Decision No. 424-W-2005

July 4, 2005

APPLICATION by Classic Motor Yachts, pursuant to the Coasting Trade Act, S.C., 1992, c. 31, for a licence to use the "NORTHWIND", an American passenger vessel, for chartering along the coast of British Columbia, during the period commencing on or about June 1, 2005 and ending on November 1, 2005.

File No. W9125/C52/05-1

APPLICATION

Classic Motor Yachts has applied to the Minister of National Revenue for a licence to operate the service set out in the title. The matter was referred to the Canadian Transportation Agency (hereinafter the Agency) on March 31, 2005.

The Agency conducted a search of the relevant portion of the marine industry, and notice of the application was given on April 1, 2005. On April 5, 2005, the Gwaii Haanas Tour Operators Association, which represents various operators licensed to operate in the Gwaii Haanas region of the Queen Charlotte Islands, filed a submission advising that, among its members, there are various vessels ranging from 60 to 92 feet that provide nature, cultural and spiritual excursion programs, which vessels could be used for the proposed activities. On April 8, 2005, Bluewater Adventures (hereinafter Bluewater) offered the use of the "Island Roamer" and the "Island Odyssey". The applicant filed its comments on the Bluewater vessel offer on April 12, 2005; and Bluewater filed a reply to the applicant's comments on April 13, 2005. The applicant filed a further submission on April 15, 2005, i.e., after the close of the pleadings, and, therefore, this submission will not be considered as part of the pleadings for this application.

ISSUE

Pursuant to subsection 8(1) of the Coasting Trade Act, the issue to be addressed is whether there are suitable Canadian vessels available to provide the proposed service or perform the activities described in the application, and whether identical or similar adequate marine services are available from persons operating Canadian vessels.

POSITIONS OF THE PARTIES

The applicant

At the outset, the applicant explains that it intends to develop a product unlike anything currently offered on the British Columbia coast: high end cruises with the use of the proposed vessel for USD$50,000 per week. In its comments on the Bluewater vessel offer, the applicant reiterates that it plans to offer an entirely different experience on a vessel that is 130-feet long, with spacious and luxurious accommodations for eight persons, on a classic era motor yacht that was built in 1930, has a history of hosting famous figures and has been part of significant historical events.

Bluewater

Bluewater offers the use of the "Island Roamer" and the "Island Odyssey", both 20-metre long vessels providing accommodations for 16 guests in double occupancy cabins. Over the time period, there is one of the vessels available for a minimum of two weeks each month during the summer. Bluewater claims that it has vessels that are available and suitable to conduct the proposed operations for the applicant, and that the vessels offered do not need to be "equivalent", but simply suitable. It does not believe its vessels to be identical to the "Northwind", but its vessels can carry the required number of passengers, can operate with experience in the required areas, and can provide a very high level of service aboard suitable vessels. Other comments were made by Bluewater concerning Transport Canada's safety requirements; however, such requirements are not relevant to the Agency's determination under the Coasting Trade Act.

Intervention

The Gwaii Haanas Tour Operators Association mentions that members of its association offer services using Canadian vessels; however, only one of them, namely Bluewater, chose to pursue the matter further.

ANALYSIS AND FINDINGS

Where the activity described in the application entails the carriage of passengers, the Minister of National Revenue cannot issue a coasting trade licence unless the Agency determines that no Canadian ship is suitable and available to perform the activity described, and that an identical or similar marine service is not available from any person operating one or more Canadian ships. In the present case, Bluewater is offering its ships for the proposed activities, and the Agency must determine whether the ships offered are suitable and available for these activities.

The applicant proposes to offer chartering services in British Columbia coastal waters. The applicant submitted that the service it intends to offer using a unique and luxurious vessel with a historical value targets a high end market which is a very different segment of the cruise market that Bluewater has been serving, offering nature and cultural excursions along the British Columbia coast.

Bluewater proposes that the applicant use either one of the two vessels it offered during the period whenever they are available. The applicant argued that the vessels offered cannot be considered suitable for the proposed activities due to the differences with respect to size and accommodations, and stressed the uniqueness of the vessel it intends to use, and for which the application has been filed. Based on the information on file, the Canadian vessels offered do not meet the characteristics requested by the applicant.

Therefore, the use of a unique vessel, offering a high level of comfort and services for chartering purposes along the coast of British Columbia is a distinct activity in itself, and differs from the services offered by Bluewater, and probably other vessel operators that chose not to oppose the granting of the application. The vessels offered by Bluewater cannot replace the classic vessel built in 1930, as the historical value of the vessel proposed as well as its classic design provide for a unique product to be offered on the coast of British Columbia.

DETERMINATION

Based on the above findings, the Agency has determined, pursuant to subsection 8(1) of the Coasting Trade Act, that there is no suitable Canadian ship available to provide the service or perform the activities described in the application, and that there is no identical or similar adequate marine service available from any person operating one or more Canadian ships. This determination will be provided to the Minister of National Revenue for any necessary action as provided for in the Coasting Trade Act.

This Decision does not constitute an authority to commence operations in respect of the service for which application has been made.