Investor Presentaiton

- 42 - Relationship Between Air Canada and Aeroplan Aeroplan is an affiliate of Air Canada. On June 29, 2005, Aeroplan Income Fund completed its initial public offering. Aeroplan Income Fund's units trade on the TSX under the symbol AER.UN. Aeroplan Income Fund currently has 200,000,000 units issued and outstanding and indirectly holds all outstanding units of Aeroplan LP. ACE currently holds 80,285,585 units of Aeroplan Income Fund, representing a 40.1% indirect ownership interest in Aeroplan LP, and is currently entitled to appoint the majority of the board of directors of Aeroplan Holding GP Inc. ("Aeroplan GP") pursuant to a securityholders' agreement dated June 29, 2005 among Aeroplan Income Fund, Aeroplan Trust, ACE, Aeroplan LP and Aeroplan GP, as amended by an agreement dated March 14, 2007 (the "Aeroplan Securityholders' Agreement"). Air Canada does not own any equity interest in Aeroplan. Air Canada has a long-term strategic relationship with Aeroplan, Canada's premier loyalty marketing program. Aeroplan is Air Canada's frequent flyer program and offers its approximately five million active members the ability to accumulate Aeroplan miles toward reward travel to destinations served by Air Canada, Jazz and worldwide partner airlines or toward other rewards. Air Canada has entered into long-term agreements with Aeroplan to sell seat capacity to Aeroplan. In 2006, approximately 90% of rewards claimed by Aeroplan members were air travel rewards from Air Canada, Jazz and Star Alliance members. Air Canada is a party to the following five major agreements with Aeroplan: (i) the Aeroplan CPSA; (ii) a Database Agreement dated May 13, 2005, effective January 1, 2002 (the "Aeroplan Database Agreement"); (iii) an Amended and Restated Master Services Agreement dated May 13, 2005, effective January 1, 2005 (the "Aeroplan MSA"); (iv) a General Services Agreement dated May 13, 2005, effective January 1, 2005 (the "Aeroplan GSA"); and (v) Trademark License Agreements dated May 13, 2005 and November 23, 2006 (the "Aeroplan Trademark License Agreements"). A brief description of these agreements is provided below. Aeroplan CPSA Pursuant to the Aeroplan CPSA, last amended on October 13, 2006, Air Canada continues to allocate 8% of the seat capacity to Aeroplan on the flights operated by Air Canada and Jazz and certain other air carriers under the "AC" code (collectively, the "AC Flights") at a fixed redemption cost. In addition, Aeroplan can purchase an unlimited number of available seats based on published fares with a variable discount depending on the fare product. Any adjustment to this variable discount is based on an identified set of parameters. The Aeroplan CPSA also provides that Aeroplan will be charged the lowest fares charged to any other loyalty program taking into account Aeroplan's volume purchase of Air Canada's seat inventory. The rates charged for the allocated 8% of the seat capacity on AC Flights are fixed through the end of 2007. Thereafter, any upward or downward adjustments to such rates must maintain aggregate discounts at least as favourable to Aeroplan as those set out in the current rates. Air Canada is one of Aeroplan's leading partners and it pays a fee to participate in the Aeroplan program, which fee is based on the Aeroplan miles awarded to Air Canada customers who travel on AC Flights. Aeroplan is required to purchase a minimum number of reward travel seats on AC Flights annually, which number is a function of Aeroplan's consumption of seats in the three preceding calendar years. Moreover, Air Canada is required to purchase a minimum number of Aeroplan miles annually. The Aeroplan CPSA also provides that Aeroplan shall, in return for a service fee, manage Air Canada's frequent flyer tier membership program for Air Canada Super Elite e(TM), Elite (TM) and Prestige (TM) customers, as well as perform certain marketing and promotion services for Air Canada, including call centre services for the frequent flyer tier membership program. Ⓡ The Aeroplan CPSA prevents any other transportation business that competes with Air Canada (other than Star Alliance member airlines) from participating in the Aeroplan program, provided that Aeroplan can have, as commercial partners, certain transportation companies such as car rental companies and cruise ship lines, with Air Canada's prior approval (not to be unreasonably withheld). This exclusivity provision shall cease to apply if, in four consecutive quarters based on a quarterly, year-over-year comparison, a very significant decrease occurs in the total seat capacity of Air Canada and Jazz (an "Air Canada Material Change"). Alternatively, Aeroplan may terminate the Aeroplan CPSA upon the occurrence of an Air Canada Material Change. Air Canada is not permitted during the term of the Aeroplan CPSA to create or participate in any other frequent flyer program or customer loyalty recognition program other than programs with certain alliance partners who have

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