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Air Services Agreement between the Government of Canada and the Government of the Russian Federation [2001] CATSer 11 (9 March 2001)

E103732 - CTS 2001 No. 15

AIR SERVICES AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE RUSSIAN FEDERATION

THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE RUSSIAN FEDERATION, hereinafter referred to as the “Contracting Parties”;

TAKING INTO CONSIDERATION the fact of Canada and the Russian Federation being parties to the Convention on International Civil Aviation opened for signature at Chicago on the seventh day of December 1944;

DESIRING to conclude an Agreement for the purpose of establishing air services between and beyond their respective territories;

HAVE AGREED as follows:

ARTICLE 1

Definitions

1. For the purposes of this Agreement the term:

(a) “Aeronautical Authorities” means, in the case of the Russian Federation, the Federal Aviation Authority of Russia or any person or body authorized to perform any function presently exercised by the said Authority, and in the case of Canada, the Minister of Transport and the Canadian Transportation Agency or any other person or body authorized to perform any function exercised by the said authorities;

(b) “Agreement” means this Agreement, any Annex attached thereto;

(c) “Convention” means the Convention on International Civil Aviation opened for signature at Chicago on the seventh day of December 1944 and includes any Annex and any amendment thereto adopted under Article 90 of the Convention to the extent that such Annex and amendment thereto are applicable to the Contracting Parties, and any amendment of the Convention under Article 94 thereof ratified by both States;

(d) “Designated Airline” means an airline which has been designated and authorized in accordance with Article 3 of this Agreement;

(e) “Air Service”, “International Air Service”, “Airline” and “Stop for non-traffic purposes” have the meanings respectively assigned to them in Article 96 of the Convention;

(f) “territory” in relation to a State has the meaning specified in Article 2 of the Convention;

(g) “Tariffs” means the prices to be paid for the carriage of passengers, baggage and cargo and the conditions under which those prices apply, including prices and conditions for other services performed by the carrier in connection with air transportation, but excluding remuneration and conditions for the carriage of mail.

2. Titles of Articles used herein shall be for reference purposes only.

ARTICLE 2

Grant of Rights

1. In accordance with provisions of the Annex 1 of the present Agreement the airlines of each Contracting Party shall enjoy while operating international air service the following rights:

(a) to fly across the territory of the State of the other Contracting Party without landing;

(b) to make stops in the territory of the State of the other Contracting Party for non-traffic purposes.

2. Each Contracting party grants to the other Contracting Party the rights specified in the present Agreement for the purpose of establishing and operating international air services on the routes specified in Annex 1 to the present Agreement (hereinafter called “the agreed services” and “the specified routes” respectively).

3. The airlines designated by each Contracting Party while operating international air service on a specified route in addition to the rights mentioned in paragraph 1 of this Article shall have the right to make stops in the territory of the other Contracting Party at the points specified for that route in Annex 1 to the present Agreement for the purpose of taking on and/or putting down international traffic in passengers, cargo and mail.

4. Nothing in this Article shall be deemed to confer on a designated airline of one Contracting Party the right of taking on board passengers, cargo and mail carried for hire or reward, between the points in the territory of the other Contracting Party.

ARTICLE 3

Designation and Authorization

1. Each Contracting Party shall have the right to designate in writing to the other Contracting Party an airline or airlines for the operation of the agreed services on the specified routes and to withdraw the designation of any airline or to substitute another airline for one previously designated.

2. On receipt of such notification Aeronautical Authorities of the Contracting Party shall without delay, subject to the provisions of paragraphs 3 and 4 of this Article, grant to each designated airline the appropriate operating authorizations.

3. The Aeronautical Authorities of one Contracting Party prior to granting the operating authorization may require an airline designated by the other Contracting Party to satisfy them that it is qualified to fulfil the conditions prescribed under the laws and regulations normally and reasonably applied by such authorities to the operation of international air services.

