Order No. 2002-A-428

October 18, 2002

File No. M4820-2-C5

Linea Aerea Nacional Chile S.A. doing business as Lanchile (hereinafter Lanchile) and Lan Chile Cargo S.A. (hereinafter Lanchile Cargo) have applied to the Canadian Transportation Agency (hereinafter the Agency) for the exemption set out in the title. The application was received on September 23, 2002 and revised on October 4, 2002.

Under Licence No. 980029, Lanchile is authorized to operate a scheduled international service on the route(s) set out in the Agreement between the Government of Canada and the Government of Republic of Chile on Air Transport, signed on July 6, 1990, as amended (hereinafter the Agreement).

Under Licence No. 020121, Lanchile Cargo is authorized to operate a non-scheduled international service to transport goods on a charter basis between points in Chile and points in Canada.

Notice of the application was given to interested parties and no interventions were filed.

The Agency has reviewed the arrangement between Lanchile and Lanchile Cargo whereby the all-cargo services of Lanchile will be operated using aircraft and flight crew provided by Lanchile Cargo. The Agency notes that Lanchile Cargo, as a "dominated company", is managed and controlled by Lanchile in the style of a division of the parent company rather than as a separate entity doing business at arm's length. The Agency considers this to be a unique relationship and the provision of aircraft with flight crew by Lanchile Cargo to its parent company Lanchile is significantly different from arrangements between separate entities which, given the potential for confusion or misrepresentation to the public, are subject to regulations concerning disclosure of the identity of the person operating the aircraft.

The Agency has considered the matter and is of the opinion that compliance by Lanchile and Lanchile Cargo with the provisions of section 60 of the Canada Transportation Act (hereinafter the CTA) and subsection 8(2) and paragraph 18(c) of the Air Transportation Regulations (hereinafter the ATR) is impractical in this case.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, hereby exempts Lanchile and Lanchile Cargo from the application of section 60 of the CTA and subsection 8(2) and paragraph 18(c) of the ATR with respect to the operation of the scheduled international all-cargo service of Lanchile under Licence No. 980029, during the period from October 20, 2002 to October 19, 2003.

The approval granted herein does not exempt Lanchile and Lanchile Cargo from the requirements of other legislative acts or regulations, including those of Transport Canada.