Decision No. 353-A-2008
July 3, 2008
APPLICATION by Air Canada for a reduction in the notice period requirement set out in subsection 64(2) of the Canada Transportation Act, S.C. 1996, c. 10, as amended.
File No. M4210/A957-1
On June 20, 2008, Air Canada filed with the Canadian Transportation Agency (Agency) an application set out in the title with respect to the proposed discontinuance of its year-round non-stop scheduled air service between Hamilton, Ontario and Montréal, Quebec (operated by Air Canada Jazz) and between Hamilton, Ontario and Ottawa, Ontario (operated by Air Canada Jazz) effective July 31, 2008, and between Montréal, Quebec and Deer Lake, Newfoundland and Labrador, effective September 1, 2008.
Under Licence No. 972089, Air Canada is authorized to operate a domestic service, medium aircraft, a domestic service, large aircraft and a domestic service, all-cargo aircraft.
In support of its application, Air Canada submits that continuous increase in the cost of fuel in recent months has impacted all its services and in particular less profitable routes. Further, following attempts to increase fares to offset the cost of fuel to customers, there has been a decrease in demand. Air Canada also states that projections show substantial revenue loss is to be expected in these markets. In addition, Air Canada states that it has recently announced important cost reduction measures across its network, including an overall reduction in capacity, which will result in the termination of certain domestic, transborder and international routes.
Air Canada submits that in line with these cost cutting measures and to ensure financial survival, Air Canada and Air Canada Jazz have to restructure their domestic network. Air Canada is required to discontinue service on routes for which subsection 64(1.1) of the Canada Transportation Act (the CTA) would apply. That is, the proposed service discontinuance will result in a reduction of at least 50 percent of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services between the points.
Air Canada, therefore, requests the Agency to grant its request for a reduction in the notice period requirement set out in subsection 64(2) of the CTA.
Subsection 64(2) of the CTA requires, among other things, a licensee to provide a 120-day notice in advance of discontinuing a service that meets certain criteria set out in subsection 64(1.1), or until the expiry of any shorter notice period that the Agency may specify.
The Agency has considered the matter and finds that following the discontinuance of Air Canada's year-round non-stop scheduled air services between Hamilton and Montréal, between Hamilton and Ottawa and between Montréal and Deer Lake, there will be a reduction, as compared to the week before the proposal is to take effect, of at least 50 percent of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services between these points. Therefore, the Agency finds that subsection 64(1.1) of the CTA applies to this application.
Pursuant to subsection 64(3) of the CTA, the Agency, in considering whether to specify a shorter notice period, shall have regard to the adequacy of alternative modes of public transportation available at or in the vicinity of the point in question or between the points concerned; other means by which air service to the point or between the points is or is likely to be provided; whether the licensee has complied with subsection 64(1.2); and the particular circumstances of the licensee.
It should be noted that the CTA and the Air Transportation Regulations, SOR/88-58, as amended, do not empower the Agency to reject a notice of discontinuance of service. The Agency may only determine whether to allow a reduction in the period of notice to be given for such a discontinuance.
The Agency is of the opinion that the notice provisions ensure that communities with limited air service, usually remote communities, are made aware enough in advance of reductions in or discontinuances of air services in their community. Once advised, the elected officials and the general population of the affected communities may choose to seek a replacement carrier. Carriers of the affected area are also made aware of the situation by the notice and can take advantage of an opportunity to enter that market.
The Agency has carefully considered the application and the factors identified in subsection 64(3) of the CTA, as they apply to this particular case.
The Agency has considered other means by which air service between the points is or is likely to be provided between Hamilton and Montréal and between Hamilton and Ottawa. WestJet operates numerous domestic routes out of Hamilton; the Hamilton International Airport (Hamilton airport) is about 60 kilometers from the Toronto-Lester B. Pearson International Airport (Toronto airport) from which Air Canada, or Air Canada Jazz, and WestJet operate numerous daily flights to Montréal and Ottawa.
With respect to the alternate services available, the Agency notes that consumers may take a shuttle bus between Hamilton airport and Toronto airport. Also, consumers may use the bus or train, as hourly bus and train services, connecting through Toronto, are available. Moreover, Hamilton is about 600 kilometers from Montréal and 510 kilometers from Ottawa; and Hamilton airport is a one hour and thirty minute drive from Toronto City Center Airport, from which Porter Airlines Inc. operates daily flights to Montréal and Ottawa.
With respect to the proposed discontinuance of domestic services between Montréal and Deer Lake, the Agency notes that Air Canada operates 3 weekly flights on the Montréal-Deer Lake route and 4 daily flights on the Toronto-Deer Lake route and that, effective September 1, 2008, Air Canada intends to operate daily flights on the Toronto-Deer Lake route, with the same aircraft, so that the overall capacity from Air Canada out of Deer Lake remains unchanged. Air Canada will continue to provide services between Deer Lake and Halifax and St-John's, as well as its 7 daily flights between Montréal and Halifax and its daily flight between Montréal and St-John's. In addition, other carriers operate domestic routes out of Deer Lake, such as WestJet, Labrador Airways Limited carrying on business as Air Labrador and Provincial Airlines Limited also carrying on business as Interprovincial Airlines, and operate services from Deer Lake to Toronto, St-John's, Wabush, Goose Bay and Stephenville.
Further, in considering the particular circumstances of Air Canada, the Agency notes its submission that passengers who made reservations on flights between Hamilton and Montréal, or between Hamilton and Ottawa, that are to be operated after July 31, 2008, will be automatically reprotected on Air Canada's service between Toronto and Montréal, or between Toronto and Ottawa, and contacted with the new itinerary. Air Canada states that if such arrangements are not acceptable to the passengers, it will refund all monies paid by them upon request. Moreover, Air Canada states that for passengers who made reservations on flights between Montréal and Deer Lake that are to be operated after September 1, 2008, they will be rerouted on its service between Montréal and Halifax, and Halifax and Deer Lake, and will also be contacted with the new itinerary.
Finally, the Agency notes that Air Canada has indicated that it intends to provide an opportunity for the elected officials of the municipal or local government of the community of the points involved in this application to meet and discuss with the licensee the impact of the proposed discontinuance or reduction.
Therefore, the Agency determines that notice, on or about July 3, 2008, of the proposal by Air Canada to discontinue its services between Hamilton and Montréal and between Hamilton and Ottawa, effective July 31, 2008 and between Montréal and Deer Lake, effective September 1, 2008, is sufficient.
Accordingly, the Agency orders Air Canada to not implement its proposal to discontinue its year-round non-stop scheduled air services between Hamilton and Montréal and between Hamilton and Ottawa until July 31, 2008 and between Montréal and Deer Lake until September 1, 2008, subject to the following conditions:
- Air Canada is required to advise the following parties of its proposed discontinuance of services:
- the federal Minister of Transport;
- the minister responsible for transportation in the provinces of Ontario, Quebec and Newfoundland and Labrador;
- elected officials of the municipal or local governments of Hamilton, Ottawa, Montréal and Deer Lake; and
- the local communities of Hamilton, Ottawa, Montréal and Deer Lake, by publishing a notice in both official languages in the newspapers with the largest circulation in each of those communities.
- Air Canada shall provide the Agency with copies of the notices sent to the parties as set out above and confirmation that an opportunity was provided to the elected officials to meet.
- Air Canada shall provide the Agency with copies of the tear sheets from the publication in both official languages.
Members
- John Scott
- J. Mark MacKeigan
- Date modified: