Order No. 2017-A-7

BACKGROUND

Air Transat A.T. Inc. carrying on business as Air Transat (applicant) has applied to the Canadian Transportation Agency (Agency) for an exemption to permit it to sell, cause to be sold or publicly offer for sale in Canada a scheduled international service, large aircraft, between Canada and Israel, in the absence of a licence.

Section 59 of the CTA states that no person shall sell, cause to be sold or publicly offer for sale in Canada an air service unless, if required under Part II of the CTA, a person holds a licence issued under that Part in respect of that service and that licence is not suspended.

The applicant has applied for a scheduled international licence to operate a service between Canada and Israel, using large aircraft, in accordance with the Agreement between the Government of Canada and the Government of the State of Israel on Air Transport, done at Jerusalem on 21 January 2015 (Agreement). However, as the application is not yet complete, the applicant has requested an exemption from section 59 of the CTA.

The applicant intends to commence commercial activities on June 18, 2017. The applicant indicates that it is in the process of obtaining a revised Canadian aviation document (CAD) from Transport Canada, which is required to complete the licence application.

The applicant states that it would like to proceed to market with its service offerings and fares as soon as practicable as it is entering the peak advance booking period for next summer’s vacation travel season. Consequently, the applicant requests an exemption for sales in the Canada-Israel air transport market pending the completion of all formalities.

ANALYSIS

The Agency deals with applications for exemptions from section 59 of the CTA on a case by case basis. The Agency recognizes that section 59 is a consumer protection measure. It is intended to prevent situations in which consumers in Canada pay for a service to an entity that does not hold an Agency licence and are left out of pocket or experience any manner of inconvenience or hardship that may result if that entity does not commence operations on schedule.

Accordingly, the Agency, prior to granting an exemption from section 59 of the CTA, must be satisfied that the applicant is taking all the necessary steps to meet all licence issuance requirements and that the applicant has demonstrated a high probability of obtaining the required licence prior to the proposed start-up date of operations.

A Canadian applicant for a scheduled international licence must establish that it:

1. has been designated by the Minister of Transport as eligible to hold a scheduled international licence;
2. meets the prescribed financial requirements;
3. has the prescribed liability insurance coverage in respect of the service to be provided under the licence; and,
4. holds a CAD.

The applicant has been designated by the Minister of Transport as eligible to hold a licence to operate a scheduled international service under the terms of the Agreement.

The applicant has the prescribed liability insurance coverage in respect of the proposed service, and it is not required to meet the financial requirements because it already holds a licence to operate large aircraft. The Agency considered the steps the applicant has taken to obtain a revised CAD from Transport Canada, and is satisfied that the CAD will likely be issued on time for the Agency to issue a licence before the proposed start-up date of operations.

Accordingly, the Agency is satisfied that there is a high probability that the licence will issue prior to the intended start-up date of June 18, 2017.

In these circumstances, considering the intent of section 59 of the CTA and the fact that the applicant is taking all the necessary steps to meet all licensing issuance requirements, the Agency finds that compliance by the applicant with section 59 of the CTA is unnecessary.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, exempts the applicant from section 59 of the CTA, effective from the date of this Order, permitting it to sell, cause to be sold or publicly offer for sale in Canada a scheduled international service, large aircraft, between Canada and Israel, without holding the required licence, subject to the following conditions:

1. All advertising in any media, whether written, electronic or telecommunications, shall include a statement that the air service is subject to government approval, unless and until the section 59 exemption expires following the issuance of a licence. All prospective passengers shall be made aware, before a reservation is made or a ticket issued, that the air service is subject to government approval;
2. The applicant shall apply its published tariffs, on file with the Agency and in effect, to sales of transportation for each scheduled point;
3. This exemption does not relieve the applicant from the requirement to hold a licence in respect of the service to be provided and, accordingly, no flights shall be operated until the appropriate licence authority has been granted; and,
4. Should the licence not be issued or not issue by the time an air service sold to a passenger is to be used, the applicant shall arrange to provide alternative air transportation by an appropriately licensed air carrier, at no additional costs for all passengers who have made reservations with the applicant. If such arrangements are not possible or acceptable to the passenger, the applicant shall arrange to provide a full refund of all monies paid by the passenger.