4. Each Contracting Party shall have the right directly, or through its Aeronautical Authorities, to refuse to grant the operating authorization referred to in paragraph 2 of this Article or to impose such conditions as may deem necessary on the exercise by a designated airline of the rights specified in Article 2 of this Agreement, in any case where the said Contracting Party is not satisfied that substantial ownership and effective control of that airline are vested in the Contracting Party designating the airline or in its nationals.

5. When an airline has been so designated and authorized, it may begin to operate the agreed services for which it is designated provided that it complies with the applicable provisions of this Agreement, in particular, that tariffs are established in accordance with the provisions of Article 12 of this Agreement.

ARTICLE 4

Revocation and Limitation of Authorization

1. Each Contracting Party acting directly or through the Aeronautical Authorities shall have the right to revoke an operating authorization or to suspend the exercise of the rights specified in Article 2 of this Agreement by an airline designated by the other Contracting party or to impose such conditions as it may deem necessary on the exercise of these rights:

(a) in any case where it is not satisfied that substantial ownership and effective control of that airline are vested in the Contracting Party designating the airline or its nationals;

(b) in case of failure by that airline to comply with the laws and regulations of the Contracting party granting the rights; or

(c) in case the airline otherwise fails to operate in accordance with the conditions prescribed under this Agreement.

2. Unless immediate revocation, suspension or imposition of the conditions mentioned in paragraph 1 of this Article is essential to prevent further infringement of the laws and regulations, or unless safety or security requires immediate action under this Article, Article 6 or Article 7 of this Agreement, such rights shall be exercised only after consultations with the Aeronautical Authorities of the other Contracting Party. Such consultations shall begin within a period of thirty (30) days from the date of the request or some further period by agreement between the Aeronautical Authorities.

ARTICLE 5

Application of Laws and Regulations

1. The laws and regulations of one Contracting party relating to the arrival in or the departure from its territory of aircraft engaged in international air services or to operation and navigation of such aircraft while within its territory shall be applied to aircraft of the airline or airlines designated by the other Contracting Party.

2. The laws and regulations of one contracting Party relating to arrival in, stay in, departure from or transit through its territory of passengers, crews, cargo or mail, such as those relating to passport, customs, currency and sanitary measures, shall be applied to passengers, crews, cargo or mail of an airline or airlines designated by the other Contracting Party while within the said territory.

3. In the application of its customs, immigration, quarantine and similar regulations, neither Contracting Party shall give preference to any airline over an airline of the other Contracting Party engaged in similar international air services.

4. Passengers, baggage and cargo in direct transit shall be exempt from the imposition of customs duties, taxes and other import charges on goods entering the territory of the Contracting Parties, with the fees for services, customs clearance and storage being levied under the national law of the Contracting Parties, subject to paragraph 3 of this Article.

ARTICLE 6

Recognition of 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 16 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 Contracting party shall be notified of such findings and the steps considered necessary to conform with these minimum standards; and the other Contracting Party 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 4 of this Agreement shall apply.

ARTICLE 7

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. 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 14 September 1963, the Convention for the Suppression of Unlawful Seizure of Aircraft, signed at the Hague on 16 December 1970, the Convention for the Suppression of Unlawful Acts against the Safety of Civil Aviation, signed at Montreal on 23 September 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 agreement governing aviation security binding upon both Contracting Parties.

2. 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.

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

4. Each Contracting Party agrees that its operators of aircraft may be required to observe the aviation security provisions and requirements referred to in paragraph 3 above required by the other Contracting Party for entry into, departure from, or while within the territory of that other Contracting Party.

5. 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 or loading. Each Contracting party shall also give sympathetic consideration to any request from the other Contracting Party for reasonable special security measures to meet a particular threat.

6. 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.

7. Each Contracting Party shall also give sympathetic consideration to a request from the other Contracting Party to enter into reciprocal administrative arrangements whereby the Aeronautical Authorities of one Contracting Party could make in the territory of the other Contracting Party their own assessment of the security measures being carried out by aircraft operators in respect of flights destined to the territory of the first Contracting Party.

