the Protocol to the Tax Convention signed May 3, 1994, and any amendments thereto.

2. Should the Convention referred to in paragraph 1 above be terminated or cease to apply to air transportation covered by this Agreement, either Contracting Party may request consultations pursuant to Article XXI (Modification of Agreement) for the purpose of modifying this Agreement to incorporate mutually acceptable provisions.

ARTICLE XVII

Airline Representatives

1. The designated airline or airlines of one Contracting Party shall be allowed, on the basis of reciprocity, to bring into and to maintain in the territory of the other Contracting Party their representatives and commercial, operational and technical staff as required in connection with the operation of agreed services.

2. These staff requirements may, at the option of the designated airline or airlines of one Contracting Party, be satisfied by its own personnel or by using the services of any other organization, company or airline operating in the territory of the other Contracting Party, and authorized to perform such services in the territory of that Contracting Party.

3. The representatives and staff shall be subject to the laws and regulations in force of the other Contracting Party, and, consistent with such laws and regulations:

(a) each Contracting Party shall, on the basis of reciprocity and with the minimum of delay, grant the necessary employment authorizations, visitor visas or other similar documents to the representatives and staff referred to in paragraph 1 of this Article; and

(b) both Contracting Parties shall facilitate and expedite the requirement of employment authorizations for personnel performing certain temporary duties not exceeding ninety (90) days.

ARTICLE XVIII

Applicability to Non-scheduled Flights

1. The provisions set out in Articles VII (Application of Laws), VIII (Safety Standards, Certificates and Licences), IX (Aviation Security), X (Use of Airports and Aviation Facilities), XII (Statistics), XIII (Customs Duties and Charges), XV (Sales and Transfer of Funds), XVI (Taxation), XVII (Airline Representatives) and XIX (Consultations) of this Agreement shall be applicable also to non-scheduled flights operated by an air carrier of one Contracting Party into or from the territory of the other Contracting Party and to the air carrier operating such flights.

ARTICLE XIX

Consultations

1. In a spirit of close cooperation, the aeronautical authorities of the Contracting Parties shall consult each other from time to time with a view to ensuring the implementation of, and satisfactory compliance with, the provisions of this Agreement and of its Annex.

2. Such consultations shall begin within a period of sixty (60) days of the date of receipt of such a request, unless otherwise agreed by the Contracting Parties.

ARTICLE XX

Settlement of Disputes

1. If any dispute arises between the Contracting Parties relating to the interpretation or application of this Agreement, the Contracting Parties shall in the first place endeavour to settle it by negotiation.

2. If the Contracting Parties fail to reach a settlement by negotiation, they may agree to refer the dispute for decision to some person or body, or either Contracting Party may submit the dispute for decision to a Tribunal of three arbitrators, one to be nominated by each Contracting Party and the third to be appointed by the two arbitrators. Each of the Contracting Parties shall nominate an arbitrator within a period of sixty (60) days from the date of receipt by either Contracting Party from the other of a notice through diplomatic channels requesting arbitration of the dispute and the third arbitrator shall be appointed within a further period of sixty (60) days. If either of the Contracting Parties fails to nominate an arbitrator within the period specified, or if the third arbitrator is not appointed within the period specified, the President of the Council of the International Civil Aviation Organization may be requested by either Contracting Party to appoint an arbitrator or arbitrators as the case requires. If the President is of the same nationality as one of the Contracting Parties, the most senior vice-president who is not disqualified on that ground, shall make the appointment. In all cases the third arbitrator shall be a national of a third State, shall act as President of the Tribunal and shall determine the place where arbitration will be held.

3. The Contracting Parties undertake to comply with any decision given under paragraph 2 of this Article.

4. The expenses of the Tribunal shall be shared equally between the Contracting Parties.

5 If and so long as either Contracting Party fails to comply with any decision given under paragraph 2 of this Article, the other Contracting Party may limit, withhold or revoke any rights or privileges which it has granted by virtue of this Agreement to the Contracting Party in default or to the designated airline in default.

ARTICLE XXI

Modification of Agreement

1. If either of the Contracting Parties considers it desirable to modify any provision of this Agreement, it may request consultations with the other Contracting Party. Such consultations which may be through discussion or by correspondence, shall begin within a period of sixty (60) days from the date of the request. Any modification agreed pursuant to such consultations shall come into force when it has been confirmed by an exchange of diplomatic notes.

2. Where the Contracting Parties agree, the consultations referred to in paragraph 1 of this Article shall be held between aeronautical authorities.

3. Subject to paragraph 2 of this Article, modifications to the Annex of this Agreement may be agreed between the aeronautical authorities of the Contracting Parties. They may be applied provisionally from the date they have been agreed upon and enter into force when confirmed by the Contracting Parties through an exchange of diplomatic notes.

ARTICLE XXII

Termination

Either Contracting Party may at any time from the entry into force of this Agreement give notice in writing through diplomatic channels to the other Contracting Party of its decision to terminate this Agreement, such notice shall be communicated simultaneously to the International Civil Aviation Organization. The Agreement shall terminate one (1) year after the date of receipt of the notice by the other Contracting Party, unless the notice to terminate is withdrawn by mutual consent before the expiry of this period. In the absence of an acknowledgement of receipt by the other Contracting Party, the notice shall be deemed to have been received fourteen (14) days after the receipt of the notice by the International Civil Aviation Organization.

