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Exchange of Notes constituting an Agreement amending the Agreement between the Government of Canada and the Government of the Czech Republic on Air Transport, signed at Prague on March 13, 1996 [2004] CATSer 14 (28 June 2004)

E105002

EXCHANGE OF NOTES CONSTITUTING AN AGREEMENT AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF CANADA AND THE GOVERNMENT OF THE CZECH REPUBLIC ON AIR TRANSPORT, SIGNED AT PRAGUE ON MARCH 13, 1996

I

The Ambassador of Canada to the Minister of Foreign Affairs of the Czech Republic

PRAGUE, April 28, 2004

no. 00101/2004

H. E. Mr. Cyril Svoboda
Minister of Foreign Affairs of the Czech Republic
Prague

Your Excellency,

I have the honour to refer to the consultations between the aeronautical authorities of Government of Canada and the Government of the Czech Republic held in Ottawa June 5-6, 2002, during which they agreed to amend the Agreement on Air Transport between the Government of Canada and the Government of the Czech Republic, signed at Prague on March 13, 1996 (the Agreement), introducing amendments to Articles XI (Capacity), XIV (Tariffs), VII bis (Smoking Ban) comprising the addition of provisions relating to a smoking ban on passenger flights and amendments to the Annex, Route Schedule and Notes, along the following lines:

Article XI of the Agreement is superseded in its entirety and the following is substituted therefor:

Article XI

Capacity

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

2. The agreed services to be operated by the designated airlines of the Contracting Parties shall have as their primary objective the provision at reasonable load factors of capacity adequate to meet current and reasonably anticipated requirements for the carriage of passengers, cargo and mail between the territories of the Contracting Parties.

3. Each Contracting Party and its designated airline(s) shall take into consideration the interests of the other Contracting Party and its designated airline(s) so as not to affect unduly the services which the latter provides.

4. 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 (expressly or tacitly) of the aeronautical authorities of both Contracting Parties. In the absence of agreement between the designated airlines, the aeronautical authorities may consult and endeavour to reach agreement on capacity.

5. Increases to capacity established in accordance with the provisions of paragraph 4 of this Article shall not constitute a change in capacity entitlements. Any change to capacity entitlements shall be agreed between the Contracting Parties.

Article XIV of the Agreement is superseded in its entirety and the following is substituted therefor:

Article XIV

Tariffs

1. The tariff to be applied by the designated airline or airlines of one Contracting Party, 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 the cost of operation, reasonable profit, characteristics of service (such as standards of speed and accommodation) and the tariffs of other airlines.

2. The prices referred to in paragraph 1 of this Article may be developed individually or, at the option of the designated airline or airlines, through coordination with each other or with other airlines. A designated airline shall be responsible only to its own aeronautical authorities for the justification of its prices.

3. Tariffs referred to in paragraph 2 of this Article shall be submitted to and received by the aeronautical authorities of the Contracting Parties at least thirty (30) days before the proposed date of their introduction, unless the aeronautical authorities of both Contracting Parties permit the filing to be made on shorter notice. Tariffs submitted to the aeronautical authorities of both Contracting Parties shall be in such a form as the aeronautical authorities of each Contracting Party may require.

4. If within fifteen (15) days from the date of receipt 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 accepted or approved and shall come into effect on the date stated in the proposed tariff. In the event that a shorter period for the submission of a tariff is permitted by the aeronautical authorities, they may also agree that the period for giving notice of dissatisfaction be less than fifteen (15) days.

5. If a tariff cannot be established in accordance with the provisions of paragraph 2 of this Article or if during the period applicable, in accordance with paragraph 4 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.

a. No tariff shall come into force if the aeronautical authorities of either Contracting Party have given notice of dissatisfaction unless a decision on the tariff is taken under the provisions of paragraph 5 of this Article or the provisions of Article XX of this Agreement.

b. If the aeronautical authorities of one Contracting Party become dissatisfied with an established tariff, they shall so notify, with an appropriate explanation, the aeronautical authorities of the other Contracting Party and concurrently the designated airline(s) concerned shall endeavour to determine a new, or revised tariff. If within 30 days of such notification, or a shorter period acceptable to both aeronautical authorities, the designated airline(s) concerned have not satisfied the dissatisfaction expressed, then the aeronautical authorities that notified dissatisfaction shall have the right to prevent the said tariff continuing in effect, and the aeronautical authorities of the other Contracting Party can request immediate consultations between and among aeronautical authorities to resolve the dissatisfaction expressed.