8. 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 4 of this Agreement.

ARTICLE 8

Use of Airports and Aviation Facilities

1. Fees and other charges for the use of airports including its installations, technical and other facilities and services as well as any charges for the use of airways, air traffic and air navigation facilities, communication facilities and services shall be levied in accordance with the rates established in the territory of each Contracting Party as applied to their own or to foreign carriers operating international air services. No preference shall be given to any airline over an airline of the other Contracting Party engaged in similar international air services.

2. In the use of airports, airways, air traffic services and associated facilities, made available in the territory of each Contracting Party, no preference shall be given to any airline over an airline of the other Contracting Party engaged in similar international air services.

ARTICLE 9

Capacity

1. There shall be fair and equal opportunity for the designated airline or airlines of each Contracting Party to operate the agreed services on the routes specified in Annex I.

2. In operating the agreed services, the designated airline or airlines of one Contracting Party shall take into account the interests of the 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 route.

3. The agreed services provided by the designated airline or airlines of each Contracting Party shall bear reasonable relationship to the requirements of the public for transportation on the specified routes and each designated airline shall have as its primary objective the provision, at a reasonable load factor, of capacity adequate to carry the current and reasonably anticipated requirements for the carriage of passengers, cargo and mail between the territories of the Contracting Parties.

4. Provision for the carriage of passengers, cargo and 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 requirements to and from the territory of the Contracting Party which has designated the airline;

(b) traffic requirements 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 requirements of through airline operation.

5. The capacity to be provided on the specified routes, i.e. frequency of services and type of aircraft, shall be agreed in advance between the designated airlines in accordance with the principles laid down in this Article, and subject to the approval of the Aeronautical Authorities of the Contracting Parties. In the absence of an 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 pursuant to Article 16 of this Agreement. Pending an arrangement either at the airline level or between the Aeronautical Authorities, the status quo shall be maintained.

ARTICLE 10

Statistics

1. The Aeronautical Authorities of both Contracting Parties shall exchange, at the request of either of them, such statements of statistics as may be reasonably required for the purpose of assessing the capacity provided on the agreed service. Such statements shall include all information required to determine the amount of traffic carried on the agreed services and the origins and destinations of such traffic.

2. The Aeronautical Authorities of both Contracting Parties shall maintain close contact with respect to the implementation of paragraph 1 of this Article. Consultations may be held in accordance with Article 16 of this Agreement to discuss the details and the methods for the provision of statistical information.

ARTICLE 11

Customs, Duties and other charges

1. Each Contracting Party shall, on the basis of reciprocity, exempt the designated airline or airlines of the other Contracting Party from customs duties, taxes and other import charges on aircraft, fuel, lubricants, 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 way bills, 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 on behalf of a designated airline of the other Contracting Party;

(b) retained on board aircraft of a designated airline of one Contracting Party upon arriving in and remaining on board the aircraft until take-off from 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 within reasonable limits;

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 other Contracting Party. In such case, under the national law of the other Contracting Party, these goods must be placed under the supervision of the Customs authorities until such time as they are re-exported or otherwise disposed of in accordance with the Customs regulations of the latter.

4. Charges corresponding to the services performed for storage and customs clearance in the territory of one Contracting Party will be charged in accordance with the internal legislation of that Contracting Party.

ARTICLE 12

Tariffs

1. The tariffs for carriage on agreed services to and from the territory of the other Contracting Party shall be established at reasonable levels, due regard being paid to all relevant factors including cost of operation, reasonable profit, characteristics of service, the interest of users and, where it is deemed suitable, the tariffs of other airlines operating over all or part of the same route.