ARTICLE XXIII

Registration with ICAO

This Agreement and any amendment thereto shall be registered with the International Civil Aviation Organization.

ARTICLE XXIV

Multilateral Conventions

If a general multilateral air convention comes into force in respect of both Contracting Parties, the provisions of such convention shall prevail. Consultations in accordance with Article XIX of this Agreement may be held with a view to determining the extent to which this Agreement is affected by the provisions of the multilateral convention.

ARTICLE XXV

Titles

Titles used in this Agreement are for reference purposes only.

ARTICLE XXVI

Entry into Force

This Agreement shall enter into force on the later of the date on which the Contracting Parties shall each have notified the other by diplomatic note that they have fulfilled the necessary domestic legal requirements.

IN WITNESS WHEREOF, the undersigned, duly authorized thereto by their respective Governments, have signed the present Agreement.

DONE in duplicate at Budapest on this 7th day of December, 1998 in the English, French and Hungarian languages, each version being equally authentic.

David Collenette

FOR THE GOVERNMENT OF CANADA

Kalman Katona

FOR THE GOVERNMENT OF THE REPUBLIC OF HUNGARY

ANNEX

Schedule of routes

Section 1

The following route may be operated in either or both directions by the airline(s) designated by the Government of the Republic of Hungary:

Notes:

1. Only one of the Points in Canada shall be available for same-plane own aircraft services. Points in Canada may be served separately or in combination. Transit rights shall be available at the Intermediate Points. No fifth freedom rights shall be available between the Intermediate Points and the Points in Canada. The selection of the Intermediate Points may be changed on ten (10) days' notification to the aeronautical authorities of Canada or such lesser period as may be agreed by the aeronautical authorities of Canada.

2. At the option of the designated airline(s) of Hungary, intra-airline connections may be made at any of the points on the route and any or all of the Intermediate Points may be omitted on any or all services provided that all services originate or terminate in Hungary.

3. While operating the agreed services, the designated airline(s) of Hungary may enter into co-operative arrangements for the purpose of code sharing (selling transportation under its own code on the flights of another airline) subject to the regulatory requirements normally applied by the aeronautical authorities of Canada to such arrangements. Code sharing services shall be permitted on the flights of any airline(s) designated by Canada and any third country airline(s) operating scheduled air services in their own right to/from Canada. For the purposes of code sharing services, the designated airline(s) of Hungary shall be entitled to transfer traffic between aircraft.

4. For the purposes of Article XI (Capacity), the Government of the Republic of Hungary shall be entitled to allocate the following capacity among its designated airline(s), for the operation of same- plane own aircraft flights and code sharing services, separately or in combination:

(a) for same-plane own aircraft services: up to a maximum of five (5) flights per week in each direction during IATA summer seasons, and three (3) flights per week in each direction during IATA winter seasons; and

(b) for services provided through code sharing on the flights of other airlines, there shall be no limit on the frequency of services.

5. Should a designated airline of Hungary provide a service to points behind its home country in connection with the route(s) specified above, public advertising or other forms of promotion by that airline in Canada or in third countries shall not employ the terms "single carrier" or "through service", and shall state that such service is by connecting flights, even when for operational reasons a single aircraft is used. The flight number assigned to the services between Hungary and Canada shall not be the same as that assigned to flights behind the home country of the airline performing the service.

SCHEDULE OF ROUTES

Section 2

The following route may be operated in either or both directions by the airline(s) designated by the Government of Canada:

Notes:

1. Only one of the Points in Hungary shall be available for same-plane own aircraft services. Points in Hungary may be served separately or in combination. Transit rights shall be available at the Intermediate Points. No fifth freedom rights shall be available between the Intermediate Points and the Points in Hungary. The selection of the Intermediate Points may be changed on ten (10) days' notification to the aeronautical authorities of Hungary or such lesser period as may be agreed by the aeronautical authorities of Hungary.

2. At the option of the designated airline(s) of Canada, intra-airline connections may be made at any of the points on the route and any or all of the Intermediate Points may be omitted on any or all services provided that all services originate or terminate in Canada.

3. While operating the agreed services, the designated airline(s) of Canada may enter into co-operative arrangements for the purpose of code sharing (selling transportation under its own code on the flights of another airline) subject to the regulatory requirements normally applied by the aeronautical authorities of Hungary to such arrangements. Code sharing services shall be permitted on the flights of any airline(s) designated by Hungary and any third country airline(s) operating scheduled air services in their own right to/from Hungary. For the purposes of code sharing services, the designated airline(s) of Canada shall be entitled to transfer traffic between aircraft.

4. For the purposes of Article XI (Capacity), the Government of Canada shall be entitled to allocate the following capacity among its designated airline(s) for the operation of same-plane own aircraft flights and code sharing services, separately or in combination:

(a) for same-plane own aircraft services, up to a maximum of five (5) flights per week in each direction during IATA summer seasons and up to a maximum of three (3) flights per week in each direction during IATA winter seasons; and

(b) for services provided through code sharing on the flights of other airlines, there shall be no limit on the frequency of services.

5. Should a designated airline of Canada provide a service to points behind its home country in connection with the route(s) specified above, public advertising or other forms of promotion by that airline in Hungary or in third countries shall not employ the terms "single carrier" or "through service", and shall state that such service is by connecting flights, even when for operational reasons a single aircraft is used. The flight number assigned to the services between Canada and Hungary shall not be the same as that assigned to flights behind the home country of the airline performing the service.