6. If the aeronautical authorities cannot agree on the determination of a tariff under paragraph 5, or 5.b. of this Article, either Contracting Party may require that the dispute be settled in accordance with the provisions of Article XX of this Agreement.

7. The designated airline(s) of one Contracting Party, can file a tariff competitive with another publicly available tariff applicable to the same points either, on agreed services, or via agreed services to or from any non-agreed points. Such tariffs will match the publicly available tariffs filed with the aeronautical authorities between the same points. Such tariff(s) are always subject to the prior, and continued acceptance, or approval, of the appropriate authorities of the countries between which such tariff(s) will apply.

a. In considering a "match" referred to in paragraph 7. above, the aeronautical authorities of the Contracting Parties shall take into account the following factors:

(i) The designated airline(s) of each Contracting Party shall have the right to match on services between the territories of the two Contracting Parties any tariff which is a publicly available lawful scheduled tariff or retail charter price, applicable to the same or adjacent points on the scheduled or charter services of another airline of either Contracting Party, on a basis which would not necessarily be identical but would be broadly equivalent.

(ii) The tariffs of the designated airline(s) of one Contracting Party for carriage between the territory of the other Contracting Party and points in third countries, can for the same class of service, match but shall not be lower, or their conditions less restrictive, than the tariffs of any scheduled airline of the other Contracting Party that applies between the same points.

b. Any tariff filed in accordance with paragraph 7.a. shall:

(i) include satisfactory evidence of the availability of the tariff which is being matched and of the consistency of matching with the requirements of this Article, and

(ii) unless otherwise agreed between the aeronautical authorities of the Contracting Parties, remain in effect only for the period of availability of the matched scheduled tariff or charter retail price.

8. A tariff established in accordance with the provisions of this Article shall remain in force during the published period of applicability, or until a new tariff has been established. Nevertheless, except as provided in paragraph 7.b.(ii) above, no tariff shall be prolonged by virtue of this paragraph for more than twelve (12) months after the date on which it otherwise would have expired.

9. The aeronautical authorities of both Contracting Parties shall endeavour to ensure as far as possible that

(a) the tariffs charged and collected conform to the tariffs accepted or approved by both aeronautical authorities; and

(b) no airline rebates any portion of such tariffs by any means.

10. Where this Article requires communicating in writing, it may be done by means of a letter, or any type of electronic communication, such as a telegram, telex or facsimile, that produces a printed text.

Article VII is amended by the addition of Article VII (bis), as follows:

ARTICLE VII (bis)

Smoking Ban

1. Each Contracting Party shall prohibit or cause their airlines to prohibit smoking on all flights carrying passengers operated by its airlines between the territories of the Contracting Parties. This prohibition shall apply to all locations within the aircraft and shall be in effect from the time an aircraft commences enplanement of passengers to the time deplanement of passengers is completed.

2. Each Contracting Party shall take all measures that it considers reasonable to secure compliance by its airlines and by their passengers and crew members with the provisions of this Article, including the imposition of appropriate penalties for non-compliance.

The Route Schedule Annex of the Agreement is superseded in its entirety and the following is substituted therefor:

ANNEX

ROUTE SCHEDULE

Section I: For Own Aircraft Services

The following route may be operated by the designated airline or airlines of Canada:

Notes:

1. In the operation of an agreed service on a specified route set out in this Section of the Route Schedule, the airline or airlines designated by the Government of Canada shall have the following rights:

(a) to pick up and discharge in the territory of the Czech Republic international traffic in passengers, mail and cargo destined for or coming from Canada;

(b) to carry international traffic in passengers, mail and cargo between Canada and intermediate points;

(c) to carry into and out of the territory of the Czech Republic on the same flight with stop-over privilege through-international traffic originating in or destined for points so specified in third countries.

2. Prague and the other point in the Czech Republic may be served on the same flight or separately.

3. Fifth freedom rights shall be available at up to four points of Canada's choice, intermediate to or beyond the Czech Republic.

4. Points to be named by Canada may be changed on 30 days notice.

5. The designated airline or airlines of Canada while operating an agreed service on a specified route may omit any or all Intermediate Points and Points Beyond provided that all services originate or terminate in Canada.