2. The tariffs referred to in paragraph 1 of this Article shall be submitted to the Aeronautical Authorities of the Contracting Parties at least thirty (30) days before the proposed date of their introduction; in special cases, a shorter period may be accepted by the Aeronautical Authorities. If within fifteen (15) days from the date of submission, the Aeronautical Authorities of one Contracting Party have not notified the Aeronautical Authorities of the other Contracting Party that they are dissatisfied with the tariff submitted to them, such tariff shall be considered to be acceptable and shall come into effect on the expiration of the fifteen (15) days period mentioned above. In the event that a shorter period for the submission 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.

3. If during the period applicable in accordance with paragraph 2 of this Article a notice of dissatisfaction has been given, the Aeronautical Authorities of the Contracting Parties shall endeavour to determine the tariff by agreement between themselves.

4. If the Aeronautical Authorities cannot agree on any tariff submitted to them under paragraph 2 of this Article or on the determination of any tariff under paragraph 3 of this Article, the dispute shall be settled in accordance with the provisions of Article 18 of this Agreement.

5. No tariff shall come into force if the Aeronautical Authorities of either Contracting Party are dissatisfied with it.

6. The tariffs established in accordance with the provisions of this Article shall remain in force until new tariffs have been established in the same manner.

7. The Aeronautical Authorities of both Contracting Parties shall endeavour to ensure that the tariffs charged and collected conform to the tariffs accepted by both Aeronautical Authorities.

ARTICLE 13

Sales

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 and including the use of its own transportation documents.

2. With respect to the sale of air transportation in the territory of one Contracting Party, the laws and regulations of that Contracting Party governing the use of currency shall apply.

ARTICLE 14

Transfer of Earnings

Each Contracting Party shall grant to the designated airlines of the other Contracting Party the right to transfer freely the excess of receipts over expenditure earned by the said airlines in connection with the operation of the international air services. The said transfer shall be made in convertible currency according to the official exchange rate valid at the time of submission of the application for transfer and in accordance with the legislation of the Contracting Party from which territory the transfer is made.

ARTICLE 15

Airline Representatives

1. With the purpose of ensuring the operation of the agreed services, the designated airline or airlines of each Contracting Party shall be granted, on the basis of reciprocity, the right to station in the territory of the other Contracting Party its representatives including administrative, commercial and technical personnel necessary.

2. Unless otherwise authorized in individual cases by competent authorities concerned, the above mentioned personnel shall consist of the nationals of either Contracting Party employed by a designated airline of that Contracting Party in the territory of the other Contracting Party as required in connection with the operation of agreed services and shall be subject to approval of the Aeronautical Authorities of the other 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 or other similar documents to the representatives and staff referred to in paragraph 1 of this Article; and

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

ARTICLE 16

Constitutions

1. From time to time there shall be the consultations between the aeronautical authorities of the Contracting Parties to ensure close collaboration in all matters affecting the implementation of this Agreement.

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 17

Modification of Agreement

If either of the Contracting Parties considers it desirable to modify the terms of the present Agreement and the Annexes thereto it may request a consultation which may be between the aeronautical authorities. Consultations shall begin within a period of sixty (60) days from the date of the request unless otherwise agreed. The modifications of the Agreement shall come into effect when confirmed by an exchange of notes through diplomatic channels. The modifications of Annexes may be made by an agreement between the aeronautical authorities of the Contracting Parties.

ARTICLE 18

Settlement of Disputes

1. Any dispute relating to the interpretation or application of this Agreement shall be settled by direct negotiations between the Aeronautical Authorities of the Contracting Parties. If the said Aeronautical Authorities fail to reach an agreement, the dispute shall be settled through diplomatic channels.

2. Should it not be possible to settle the dispute as provided for in paragraph 1 of this Article, each Contracting Party may limit, suspend or revoke the rights or privileges granted by it to the other Contracting Party under the terms of this Agreement.

ARTICLE 19

Termination

Either Contracting Party may at any time give notice to the Contracting Party through diplomatic channels of its decision to terminate the present Agreement. The Agreement shall terminate twelve (12) months after the date of receipt of the notice by the other Contracting Party unless the notice to terminate is withdrawn by mutual agreement before the expiry of this period.

