Order No. 2022-A-27

BACKGROUND

The applicant has applied to the Canadian Transportation Agency (Agency), pursuant to section 80 of the CTA, for an exemption from the application of section 59 of the CTA to permit it to sell, cause to be sold or publicly offer for sale in Canada a domestic service, large aircraft, 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 applied for a licence to operate a domestic service, large aircraft. However, as the licence has not yet been issued, the applicant is requesting an exemption from the application of section 59 of the CTA.

The applicant indicates that it intends to commence commercial activities in Canada in December 2022.

The applicant states that it seeks the exemption from the application of section 59 of the CTA to commence commercial activities prior to the issuance of its domestic licence in order to operate its service with revenue-carrying passengers starting in December.

ANALYSIS

The Agency deals with applications for exemptions from the application of section 59 of the CTA on a case-by-case basis. Section 59 is a consumer protection measure intended to prevent situations in which consumers in Canada pay an entity for a service for which they do not hold a licence issued by the Agency, and as a result experience financial loss or 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 the application of section 59 of the CTA, considers whether the applicant is taking all the necessary steps to meet all the licence issuance requirements and whether the applicant has demonstrated a high probability of obtaining the required licence prior to the proposed date for commencing operations.

In particular, a Canadian air carrier applying for a domestic licence must establish that it:

1. is Canadian;
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 Canadian Aviation Document (CAD) issued by Transport Canada in respect of the service to be provided under the licence.

In this case:

1. The Agency is satisfied that the applicant is Canadian.
2. The Agency is satisfied that the applicant has met the prescribed financial requirements.
3. The Agency has received a written confirmation that the affiliated company, Porter Airlines Inc., holds the required liability insurance and that arrangements will be made to assign the prescribed liability insurance coverage to the applicant in respect of the service to be provided under the licence prior to commencing the operation of its air service.
4. The Agency has considered the steps that the applicant has taken to obtain a CAD from Transport Canada, and is satisfied that the CAD will likely be issued on or before December 31, 2022.

In the present circumstances, considering the intent of section 59 of the CTA and the fact that the applicant is taking the necessary steps to meet all the licence issuance requirements, the Agency, pursuant to paragraph 80(1)(c) of the CTA, exempts the applicant from the application of section 59 of the CTA, effective from the date of this Order until such time as a decision is made to either issue or not issue a licence, permitting it to sell, cause to be sold or publicly offer for sale in Canada a domestic service, large aircraft, for an operation commencing January 1, 2023, or later, 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 the Agency's approval, and all prospective passengers shall be informed, before a reservation is made or a ticket is issued, that the air service is subject to the Agency's approval;
2. Should the licence not be issued or still not be issued by the time that 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 cost, for all passengers who have made reservations with the applicant. If such arrangements are not possible or acceptable to the passengers, the applicant shall arrange to provide a full refund of all monies paid by the passengers. The applicant will also indicate on every contract or ticket which air carrier will be operating the service.

For clarification, this exemption from the application of section 59 of the CTA 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. This exemption also does not relieve the applicant from the requirement to apply its published tariffs, on file with the Agency and in effect, to sales of transportation for each point.