MARKET INFORMATION

The Scheduled Air Transportation industry in Canada has performed well over much of the five years to 2020 as rising levels o f disposable income during most of the period have enabled more consumers to purchase airline tickets, while a relatively weak Canadian dollar has encouraged inbound travel from foreign consumers visiting Canada. However, the outbreak of COVID-19 (coronavirus) has resulted in many airlines suspending international service and governments imposing social distancing guidelines to prevent the spread of coronavirus, severely constraining industry revenue. Overall, industry revenue is estimated have a projected decline of 50.0% in 2020 alone.

• The Scheduled Air Transportation industry in Canada is forecast to experience a revenue decline of 50.0% in 2020 and 2021 as a result of the COVID-19 (coronavirus) pandemic. Social distancing measures have discouraged travel, which has severely eroded demand.
• The industry's reliance on travelers will likely result in a reduction in demand. Some airlines have completely suspended services as a way to attempt to contain the spread of coronavirus.
• The industry has a high degree of globalization, leaving it exposed to reductions in demand. Many airlines have suspended international services and are only operating domestically.

THE PROBLEM

• COVID-19 has halted the travel industry almost completely. Prior to the pandemic, travel was an all -time high with personal travel for pleasure and business travel both being major income streams.
• Air Canada has operating expenses that need to be covered and shareholders that need to be answered to and are looking for answers.
• People are not traveling in a way that they used to, in the current moment government restrictions do not allow for internati onal travel, and restricted domestic travel. However, customer confidence is also low for booking future travel in Q4 of 2021 and 2022. Future travel bookings are key for positive cash flow being infused into the company now.

MARKET SHARES & COMPETITOR PROFILE

Canada's air carrier market is dominated by the duopoly of Air Canada and low-cost airline WestJet , but other regional and charter operators, like Porter Airlines, serve some small segments of the market. Air Canada is the national flag carrier serving the busiest Canadian hubs Toronto, Vancouver and Montreal-Pierre Elliot Trudeau International Airport. With 29,900 employees, the airline generated more than 16.2 million Canadian dollars from its passenger transportation service in 2018.

The Calgary-based airline, WestJet started as a low-cost airline in 1996 and by 2016, the company carried passengers to over 100 destinations in North America, Central America, the Caribbean and Europe. In 2018, the airline generated operating revenue over 4.7 billion Canadian dollars from transporting passengers on more than 27.5 billion miles.

Another contender for the ultra-low fare battle is Canada Jetlines. The Canadian ultra-low cost airline is headquartered in Vancouver and was expectedto begin operationson December 17, 2019 with flights throughout Canada, the United States, Mexico, and the Caribbean.

BRAND PROFILE / COMPANY BACKGROUND

Air Canada is Canada's largest airline and the largest provider of scheduled passenger services in the Canadian market, the Canada - U.S. transborder market and in the international market to and from Canada. In 2019, Air Canada, together with its Air Canada Express regional partners, carried over 51 million passengers, offering direct passenger service to nearly 220 destinations on si xcontinents. Air Canada is a founding member of Star AllianceTM, providing the world's most comprehensive air transportationnetwork.

Air Canada's predecessor, Trans-Canada Air Lines (TCA), inaugurated its first flight on September 1, 1937. The 50 -minute flight aboard a LockheedL-10A carried two passengers and mail between Vancouver and Seattle. By1964, TCA had grown to become Canada's national airline; it changed its name to Air Canada. The airline became fully privatized in 1989. Air Canada shares are traded on the Toronto Stock Exchange (TSX:AC), and effective July 29, 2016, its Class A variable voting shares and Class B voting s hares began trading on OTCQX International Premier in the U.S. under the single ticker symbol "ACDVF".

Air Canada is among the 20 largest airlinesglobally. Its corporate headquarters are located in Montreal.

THE TRANSFORMATION

FROM consumers not travelling

FROM consumers not planning to travel

TO consumers booking air travel domestically & internationally now for pleasure in Q4 of 2021 and beyond

TARGET MARKET

Demographic:

oAdults 25-55

60%Female

50%Male

oAverage household annual income of $75,000

oMix of families and single households

oReside in urban markets throughout Canada (with major airport within 50km)

Psychographic:

oAdventurous & like to travel

oHave disposable income

oNeed a break and a reason to get away from day to day routine

oHave been working from home during COVID-19 and have a built-up ambition to travel

CREATIVE OBJECTIVES

To communicate a reason to book travel today for a later time.

oCreate a promotion/sale to promote through the creative

• Inspire travel and a reason to spend disposable income
• Be aspirational and potentially emotional, showcasing a life that used to be and will be once again
• Ensure that our message of safety is portrayed and included in some way as a part of Clean Care + program
• Ensure all brand items are portrayed properly and professionally
• Creative direction is at full discretion of the agency.

CREATIVE STRATEGY

Creative strategy is at the discretion of the agency but should be in line with corporate brand strategy and in line with other current and past advertising in market.

CREATIVE EXECUTION

A variety of creative assets will be produced. We are open to suggestions from the agency but typically would create the following assets for use in the media strategy:

• 30SecondTVspot
• 30 Second radio spot
• Fullcolourprintad(varietyofsizes)
• Online multimedia advertisements
• Social Media
• Experiential out of the box ideas and activations
• Billboards/Out of Home
• Etc

TIMING

• Advertising campaign to launch:

oSeptember 1, 2021

Campaign duration: 1 year

BUDGET

$1,500,000

oFor entire 12 month campaign

oCreative costs not included, for media spend only

APPENDIX

Brand Photos:https://www.aircanada.com/ca/en/aco/home/about/media/photos-logos.html

Company Facts:https://www.aircanada.com/ca/en/aco/home/about/media/facts-about-air-canada.html

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Interim Report

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1. Market Analysis

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