6. For the purpose of Article XI, the airline or airlines designated by Canada shall be entitled to operate in total:

(a) four passenger-combination flights per week in each direction effective the IATA 2002 summer season and seven flights per week in each direction effective the IATA 2003 summer season and

(b) one all-cargo flight per week in each direction between Montreal and Prague with all-cargo aircraft. The capacity to be operated on such service shall not exceed forty (40) tonnes per week in each direction.

Any changes to the permitted frequency and capacity shall be determined pursuant to the provisions of Article XI.

Section II: For Own Aircraft Services

The following route may be operated by the designated airline or airlines of the Czech Republic:

Notes:

1. In the operation of an agreed service on a specified route set out in this Section of the Route Schedule, the airline or airlines designated by the Government of the Czech Republic shall have the following rights:

(a) to pick up and discharge in the territory of Canada international traffic in passengers, mail and cargo destined for or coming from the Czech Republic;

(b) to carry international traffic in passengers, mail and cargo between the Czech Republic and intermediate points;

(c) to carry into and out of the territory of Canada on the same flight with stop-over privilege through-international traffic originating in or destined for points so specified in third countries.

2. Montreal and Toronto may be served on the same flight or separately.

3. No point in the USA may be served on any flight serving Toronto.

4. Fifth freedom rights shall be available only between Montreal and two points in the USA north of and including Washington, DC and east of and including Chicago. The selection of the U.S. fifth freedom points may be changed on 30 days notice by the Czech Republic.

5. The designated airline or airlines of the Czech Republic while operating an agreed service on a specified route may omit any or all Intermediate Points or Points Beyond provided that all services originate or terminate in the Czech Republic.

6. Intermediate points in Europe to be named by the Czech Republic may be changed on 30 days notice.

7. For the purpose of Article XI, the airline or airlines designated by the Czech Republic shall be entitled to operate in total:

(a) four passenger-combination flights per week in each direction effective the IATA 2002 summer season provided that no more than three flights per week in each direction are operated at Toronto and seven flights per week in each direction effective the IATA 2003 summer season, provided that no more than four flights per week in each direction are operated at Toronto, and

(b) one all-cargo flight per week in each direction between Montreal and Prague with all-cargo aircraft. The capacity to be operated on such service shall not exceed forty (40) tonnes per week in each direction.

Any changes to the permitted frequency and capacity shall be determined pursuant to the provisions of Article XI.

Section III: For Code-Sharing Services

The following route may be operated by the designated airline or airlines of Canada:

Notes:

1. Subject to the regulatory requirements normally applied to such operations by the aeronautical authorities of the Czech Republic each designated airline of Canada may enter into cooperative arrangements for the purpose of

a) holding out the agreed services on the specified routes by code-sharing (i.e. selling transportation under its own code) on flights operated by an airline(s) of Canada, the Czech Republic, and/or of any third country; and/or

b) carrying traffic under the code of any other airline(s) where such other airline(s) has been authorized by the aeronautical authorities of Czech Republic to sell transportation under its own code on flights operated by that designated airline of the Canada.

Code sharing services involving transportation between Points in the Czech Republic shall be restricted to flights operated by an airline(s) authorized by the aeronautical authorities of the Czech Republic to provide service between points in the Czech Republic and all transportation between Points in the Czech Republic under the code of the designated airline(s) of Canada shall only be available as part of an international journey. All airlines involved in code-sharing arrangements shall hold the appropriate underlying route authority. Airlines shall be permitted to transfer traffic between aircraft involved in code-share services without limitation. The aeronautical authorities of the Czech Republic shall not withhold permission for code-sharing services identified in a) above by the designated airline(s) of Canada on the basis that the airline(s) operating the aircraft does not have the right from the Czech Republic to carry traffic under the code of the designated airline(s) of Canada.

2. Any Intermediate Points and /or Points Beyond may be omitted on any or all services, provided that all services originate or terminate in Canada. Points in the Czech Republic may be served separately or in combination. The points to be named by Canada may be changed on sixty days notice to the aeronautical authorities of the Czech Republic or such lesser period of notice acceptable to the aeronautical authorities of the Czech Republic. Transit and own stopover rights shall be available at Intermediate Points and at points in the Czech Republic. Stopover rights shall not be available between points in the Czech Republic.

3. For the purposes of Article XI of the Agreement, the aeronautical authorities of the Czech Republic shall not impose any restriction with respect to the capacity or frequency to be offered by the designated airline(s) of Canada for the operation of code-sharing services. For code-sharing services, airlines shall be permitted to transfer traffic between aircraft without limitation.

