Backgrounder – Amendments to the Air Transportation Regulations

Introduction

Amendments to the Air Transportation Regulations (ATR) have been finalized and published in Part II of the Canada Gazette (insert link).

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 do not reflect the current practices and business models in this area.

Charter Types

The ATR currently defines 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 do 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 will 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 will 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 will no longer require air carriers to apply for a permit for non-resaleable, foreign originating charter or cargo charters. Instead, it will require that the CTA be notified of a charter flight in advance.

Clarify code-sharing and wet-leasing

Code-sharingFootnote 1 and wet-leasingFootnote 2 are increasingly common arrangements between carriers that are not identified distinctly in the ATR. The proposal will distinguish between the two practices with principle-based descriptions that could capture future business models.

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

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

The amendments will 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 will align with the requirements for Canadian carriers and could facilitate the introduction of more competitive air services for Canadian travellers.

Reduce burden on licensed operators

Currently, the ATR includes several requirements that are outdated and unduly burdensome. Ways in which an amended ATR will 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 amendments to the ATR, the proposal will make several lower-impact or procedural adjustments to the ATR, 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.
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