Decision No. 205-A-2006

March 31, 2006

File Nos. M4212-C575-4
M4820-F3

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Corsair has applied to the Canadian Transportation Agency (hereinafter the Agency) for the approval set out in the title. The application was received on December 22, 2005.

Under Licence No. 975149, Corsair is authorized to operate a scheduled international service between France and Canada in accordance with the Agreement between the Government of Canada and the Government of the French Republic on Air Transport signed on June 15, 1976, as amended (hereinafter the 1976 Agreement).

Condition No. 1 of Licence No. 975149 states:

The Licensee is authorized to operate a scheduled international service on Route 1 of the French Route Schedule of the 1976 Agreement, between Paris, France and Montréal, Quebec/Toronto, Ontario, Canada.

Condition No. 2 of Licence No. 975149 states:

The operation of the scheduled international service authorized herein shall be conducted subject to the provisions of the Agreement and to any arrangements related thereto as may be agreed to between Canada and France.

Corsair is requesting the extra-bilateral authority to serve the point Moncton, New Brunswick, Canada, as service at this point is not provided for in the 1976 Agreement. Under the terms of the 1976 Agreement, Corsair is authorized to serve Route 1 of the French Route Schedule which permits own aircraft services to only Montréal and/or Toronto.

Due to the extra-bilateral nature of Corsair's requested authority, the Agency, by letter dated January 3, 2006, gave notice of the application to parties that may have an interest, namely Air Canada, Air Transat A.T. Inc., carrying on business as Air Transat (hereinafter Air Transat), Zoom Airlines Incorporated (hereinafter Zoom), the Montréal - Pierre Elliott Trudeau International Airport and the Greater Moncton Airport Authority Inc. (hereinafter Moncton Airport). By letter dated January 17, 2006, Air Transat requested an extension of time until February 10, 2006 to comment on Corsair's application. The Agency granted the extension on January 20, 2006.

Interventions in support of the application were received from the Moncton Airport and the New Brunswick Department of Tourism and Parks. Air Transat and Air Canada are prepared to support Corsair's application conditional on favourable reciprocal treatment by the French authorities of their own respective applications for extra-bilateral authorities.

ISSUE

The issue to be addressed is whether to authorize Corsair to operate a scheduled international passenger service to and from Moncton on an extra-bilateral basis.

POSITIONS OF THE PARTIES

Corsair indicates that for the 400th anniversary celebrations of the founding of Acadia during the summer of 2004, the Government of New Brunswick had expressed the wish to see the operation of a once-weekly service between Moncton and Paris from June to September 2004. Corsair states that the flight was the result of a partnership between the Government of New Brunswick, the Moncton International Airport, the European Bureau of the Canadian Tourism Commission and the municipalities of Moncton and Dieppe. To this end, Corsair indicates that the Agency issued a favourable decision and permitted Corsair to operate the proposed flights.

Corsair maintains that in light of the success of the program and the economic contributions for the tourist activities of New Brunswick, the different partners had asked Corsair to repeat the series of flights for the summer of 2005, which was done. For these reasons, Corsair requests, pursuant to subsection 78(2) of the Canada Transportation Act (hereinafter the CTA), a special permission to again operate the flights Paris/Montréal/Moncton/Paris on a scheduled basis during the tourist summer season of 2006.

The Moncton Airport is fully supportive of the proposed service by Corsair. It indicates that the 2005 summer service Paris/Moncton was very successful in bringing French visitors to New Brunswick and adds that New Brunswick's partners, the small communities, the Moncton Airport and Tourism New Brunswick have been aggressively promoting and advertising in the French market since 1997 to increase French tourism to Canada and the province of New Brunswick. Moncton Airport adds that the increased tourism and economic impact generated by the Corsair flights are very important to the Greater Moncton community and the province of New Brunswick. Moncton Airport also notes that it is approaching major Canadian airlines on a regular basis to offer services to/from Moncton to destinations such as France but airlines usually choose larger hub operations instead.

The Department of Tourism and Parks of New Brunswick indicates that it is fully supportive of the Corsair service which has created important business exchanges between France and New Brunswick and that France is New Brunswick's third largest overseas tourism market. The Department of Tourism adds that it is confident that this direct air service will continue to open New Brunswick to more visitors leading up to the next Congrès Mondial Acadian in New Brunswick in 2009, and further expand its presence in France as a world class tourism destination.

Air Transat indicates that as has been the case in the past and in the absence of a liberalized arrangement, it has filed a request for extra-bilateral authority with the French aeronautical authorities to operate a weekly Montréal/Toulouse/Montréal program on a scheduled service basis that will be similar in size and scope to Corsair's proposed program involving Moncton.