Section IV: For Code-Sharing Services

The following route may be operated by the designated airline or airlines of the Czech Republic:

Notes:

1. Subject to the regulatory requirements normally applied to such operations by the aeronautical authorities of Canada, each designated airline of the Czech Republic may enter into cooperative arrangements for the purpose of

a) holding out the agreed services on the specified routes by code-sharing (i.e. selling transportation under its own code) on flights operated by an airline(s) of Czech Republic, of Canada and/or of any third country; and /or

b) carrying traffic under the code of any other airline(s) where such other airline(s) has been authorized by the aeronautical authorities of Canada to sell transportation under its own code on flights operated by that designated airline of the Czech Republic.

Code sharing services involving transportation between Points in Canada shall be restricted to flights operated by an airline(s) authorized by the aeronautical authorities of Canada to provide service between points in Canada and all transportation between Points in Canada under the code of the designated airline(s) of the Czech Republic shall only be available as part of an international journey. All airlines involved in code-sharing arrangements shall hold the appropriate underlying route authority. Airlines shall be permitted to transfer traffic between aircraft involved in code-share services without limitation. The aeronautical authorities of Canada shall not withhold permission for code-sharing services identified in a) above by the designated airline(s) of Czech Republic on the basis that the airline(s) operating the aircraft does not have the right from Canada to carry traffic under the code of the designated airline(s) of the Czech Republic.

3. For the purposes of Article XI of the Agreement, the aeronautical authorities of Canada shall not impose any restriction with respect to the capacity or frequency to be offered by the designated airline(s) of the Czech Republic for the operation of code-sharing services. For code-sharing services, airlines shall be permitted to transfer traffic between aircraft without limitation.

If the foregoing amendments are acceptable to your Excellency's Government, I have the honour to propose that this Note, the text of which is equally authentic in English, French and Czech, and your reply in confirmation thereto, shall constitute an Agreement between our two Governments which shall permit its entry into force on the date of your Note in reply, in conformity with the provisions of Article XXI of the Agreement

Accept, Excellency, the renewed assurances of my highest consideration.

Bruce Jutzi

Ambassador of Canada

II

The Minister of Foreign Affairs of the Czech Republic to the Ambassador of Canada

PRAGUE, June 28, 2004

Ref. No. 118418/2004-MPO

Your Excellency,

I have the honour to acknowledge receipt of your Note No. 00101/2004 dated April 28, 2004, which reads as follows:

"Your Excellency,

I have the honour to refer to the consultations between the aeronautical authorities of Government of Canada and the Government of the Czech Republic held in Ottawa June 5-6, 2002, during which they agreed to amend the Agreement on Air Transport between the Government of Canada and the Government of the Czech Republic, signed at Prague on March 13, 1996 (the Agreement), introducing amendments to Articles XI (Capacity), XIV (Tariffs), VII bis (Smoking Ban) comprising the addition of provisions relating to a smoking ban on passenger flights and amendments to the Annex, Route Schedule and Notes, along the following lines:

Article XI of the Agreement is superseded in its entirety and the following is substituted therefor:

Article XI

Capacity

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

2. The agreed services to be operated by the designated airlines of the Contracting Parties shall have as their primary objective the provision at reasonable load factors of capacity adequate to meet current and reasonably anticipated requirements for the carriage of passengers, cargo and mail between the territories of the Contracting Parties.

3. Each Contracting Party and its designated airline(s) shall take into consideration the interests of the other Contracting Party and its designated airline(s) so as not to affect unduly the services which the latter provides.

4. 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 (expressly or tacitly) of the aeronautical authorities of both Contracting Parties. In the absence of agreement between the designated airlines, the aeronautical authorities may consult and endeavour to reach agreement on capacity.

5. Increases to capacity established in accordance with the provisions of paragraph 4 of this Article shall not constitute a change in capacity entitlements. Any change to capacity entitlements shall be agreed between the Contracting Parties.

Article XIV of the Agreement is superseded in its entirety and the following is substituted therefor:

Article XIV

Tariffs

1. The tariff to be applied by the designated airline or airlines of one Contracting Party, 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 the cost of operation, reasonable profit, characteristics of service (such as standards of speed and accommodation) and the tariffs of other airlines.

