Backgrounder – Amendments to the Air Transportation Regulations

Introduction

Amendments to the Air Transportation Regulations (ATR) were finalized and published in Part II of the Canada Gazette on May 31, 2019.

The regulations reflect input that the CTA heard from the public, the air industry, experts and other interested parties during consultations held from December 2016 to October 2017 and a 60-day comment period following the pre-publication of the regulations in December 2018.

Overview

The ATR were developed over thirty years ago, and while they have been adjusted over the years, they needed updating in order to reflect changes in the domestic and international aviation industry. Specifically, amendments to the ATR were required to:

• Modernize air insurance provisions;
• update charter provisions to reflect market realities;
• Clarify code-sharing and wet-leasing provisions;
• Reduce burden on licensed operators; and
• Address housekeeping items.

The majority of the amendments will come into force July 1, 2019, while increased insurance requirements will be implemented in two years, on July 1, 2021.

Modernize air insurance provisions

The ATR sets public and passenger liability insurance requirements for air carriers operating an international or domestic service. The amendments update, strengthen and clarify the insurance requirements set out in the ATR. They will:

• Ensure air carriers hold sufficient coverage by updating the minimum requirements (which have remained unchanged at $300,000 for thirty years) and indexing them to inflation;
• Require that public liability insurance cover air carrier employees not on board the plane;
• Explicitly state that insurance must cover injuries sustained by passengers during embarkation and disembarkation, in alignment with the wording of the Montreal Convention, which establishes air carrier liability limits for international travel.

Update charter provisions

Charter transportation is a service in which a flight is operated under a contract by an individual or by an entity that resells transportation. The ATR's charter types and the provisions regarding Canadian-originating charters, foreign-originating charters and permit and notification filings did not reflect the current practices and business models in this area.

Charter Types

The ATR defined eight different Canadian-originating charter types, some of which no longer exist and many of which appear to be out of sync with today's aviation industry.

The amendments remove obsolete terms and consolidate the number of charter types from eight to four, based on whether they are for resaleable or non-resaleable passenger transportation originating in Canada, passenger transportation originating in a foreign country, or goods transportation.

Canadian-originating

A number of Canadian-originating charter provisions reflected a dated aim to strictly regulate competition between international services provided by Canadian air carriers and charterers. These did not reflect the evolution toward a more liberalized environment. The amendments reflect this gradual shift by:

• Eliminating unnecessary restrictions on Canadian-originating charters (e.g. provisions requiring minimum advance booking and minimum price per seat, prohibition of one-way travel, and limits on number of points served);
• Raising the limit on the number of charterers per aircraft from one to three, for non-resaleable passenger charters; and,
• Allowing goods charters to consolidate cargo shipments from several sources.

Foreign-originating charters

The amendments also eliminate unnecessary restrictions placed on foreign-originating charters, which do not respond to the needs of the travelling public, impede efficient operation of charter services and are not aligned with current practices. Eliminated provisions include requirements for minimum advance booking, return travel, and a minimum period of stay in the foreign country prior to return.

Permit and notification filings

To reduce the undue administrative burden of the charter permit issuance process while retaining oversight and the flow of necessary information, the amended ATR no longer require air carriers to apply for a permit for non-resaleable, foreign originating charter or cargo charters. Instead, they require that the CTA be notified of a charter flight in advance.

Clarify code-sharing and wet-leasing

Code-sharing^{Footnote 1} and wet-leasing^{Footnote 2} are increasingly common arrangements between carriers that were not identified distinctly in the ATR. The amendments distinguish between the two practices with principle-based descriptions that could capture future business models.

In addition, the amended ATR reflect the fact that these arrangements have now become a standard way of providing air services by removing unnecessary burden in the approval process. Before, carriers had to submit an application for wet-leasing and code-sharing arrangements to the CTA 45 days in advance. Amendments now include:

• allowing code-sharing applicants to notify the CTA five business days prior to the flight; and,
• reducing the timeline for wet-lease applications from 45 to 15 business days.

The amendments also allow any two U.S. carriers to enter into wet-lease or code-share arrangements for a service between Canada and the U.S. without seeking the approval of the CTA. This aligns with the requirements for Canadian carriers and could facilitate the introduction of more competitive air services for Canadian travellers.

Reduce burden on licensed operators

The ATR included several requirements that were outdated and unduly burdensome. Ways in which the  amended ATR reduce the burden on licensed operators include:

• Removing the requirement for an air carrier to file an annual declaration that they continue to meet all of the qualifications to keep their licence valid (as there are other existing provisions to ensure this).
• Removing the requirement for a domestic licensee to meet the ATR's financial requirements when they already hold a license to operate a service using larger aircraft.
• Removing the restriction regarding advertising on an aircraft.

Address housekeeping items

In addition to the substantive revisions to the ATR, the amendments make several lower-impact or procedural adjustments, including:

• Updating regulatory language and style;
• Removing duplicative or redundant text;
• Enabling the electronic filing of tariffs; and
• Ensuring consistent application of Administrative Monetary Penalties (AMPs) by making additional provisions subject to AMPs and increasing the maximum payable amounts for certain existing provisions.