Order No. 2008-A-359

September 16, 2008

File Nos. M4212/L226-4
M4212/L225-2

Lan Airlines S.A. carrying on business as Lan Airlines (Lan Airlines) and Lan Cargo S.A. carrying on business as Lan Cargo (Lan Cargo) have applied to the Canadian Transportation Agency (the Agency) for the exemption set out in the title. The application was complete on August 25, 2008.

Under Licence No. 980029, Lan Airlines is authorized to operate a scheduled international service in accordance with the Agreement between the Government of Canada and the Government of the Republic of Chile on Air Transport signed on December 4, 2003.

Under Licence No. 020121, Lan 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.

The Agency notes that this application is a renewal of the exemption which was granted by Order No. 2007-A-466 dated October 17, 2007 for the period from October 20, 2007 to October 19, 2008.

The Agency has reviewed the application whereby the all-cargo services of Lan Airlines are to be operated using aircraft and flight crew provided by Lan Cargo. The Agency notes that Lan Cargo, as a "dominated company", is managed and controlled by Lan Airlines and is not 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 Lan Cargo to its parent company Lan Airlines 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 Lan Airlines and Lan Cargo with the provisions of section 60 of the Canada Transportation Act (the CTA) and section 8.2 and paragraph 18(c) of the Air Transportation Regulations (the ATR) is impractical in this case.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, hereby exempts Lan Airlines and Lan Cargo from the application of section 60 of the CTA and section 8.2 and paragraph 18(c) of the ATR with respect to the operation of the scheduled international all-cargo service of Lan Airlines under Licence No. 980029, during the period from October 20, 2008 to October 19, 2009.

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

Any request for extension of this authority shall be submitted to the Agency for approval by no later than September 8, 2009.

This Order shall be affixed to Licence Nos. 980029 and 020121.