ARTICLE 20

Registration with ICAO

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

ARTICLE 21

Multilateral Conventions

If both Contracting Parties become parties to any multilateral convention dealing with issues regulated by the present Agreement they may, by mutual consent, amend the present Agreement accordingly in order to bring it into conformity with the provisions of the said Convention.

ARTICLE 22

Entry into Force

The present Agreement shall enter into force at the date of the last written notification, through diplomatic channels, confirming that the Contracting Parties have fulfilled all their internal procedures for the entry into force of this Agreement. From the day this Agreement comes into force; the Air Transport Agreement between the Government of the Union of Soviet Socialist Republics and the Government of Canada, signed on July 11, 1966 is terminated in regard to the relations between the Russian Federation and Canada.

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

DONE in two originals, at Ottawa, on the 18th day of December 2000, in the English, French and Russian languages, each version being equally authentic.

David Collenette

FOR THE GOVERNMENT OF CANADA

Voktor Khristenko

FOR THE GOVERNMENT OF THE RUSSIAN FEDERATION

ANNEX I

ROUTE SCHEDULE

Section I

Route(s) to be operated by the designated airline(s) of Canada:

* (excluding points in the territory of the countries of the Commonwealth of Independent States (C.I.S.) and Baltic Republics)

Notes:

1. Any Intermediate Points and Beyond Points may be omitted on any or all flights provided that all services shall originate or terminate in Canada. Points in the Russian Federation may be served on the same flight or separately.

2. Intransit rights are available at Intermediate Points and at the points in the Russian Federation. Own stopover rights are available at Intermediate Points. Own stopover rights are available at points in the Russian Federation for traffic enroute to points beyond. Fifth freedom traffic rights are available between one Intermediate Point in Europe to be named by Canada, and Moscow. The exercise of fifth freedom rights shall be limited to two flights per week in each direction and fifty percent of aircraft capacity per flight.

3. Points to be named may be changed each IATA season on sixty days’ notice to the aeronautical authorities of the Russian Federation, or such lesser notice as may be agreed to by the aeronautical authorities of the Russian Federation. Of the three additional Points in the Russian Federation to be named by Canada, three shall be available immediately for code sharing services but only one shall be available for own aircraft services as of October 27, 2002.

4. Notwithstanding Article 9 of the Agreement, the designated airlines of Canada shall in total be entitled to operate own aircraft services up to a maximum of nine (9) flights per week in each direction to the Russian Federation, provided that not more than daily flights in each direction are operated at Moscow or St. Petersburg and not more than two (2) flights per week in each direction are operated at the one additional point to be named by Canada. A third flight per week in each direction at the point to be named by Canada shall be subject to negotiations. Seasonal or ad hoc increases in capacity may be agreed in accordance with the procedures set out in Article 9 of the Agreement. Such increases shall not constitute a change to the above entitlements unless specifically agreed between the Contracting Parties.

5. Should a designated airline or airlines of Canada provide a service to points behind Canada in connection with the operation of the agreed services, public advertising or other forms of promotion by such airline 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 the Russian Federation shall not be the same as that assigned to flights behind Canada.

Section II

Route(s) to be operated by the designated airline(s) of the Russian Federation:

Notes:

1. Any Intermediate Points and Beyond Points may be omitted on any or all flights provided that all services shall originate or terminate in the Russian Federation. Points in Canada may be served on the same flight or separately.

2. Intransit rights are available at Intermediate Points and at Points in Canada. Own stopover rights are available at Intermediate Points. Own stopover rights are available at Points in Canada for traffic enroute to Points Beyond. Fifth freedom rights are available between Montreal and Points Beyond in the USA (excluding points in California and Florida) and between Montreal and Mexico City. The exercise of fifth freedom rights shall be limited to two flights per week in each direction and fifty percent of aircraft capacity per flight to each of the Points Beyond.