2. The prices referred to in paragraph 1 of this Article may be developed individually or, at the option of the designated airline or airlines, through coordination with each other or with other airlines. A designated airline shall be responsible only to its own aeronautical authorities for the justification of its prices.

3. Tariffs referred to in paragraph 2 of this Article shall be submitted to and received by the aeronautical authorities of the Contracting Parties at least thirty (30) days before the proposed date of their introduction, unless the aeronautical authorities of both Contracting Parties permit the filing to be made on shorter notice. Tariffs submitted to the aeronautical authorities of both Contracting Parties shall be in such a form as the aeronautical authorities of each Contracting Party may require.

4. If within fifteen (15) days from the date of receipt 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 accepted or approved and shall come into effect on the date stated in the proposed tariff. In the event that a shorter period for the submission of a tariff is permitted by the aeronautical authorities, they may also agree that the period for giving notice of dissatisfaction be less than fifteen (15) days.

5. If a tariff cannot be established in accordance with the provisions of paragraph 2 of this Article or if during the period applicable, in accordance with paragraph 4 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.

a. No tariff shall come into force if the aeronautical authorities of either Contracting Party have given notice of dissatisfaction unless a decision on the tariff is taken under the provisions of paragraph 5 of this Article or the provisions of Article XX of this Agreement.

b. If the aeronautical authorities of one Contracting Party become dissatisfied with an established tariff, they shall so notify, with an appropriate explanation, the aeronautical authorities of the other Contracting Party and concurrently the designated airline(s) concerned shall endeavour to determine a new, or revised tariff. If within 30 days of such notification, or a shorter period acceptable to both aeronautical authorities, the designated airline(s) concerned have not satisfied the dissatisfaction expressed, then the aeronautical authorities that notified dissatisfaction shall have the right to prevent the said tariff continuing in effect, and the aeronautical authorities of the other Contracting Party can request immediate consultations between and among aeronautical authorities to resolve the dissatisfaction expressed.

6. If the aeronautical authorities cannot agree on the determination of a tariff under paragraph 5, or 5.b. of this Article, either Contracting Party may require that the dispute be settled in accordance with the provisions of Article XX of this Agreement.

7. The designated airline(s) of one Contracting Party, can file a tariff competitive with another publicly available tariff applicable to the same points either, on agreed services, or via agreed services to or from any non-agreed points. Such tariffs will match the publicly available tariffs filed with the aeronautical authorities between the same points. Such tariff(s) are always subject to the prior, and continued acceptance, or approval, of the appropriate authorities of the countries between which such tariff(s) will apply.

a. In considering a "match" referred to in paragraph 7. above, the aeronautical authorities of the Contracting Parties shall take into account the following factors:

(i) The designated airline(s) of each Contracting Party shall have the right to match on services between the territories of the two Contracting Parties any tariff which is a publicly available lawful scheduled tariff or retail charter price, applicable to the same or adjacent points on the scheduled or charter services of another airline of either Contracting Party, on a basis which would not necessarily be identical but would be broadly equivalent.

(ii) The tariffs of the designated airline(s) of one Contracting Party for carriage between the territory of the other Contracting Party and points in third countries, can for the same class of service, match but shall not be lower, or their conditions less restrictive, than the tariffs of any scheduled airline of the other Contracting Party that applies between the same points.

b. Any tariff filed in accordance with paragraph 7.a. shall:

(i) include satisfactory evidence of the availability of the tariff which is being matched and of the consistency of matching with the requirements of this Article, and

(ii) unless otherwise agreed between the aeronautical authorities of the Contracting Parties, remain in effect only for the period of availability of the matched scheduled tariff or charter retail price.

8. A tariff established in accordance with the provisions of this Article shall remain in force during the published period of applicability, or until a new tariff has been established. Nevertheless, except as provided in paragraph 7.b.(ii) above, no tariff shall be prolonged by virtue of this paragraph for more than twelve (12) months after the date on which it otherwise would have expired.

9. The aeronautical authorities of both Contracting Parties shall endeavour to ensure as far as possible that

(a) the tariffs charged and collected conform to the tariffs accepted or approved by both aeronautical authorities; and

(b) no airline rebates any portion of such tariffs by any means.

10. Where this Article requires communicating in writing, it may be done by means of a letter, or any type of electronic communication, such as a telegram, telex or facsimile, that produces a printed text.