Therefore, Air Transat is prepared to support Corsair's application in this case. However, the carrier indicates that this support is strictly conditional on favourable reciprocal treatment by the French authorities of its own application. Air Transat further indicates that its support should automatically be considered withdrawn and substituted with an objection in the event its application is denied or unilaterally amended by the French authorities in a manner unacceptable to Air Transat.

Air Canada indicates that it has been, and continues to be, in favour of liberalizing the current 1976 Agreement. According to Air Canada, the restrictions on being able to fully market third and fourth freedom traffic results in lost revenue opportunities. Air Canada adds that it recently sought permission from the French authorities to provide code share services to/from and via France this summer.

Air Canada states that should the Agency approve Corsair's most recent application, it should do so on the basis of reciprocity, whereby such approval would be granted subject to Air Canada receiving approval from the French authorities for its own extra-bilateral application. Otherwise, Air Canada urges the Agency to deny Corsair's application and suggests that the Agency apply France's approach in 2005 which was to deny Air Canada's extra-bilateral applications and review stakeholders' interests during bilateral air consultations.

In reply to Air Canada and Air Transat's interventions, Corsair believes that the carriers' arguments, whether they are valid or not, should not prevent the province of New Brunswick from benefiting from tourism gain that is essential to its economy.

Corsair adds that its request is for a few flights only to be operated during the tourist summer season of 2006 and that it has not opposed nor does it normally oppose the requests of Air Canada and Air Transat. The carrier further adds that it understands the position of the Canadian carriers but that an unfavourable decision on its application would not help the objectives of Air Canada and Air Transat.

ANALYSIS AND FINDINGS

The Agency has reviewed and considered the application and the interventions filed by Air Canada, Air Transat, Moncton Airport and the Department of Tourism and Parks of New Brunswick.

Pursuant to subsection 78(2) of the CTA, the Agency may vary the terms and conditions of a licence on a temporary basis for international air services that are not permitted in an agreement, convention or arrangement to which Canada is a party.

As noted in the pleadings, Corsair seeks extra-bilateral authority to operate its Paris/Montréal scheduled service via Moncton, a point not provided for in the 1976 Agreement. The service would be provided once a week from June 29 to September 14, 2006, for a total of 12 flights.

In its review of Corsair's application, the Agency has considered the economic interests of the communities to be served. In this respect, the Agency recognizes the potential to which the interveners refer, that the proposed service could generate additional revenues for the tourism industry in New Brunswick, the Moncton community and Moncton Airport.

However, the Agency must also consider the economic interests of Canadian air carriers, as well as the impact its decisions may have on the balance to be struck between the advantages stemming from the bilateral agreement and the bilateral relations with France.

In this context, the Agency notes that Air Canada's request to obtain temporary additional rights to expand its services to France has not been approved by the French Aeronautical Authority. The Agency also notes the French Aeronautical Authority's statements to Air Canada indicating that the current Canada-France Agreement does not provide for code-sharing rights, but that they remain open to liberalize the bilateral agreement, as long as the requests from the Parties would be realistic and compatible.

Finally, the Agency notes that an application by Air Transat to operate, on an extra-bilateral basis, a series of 12 scheduled flights between Toronto/Montréal and Toulouse from July 1 to September 17, 2006 has been filed with the French aeronautical authorities and that Air Transat is still awaiting a decision.

In light of the above, and in accordance with the principles of reciprocity and mutual benefits, the Agency deems it appropriate to approve this application insofar as it would provide for adequate reciprocity.

Consequently, the Agency is of the opinion that approval by the French aeronautical authorities on an extra-bilateral basis of Air Transat's application in view of operating 12 regular flights to Toulouse from July 1 to September 17, 2006, would provide reciprocity in support of the approval of Corsair's application.

Consequently, pursuant to subsection 78(2) of the CTA, the Agency hereby varies Condition Nos. 1 and 2 of Licence No. 975149 to permit Corsair to provide an international scheduled air service on the route Paris/Montréal/Moncton/ Paris from June 29 to September 14, 2006, subject to the following condition:

Pursuant to paragraph 28(1)(b) of the CTA, the variance of Condition Nos. 1 and 2 of Corsair's Licence No. 975149 referred to above will only come into force on the date the French aeronautical authorities approve the extra-bilateral authority requested by Air Transat to operate 12 scheduled flights between Toronto/Montréal and Toulouse from July 1 to September 17, 2006.

In all other respects, the service authorized herein shall be operated in accordance with the 1976 Agreement, as amended.

The authority granted herein does not exempt Corsair from the requirements of other legislative acts or regulations, including those of Transport Canada.

This Decision shall form part of Licence No. 975149 and shall remain affixed thereto as long as the said Decision is in force.

Members

• Guy Delisle
• Beaton Tulk