Order No. 2012-A-86

Provincial Airlines Limited (Provincial Airlines) applied to the Canadian Transportation Agency (Agency) for an exemption to allow for the transfer of licences to PAL Airlines Ltd. carrying on business as Provincial Airlines (PAL).

Under Licence No. 972085, Provincial Airlines is authorized to operate domestic services, small, medium and all‑cargo aircraft.

Under Licence No. 977152, Provincial Airlines is authorized to operate non-scheduled international services, small and medium aircraft, to transport traffic on a charter basis between Canada and any other country.

Section 58 of the Canada Transportation Act (CTA) provides that a licence issued for the operation of an air service is not transferable.

Pursuant to paragraph 80(1)(c) of the CTA, the Agency may exempt a person from the application of a provision of the CTA where it is of the opinion that compliance with the provision by the person is unnecessary, undesirable or impractical.

Provincial Airlines intends to effect an internal corporate reorganization, by transferring all of its aircraft, facilities, management, personnel and air service operations to its wholly-owned subsidiary PAL, to be effective on or about April 16, 2012.

With respect to the requirement to be Canadian, the Agency has determined that it is satisfied, based on the information and documents filed, that PAL would meet the Canadian ownership and control requirements as defined in subsection 55(1) of the CTA upon the execution of the proposed transaction.

The Agency notes that PAL has the prescribed liability insurance coverage effective December 20, 2011. The Agency notes, however, that PAL does not presently hold a valid Canadian aviation document.

The Agency is therefore satisfied that PAL meets the requirements of section 61 and subsection 73(1) of the CTA, with the exception of the requirement to hold a valid Canadian aviation document.

The Agency has considered the matter and finds that the proposed reorganization, as described by Provincial Airlines, is in the nature of an internal corporate restructuring. Therefore, compliance by Provincial Airlines with section 58 of the CTA is impractical in the present circumstances.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, exempts Provincial Airlines from the application of section 58 of the CTA.

Licence Nos. 972085 and 977152 will be transferred from Provincial Airlines to PAL. However, pursuant to paragraph 28(1)(b) of the CTA, the Agency may in any order direct that the order or a portion or provision of it shall come into force on the happening of any contingency, event or condition specified in the order.

The Agency directs that the transfer of these licences shall come into force upon the occurrence of both:

1. the execution of the proposed transaction which is expected to be effective on or about April 16, 2012; and
2. the confirmation from Transport Canada that PAL Airlines Ltd. holds a valid Canadian aviation document in respect of the services provided under Licence Nos. 972085 and 977152, in compliance with the requirement of subparagraphs 61(a)(ii) and 73(1)(a)(ii) of the CTA.

New documents of licences will be issued to PAL Airlines Ltd. carrying on business as Provincial Airlines.