Article VII is amended by the addition of Article VII (bis), as follows:

ARTICLE VII (bis)

Smoking Ban

1. Each Contracting Party shall prohibit or cause their airlines to prohibit smoking on all flights carrying passengers operated by its airlines between the territories of the Contracting Parties. This prohibition shall apply to all locations within the aircraft and shall be in effect from the time an aircraft commences enplanement of passengers to the time deplanement of passengers is completed.

2. Each Contracting Party shall take all measures that it considers reasonable to secure compliance by its airlines and by their passengers and crew members with the provisions of this Article, including the imposition of appropriate penalties for non-compliance.

The Route Schedule Annex of the Agreement is superseded in its entirety and the following is substituted therefor:

ANNEX

ROUTE SCHEDULE

Section I: For Own Aircraft Services

The following route may be operated by the designated airline or airlines of Canada:

Notes:

1. In the operation of an agreed service on a specified route set out in this Section of the Route Schedule, the airline or airlines designated by the Government of Canada shall have the following rights:

(a) to pick up and discharge in the territory of the Czech Republic international traffic in passengers, mail and cargo destined for or coming from Canada;

(b) to carry international traffic in passengers, mail and cargo between Canada and intermediate points;

(c) to carry into and out of the territory of the Czech Republic on the same flight with stop-over privilege through-international traffic originating in or destined for points so specified in third countries.

2. Prague and the other point in the Czech Republic may be served on the same flight or separately.

3. Fifth freedom rights shall be available at up to four points of Canada's choice, intermediate to or beyond the Czech Republic.

4. Points to be named by Canada may be changed on 30 days notice.

5. The designated airline or airlines of Canada while operating an agreed service on a specified route may omit any or all Intermediate Points and Points Beyond provided that all services originate or terminate in Canada.

6. For the purpose of Article XI, the airline or airlines designated by Canada shall be entitled to operate in total:

(a) four passenger-combination flights per week in each direction effective the IATA 2002 summer season and seven flights per week in each direction effective the IATA 2003 summer season and

(b) one all-cargo flight per week in each direction between Montreal and Prague with all-cargo aircraft. The capacity to be operated on such service shall not exceed forty (40) tonnes per week in each direction.

Any changes to the permitted frequency and capacity shall be determined pursuant to the provisions of Article XI.

Section II: For Own Aircraft Services

The following route may be operated by the designated airline or airlines of the Czech Republic:

Notes:

1. In the operation of an agreed service on a specified route set out in this Section of the Route Schedule, the airline or airlines designated by the Government of the Czech Republic shall have the following rights:

(a) to pick up and discharge in the territory of Canada international traffic in passengers, mail and cargo destined for or coming from the Czech Republic;

(b) to carry international traffic in passengers, mail and cargo between the Czech Republic and intermediate points;

(c) to carry into and out of the territory of Canada on the same flight with stop-over privilege through-international traffic originating in or destined for points so specified in third countries.

2. Montreal and Toronto may be served on the same flight or separately.

3. No point in the USA may be served on any flight serving Toronto.

4. Fifth freedom rights shall be available only between Montreal and two points in the USA north of and including Washington, DC and east of and including Chicago. The selection of the U.S. fifth freedom points may be changed on 30 days notice by the Czech Republic.

5. The designated airline or airlines of the Czech Republic while operating an agreed service on a specified route may omit any or all Intermediate Points or Points Beyond provided that all services originate or terminate in the Czech Republic.

6. Intermediate points in Europe to be named by the Czech Republic may be changed on 30 days notice.

7. For the purpose of Article XI, the airline or airlines designated by the Czech Republic shall be entitled to operate in total:

(a) four passenger-combination flights per week in each direction effective the IATA 2002 summer season provided that no more than three flights per week in each direction are operated at Toronto and seven flights per week in each direction effective the IATA 2003 summer season, provided that no more than four flights per week in each direction are operated at Toronto, and

(b) one all-cargo flight per week in each direction between Montreal and Prague with all-cargo aircraft. The capacity to be operated on such service shall not exceed forty (40) tonnes per week in each direction.

Any changes to the permitted frequency and capacity shall be determined pursuant to the provisions of Article XI.

Section III: For Code-Sharing Services

The following route may be operated by the designated airline or airlines of Canada:

Notes:

1. Subject to the regulatory requirements normally applied to such operations by the aeronautical authorities of the Czech Republic each designated airline of Canada may enter into cooperative arrangements for the purpose of

a) holding out the agreed services on the specified routes by code-sharing (i.e. selling transportation under its own code) on flights operated by an airline(s) of Canada, the Czech Republic, and/or of any third country; and/or

b) carrying traffic under the code of any other airline(s) where such other airline(s) has been authorized by the aeronautical authorities of Czech Republic to sell transportation under its own code on flights operated by that designated airline of the Canada.