3. Points to be named may be changed each IATA season on sixty days’ notice to the aeronautical authorities of Canada, or such lesser notice as may be agreed to by the aeronautical authorities of Canada. Of the three additional Points in Canada to be named by the Russian Federation, three shall be available immediately for code sharing services but only one shall be available for own aircraft services.

4. Notwithstanding Article 9 of the Agreement, the designated airlines of the Russian Federation shall in total be entitled to operate own aircraft services up to a maximum of nine (9) flights per week in each direction to Canada, provided that not more than daily flights in each direction are operated at Montreal or Toronto and not more than two (2) flights per week in each direction are operated at the one additional point to be named by the Russian Federation. A third flight per week in each direction at the point to be named by the Russian Federation shall be subject to negotiations. Seasonal or ad hoc increases in capacity may be agreed in accordance with the procedures set out in Article 9 of the Agreement. Such increases shall not constitute a change to the above entitlements unless specifically agreed between the Contracting Parties.

5. Should a designated airline or airlines of the Russian Federation provide a service to points behind the Russian Federation in connection with the operation of the agreed services, public advertising or other forms of promotion by such airline 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 the Russian Federation and Canada shall not be same as that assigned to flights behind the Russian Federation.

6. Notwithstanding the exclusion of Gander as a point in Canada above, the designated airline(s) of the Russian Federation may operate Shannon-Gander and Gander-Havana with fifth freedom rights. During technical stops at Gander, the designated airline(s) of the Russian Federation may transfer traffic between its own flights at Gander that originate in or are destined for points in third countries.

ANNEX II

A. OVERFLIGHTS

Further to Article 2 of this Agreement

1. Each Contracting Party shall ensure that air carriers of the other Contracting Party are permitted, without the requirement to land, to fly over the territory of the other Contracting Party. The terms and conditions (including fees and other charges) applicable to such operations shall be no less favourable than those applied to air carriers of other countries under similar circumstances.

2. Frequency of flights on all routes available for international traffic for any air carrier shall be subject to the traffic handling capability on the Air Traffic Services (ATS) routing. The following specific conditions shall also apply:

a) the airlines of Canada shall be entitled to operate up to one hundred and ten (110) one-way flights per week between points in Canada and points in the Far East and in the Asia-Pacific region on ATS routings approved for international air services;

b) the airlines of the Russian Federation shall be entitled to operate up to one hundred and ten (110) one-way flights per week between points in the Russian Federation and points in the USA, Central America and South America on ATS routings approved for international air services.

c) favourable consideration shall be given to requests for additional flights to be operated in excess of the entitlements specified in a) and b) of this paragraph; and

d) the entitlements specified in sub-paragraphs a) and b) of this paragraph shall be reviewed prior to 2001/2002 IATA winter season in light of any improvements in traffic handling capabilities with a view to giving favourable consideration to increasing the entitlements.

3. The user charges and fees to be imposed for overflights in sub-paragraph 2(c) above shall not be higher than those imposed by the respective authorities in sub-paragraphs 2(a) and (b).

4. For the operation of overflights, the air carriers of each Contracting Party shall be permitted to use any type of subsonic aircraft with no more than 500 seats, subject to the laws and regulations of the other Contracting Party.

5. Authorization of overflights for air carriers of either Contracting Party operating charter services shall be considered on the basis of comity and reciprocity.

6. Advance notification and any amendments to notification of overflights shall be subject to the laws and regulations of the Contracting Party the territory of which is being overflown. Where approvals are required, they shall be issued on a timely basis.

7. Air carriers of each Contracting Party shall be free to request any entry and exit points on ATS overflight routings established within the territory of the other Contracting Party. The aeronautical authorities of each Contracting Party shall have the right to modify ATS overflight routings for reasons of national security. The aeronautical authorities of each Contracting Party shall at all times attempt to permit as optimum overflight routing as possible for the air carriers of the other Contracting Party.

B. CODE SHARING

Further to the provisions of the Route Schedules set forth in Annex I to the Agreement, the following shall also apply.

