Decision No. 439-A-2010

October 21, 2010

File No. M4210/J188-2

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APPLICATION

[1] Jazz Air LP, as represented by its general partner, Jazz Air Holding GP Inc. carrying on business as Air Canada Jazz; Jazz; and Jazz Air (Jazz Air) has applied to the Canadian Transportation Agency (Agency) for a licence to operate a non-scheduled international service, large aircraft, to transport traffic on a charter basis between Canada and any other country.

[2] As part of its licence application, Jazz Air also applied to use the trade name of "Thomas Cook Airlines Canada", and later changed it to "Thomas Cook Canada".

BACKGROUND

[3] Jazz Air is currently licensed to operate non-scheduled international services, small and medium aircraft, to transport traffic on a charter basis between Canada and any other country.

[4] In its Decision No. LET-A-173-2010, the Agency acknowledged receipt of an intervention by Sunwing Airlines Inc. (Sunwing) in Jazz Air's licence application proceedings. In that letter decision, the Agency determined that Sunwing's intervention, as well as Jazz Air's reply and Sunwing's response, would be accepted and form part of the proceedings' record.

[5] The Agency already determined that it is satisfied that Jazz Air is Canadian as defined in subsection 55(1) of the Canada Transportation Act (CTA) and that the carrier meets the regulatory financial requirements.

SUNWING'S POSITION

[6] Sunwing alleges that Jazz Air has failed to comply with section 59 of the CTA. Sunwing supported its intervention with publications and advertizing material relating to the operations of the air service for which Jazz Air is seeking a licence. According to Sunwing, these documents make it clear that Jazz Air "has sold, or at the very least has offered to sell, charter air transportation to Thomas Cook Canada Inc. for which a licence is required".

[7] Sunwing further submits that Jazz Air is an experienced Canadian carrier that is fully aware of the legislative and regulatory requirements with respect to operating an air service. Therefore, Sunwing states that the Agency should exercise its discretion under subsection 79(2) of the CTA and refuse to issue a licence to Jazz Air for at least six months.

[8] Sunwing also submits that the Agency should immediately issue a show cause order directing Jazz Air to cease and desist from contravening section 59 of the CTA.

[9] Sunwing opposes Jazz Air's request to use the trade name "Thomas Cook Airlines Canada", on the basis that by operating under such a name, Jazz Air would be permitted to represent itself as another airline, more particularly the UK carrier Thomas Cook Airlines Limited. Sunwing argues that the proposed business name would cause material confusion with the travelling public.

ANALYSIS AND FINDINGS

[10] For a licence to be issued, the Agency must be satisfied, as provided for in paragraph 73(1)(a) of the CTA, that Jazz Air is a Canadian, holds a Canadian aviation document and has the prescribed liability insurance coverage in respect of the service to be provided under the licence, and meets prescribed financial requirements. The Agency must also be satisfied, as provided for in paragraph 73(1)(b) of the CTA, that Jazz Air has not contravened section 59 of the CTA to the effect that no person has sold, caused to be sold or publicly offered for sale in Canada an air service within the preceding twelve months unless the person holds a licence in respect of that service and that licence is not suspended.

Requirements of paragraph 73(1)(a) of the CTA

[11] The Agency is satisfied that Jazz Air meets all the applicable requirements of paragraph 73(1)(a) of the CTA.

Requirement of paragraph 73(1)(b) of the CTA

[12] With respect to this application, Jazz Air has undertaken that it will not contravene section 59 of the CTA prior to the issuance of the applied for licence.

[13] In its analysis of whether Jazz Air has contravened section 59 of the CTA, the Agency reviewed the Flight Services Agreement entered into by Jazz Air and the tour operator Thomas Cook Canada Inc. with respect to the operation of the proposed air service. The Agency notes that the parties to the Flight Services Agreement only agreed on the principal terms under which Jazz Air's services will be purchased by Thomas Cook Canada Inc., which purchase is conditional on parties entering into definitive agreements and on all regulatory approvals having been obtained. In addition, the Flight Services Agreement expressly stipulates that the commencement of services by Jazz Air is conditional on Jazz Air obtaining the regulatory approvals.

[14] The Agency considers that the Flight Services Agreement does not constitute a charter contract. The Agency is of the opinion that the Flight Services Agreement can be characterized as the expression of the parties' intent to enter into a binding Agreement once certain conditions are met, including the condition that the applicable regulatory approvals be obtained. The Agency finds that by entering into the Flight Services Agreement, Jazz Air did not sell or cause to be sold its air services to Thomas Cook Canada Inc.

[15] The Agency notes that vacation packages with flights to be operated by Jazz Air were indeed advertized to the public in Thomas Cook Canada Inc.'s brochure. However, the brochure is not that of Jazz Air.

Section 59 of the CTA

[16] When dealing with a licence application under section 73 of the CTA and in the exercise of its discretion under subsection 79(2) of the CTA to refuse to issue a licence, the Agency can only take into account a breach of section 59 of the CTA by the applicant itself. Although carriers may have a business relationship with tour operators, carriers may have limited ability to control the advertizing of their services by tour operators. In general, the Agency must be careful not to consider that the advertizing and selling of an air service by a tour operator constitute a breach of section 59 of the CTA by the carrier seeking a licence. In the Agency's opinion, there may be circumstances in which the advertizing of an air service by a tour operator could be considered a breach of section 59 of the CTA by the carrier, for instance, when there are indications that the licence applicant used the tour operator to circumvent the requirement of section 59 of the CTA. However, that is not the case here as the Agency notes that the terms and conditions of the Flight Services Agreement are conditional on all regulatory approvals having been obtained.

[17] For these reasons, the Agency finds that Jazz Air did not sell, cause to be sold or publicly offer for sale in Canada an air service within the preceding twelve months, in contravention of section 59 of the CTA. The Agency is of the opinion that the concerns raised by the advertizing of Jazz Air's air service remain. However, as these concerns relate to issues and parties external to this licence application, the Agency considers that they would more appropriately be dealt with in a subsequent and separate proceeding, as the case may be.

CONCLUSION

[18] In light of the foregoing, the Agency concludes that Jazz Air has not contravened section 59 of the CTA and is satisfied that Jazz Air meets the requirement of paragraph 73(1)(b) of the CTA.

USE OF TRADE NAME

[19] The Agency notes that paragraph 18(c) of the Air Transportation Regulations, SOR/88-58, as amended (ATR) provides that air carriers are prohibited from operating an international service under a name that is not on their licence. The Agency also notes that there is no provision in the ATR imposing restrictions on the air carrier with respect to the trade name under which it operates its services.

[20] Further, there is no restriction for domestic operations. The Agency is of the opinion that this is indicative of the legislator's intention that the Agency not interfere on the choice of the name under which the air carriers operate.

[21] When the Agency reviews licence applications, it ensures that the applicant has applied under its legal name. However, once the licence is issued, the licensee is free to operate under any other name it may choose, on the condition that such other trade name is added to its licence. It is not uncommon for carriers to operate under more than one trade name, including that of another corporation with which it has business relations authorizing the licensee to use that other corporation's trade name.

[22] In the realm of non-scheduled services, there is a common practice where air carriers include, with the approval of the Agency, the tour operator's name on their fuselage. In this case, considering the air service, which by its very nature can only be sold and marketed to the public through a charterer or a tour operator, the Agency does not consider it inappropriate for the carrier to operate its air service using a trade name used by the tour operator that purchases its services.

[23] While the Agency will not as a general rule interfere in a licensee's business decision with respect to trade names, the Agency reminds Jazz Air of its ongoing obligation to meet the requirement of paragraph 18(b) of the ATR that a licensee shall not make publicly any statement that is false or misleading with respect to the licensee's air service or any service incidental thereto. The Agency is of the opinion that false or misleading statements referred to in paragraph 18(b) of the ATR could in certain circumstances capture those made through the use of a given trade name. However, in these circumstances, that is not the case.

[24] Accordingly, the Agency approves Jazz Air's application for a licence to operate a non‑scheduled international service, large aircraft.

Members

• Raymon J. Kaduck
• J. Mark MacKeigan
• Jean-Denis Pelletier, P. Eng.