Code sharing services involving transportation between Points in the Czech Republic shall be restricted to flights operated by an airline(s) authorized by the aeronautical authorities of the Czech Republic to provide service between points in the Czech Republic and all transportation between Points in the Czech Republic under the code of the designated airline(s) of Canada shall only be available as part of an international journey. All airlines involved in code-sharing arrangements shall hold the appropriate underlying route authority. Airlines shall be permitted to transfer traffic between aircraft involved in code-share services without limitation. The aeronautical authorities of the Czech Republic shall not withhold permission for code-sharing services identified in a) above by the designated airline(s) of Canada on the basis that the airline(s) operating the aircraft does not have the right from the Czech Republic to carry traffic under the code of the designated airline(s) of Canada.

2. Any Intermediate Points and /or Points Beyond may be omitted on any or all services, provided that all services originate or terminate in Canada. Points in the Czech Republic may be served separately or in combination. The points to be named by Canada may be changed on sixty days notice to the aeronautical authorities of the Czech Republic or such lesser period of notice acceptable to the aeronautical authorities of the Czech Republic. Transit and own stopover rights shall be available at Intermediate Points and at points in the Czech Republic. Stopover rights shall not be available between points in the Czech Republic.

3. For the purposes of Article XI of the Agreement, the aeronautical authorities of the Czech Republic shall not impose any restriction with respect to the capacity or frequency to be offered by the designated airline(s) of Canada for the operation of code-sharing services. For code-sharing services, airlines shall be permitted to transfer traffic between aircraft without limitation.

Section IV: For Code-Sharing Services

The following route may be operated by the designated airline or airlines of the Czech Republic:

Notes:

1. Subject to the regulatory requirements normally applied to such operations by the aeronautical authorities of Canada, each designated airline of the Czech Republic may enter into cooperative arrangements for the purpose of

a) holding out the agreed services on the specified routes by code-sharing (i.e. selling transportation under its own code) on flights operated by an airline(s) of Czech Republic, of Canada and/or of any third country; and/or

b) carrying traffic under the code of any other airline(s) where such other airline(s) has been authorized by the aeronautical authorities of Canada to sell transportation under its own code on flights operated by that designated airline of the Czech Republic.

Code sharing services involving transportation between Points in Canada shall be restricted to flights operated by an airline(s) authorized by the aeronautical authorities of Canada to provide service between points in Canada and all transportation between Points in Canada under the code of the designated airline(s) of the Czech Republic shall only be available as part of an international journey. All airlines involved in code-sharing arrangements shall hold the appropriate underlying route authority. Airlines shall be permitted to transfer traffic between aircraft involved in code-share services without limitation. The aeronautical authorities of Canada shall not withhold permission for code-sharing services identified in a) above by the designated airline(s) of Czech Republic on the basis that the airline(s) operating the aircraft does not have the right from Canada to carry traffic under the code of the designated airline(s) of the Czech Republic .

2. Any Intermediate Points and /or Points Beyond may be omitted on any or all services, provided that all services originate or terminate in the Czech Republic. Points in Canada may be served separately or in combination. The points to be named by the Czech Republic may be changed on sixty days notice to the aeronautical authorities of Canada or such lesser period of notice acceptable to the aeronautical authorities of Canada. Transit and own stopover rights shall be available at Intermediate Points and at points in Canada. Stopover rights shall not be available between points in Canada.

3. For the purposes of Article XI of the Agreement, the aeronautical authorities of Canada shall not impose any restriction with respect to the capacity or frequency to be offered by the designated airline(s) of the Czech Republic for the operation of code-sharing services. For code-sharing services, airlines shall be permitted to transfer traffic between aircraft without limitation.

If the foregoing amendments are acceptable to your Excellency's Government, I have the honour to propose that this Note, the text of which is equally authentic in English, French and Czech, and your reply in confirmation thereto, shall constitute an Agreement between our two Governments which shall permit its entry into force on the date of your Note in reply, in conformity with the provisions of Article XXI of the Agreement.

Accept, Excellence, the renewed assurances of my highest consideration."

Cyril Svoboda