1. Subject to the regulatory requirements normally applied by the aeronautical authorities of the Russian Federation to such joint airline operations, each designated airline of Canada shall have the right to operate the agreed services on transatlantic routings by selling transportation under its own code on flights of the designated airlines of the Russian Federation or on flights of up to two airlines of its choice operating scheduled air services between up to two Intermediate Points of its choice and Points in the Russian Federation. For the purposes of code sharing arrangements, designated airlines of Canada shall only be permitted to operate code sharing services to, from and via licensed points. The code sharing partners of the designated airlines of Canada shall operate flights in accordance with licence authorities issued by the Russian Federation but no specific authorization of the code sharing partners shall be required by the Russian Federation for the purposes of permitting the designated airlines of Canada to code share on the code sharing partner’s flights. For the purpose of code sharing arrangements the designated airlines of Canada shall be permitted to transfer traffic between aircraft.

2. For code sharing services by each of the designated airlines of Canada to each of the Points in the Russian Federation, each designated airline of Canada shall be entitled to operate up to daily service from each of the Points in Canada and no greater frequency of flights than that operated by the code sharing partners of the designated airlines of Canada.

3. Subject to the regulatory requirements normally applied by the aeronautical authorities of Canada to such joint airline operations, each designated airline of the Russian Federation shall have the right to operate the agreed service on transatlantic routings by selling transportation under its own code on flights of designated airlines of Canada or on flights of up to two airlines of its choice operating scheduled air services between up to two Intermediate Points of its choice and Points in Canada. For the purposes of code sharing arrangements, designated airlines of the Russian Federation shall only be permitted to operate code sharing services to, from and via licensed points. The code sharing partners of the designated airlines of the Russian Federation shall operate flights in accordance with licence authorities issued by Canada but no specific authorization of the code sharing partners shall be required by Canada for the purposes of permitting the designated airlines of the Russian Federation to code share on the code sharing partners’ flights. For the purposes of code sharing arrangements the designated airlines of the Russian Federation shall be permitted to transfer traffic between aircraft.

4. For the code sharing services by each of the designated airlines of the Russian Federation, to each of Montreal and Toronto, each designated airline of the Russian Federation shall be entitled to operate up to daily service from each of the Points in the Russian Federation and no greater frequency of flights than that operated by the code sharing partners of the designated airlines of the Russian Federation. With respect to Note 3 of Section 2 of the Route Schedule in Annex I to the Agreement, code sharing services shall only be available at Vancouver as of October 27, 2002.

C. GROUND HANDLING

Each designated airline of one Contracting Party shall have the right to perform its own ground handling services in the territory of the other Contracting Party or, at its option, to have its ground handling services provided in whole or in part by its code sharing partners, that partners’ agent or any other agent authorized by the competent authorities of the other Contracting Party to provide such services.

MEMORANDUM OF UNDERSTANDING BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE RUSSIAN FEDERATION ON CUSTOMS DUTIES AND FUEL TAXES

THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE RUSSIAN FEDERATION,

FURTHER to the Air Services Agreement between the Government of Canada and the Government of the Russian Federation signed at Ottawa on the 18th day of December 2000 (“the Agreement”),

HAVE AGREED as follows:

1. With respect to Article 11 of the Agreement and taxes that certain Canadian Provincial Governments may levy on certain items specified in paragraph 1 of the Article, the Government of Canada will ensure that the airline or airlines of the Russian Federation receive treatment no less favourable than that accorded to any other foreign airline operating international air services to and from Canada.

2. This Memorandum of Understanding shall form an integral part of the Air Services Agreement between the Government of Canada and the Government of the Russian Federation signed at Ottawa on the 18^th day of December 2000, and take effect on the date of entry into force of the Agreement.

DONE at Ottawa, on the 18^th day of December 2000.

David Collenette

FOR THE GOVERNMENT OF CANADA

Voktor Khristenko

FOR THE GOVERNMENT OF THE RUSSIAN FEDERATION