Decision No. 468-A-2002
August 23, 2002
File No. M4212/E189-2Docket No. 011378
Electra Airlines Société Anonyme Aérienne carrying on business as Electra Airlines (hereinafter the applicant) has applied to the Canadian Transportation Agency (hereinafter the Agency) for a licence to operate the service set out in the title. The application was received on December 31, 2001 and was amended on January 25, 2002.
Pursuant to subsection 29(1) of the Canada Transportation Act (hereinafter the CTA), the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, the applicant has agreed to an indefinite extension of the deadline.
As part of its application, the applicant filed an affidavit attesting that within twelve months preceding the filing of the application it did not contravene section 59 of the CTA in that it has not sold, caused to be sold or publicly offered for sale in Canada transportation in respect of the applied for air service without holding the required licence. The applicant has also undertaken in respect of the air service applied for that it will not contravene section 59 of the CTA prior to the issuance of the applied for licence.
On April 11, 2002, Univers Gestion Multi Voyages Inc. carrying on business as, among others, Canada Air Charter (hereinafter Canada Air Charter) applied to the Agency, on behalf of the applicant, for a program permit to operate a series of 101 charter flights between Canada and various southern destinations, using DC-10-15 aircraft from May 13, 2002 to December 30, 2002. In support of its application, Canada Air Charter provided a contract in the form of a "Lease Agreement", effective April 7, 2002 and signed by the applicant and Canada Air Charter. That application was subsequently denied by Agency Decision No. 185-A-2002 dated April 17, 2002.
By Decision No. LET-A-116-2002 dated April 22, 2002, the Agency advised the applicant that in light of the documents submitted with the Agency on April 11, 2002 by Canada Air Charter, on behalf of the applicant, it appeared that the applicant may have contravened section 59 of the CTA. The applicant was therefore required to complete and submit with the Agency, by close of business on April 24, 2002, a new affidavit and a new undertaking in respect of the present application for a non-scheduled international licence. The applicant was further advised that if it were not in a position to sign these documents, a complete justification would be required.
On April 24, 2002, the applicant responded to Decision No. LET-A-116-2002, advising the Agency that the filing of the "Lease Agreement" was made without its knowledge or that of its agent who has delegated power of attorney. It also advised that the said document was not a charter agreement and that nothing therein indicates that it is a document to be used for any regulatory filing in Canada or anywhere else. The applicant is therefore of the view that it did not contravene section 59 of the CTA. The applicant also stated that it had been clearly briefed by its agent about section 59 of the CTA and other regulatory matters, including the possibility of asking for an exemption from section 59 of the CTA, if needed. The applicant submitted a new affidavit as well as a new undertaking signed by an authorized officer of the company.
On May 10, 2002, the applicant submitted with the Agency a charter transportation agreement signed by Canada Air Charter and the applicant for the operation of a series of 33 fifth freedom Advance Booking Charters/Inclusive Tour Charters (hereinafter ABC/ITC) from Mirabel to Port-au-Prince, Haiti, commencing on May 20, 2002. The application for authority to operate the said flights was subsequently withdrawn by the applicant on May 16, 2002.
On May 24, 2002, the Agency acknowledged the withdrawal of the application for authority to operate the series of 33 fifth freedom charter flights.
By Decision No. LET-A-162-2002 dated June 6, 2002, the applicant was required to provide the Agency, by close of business on June 12, 2002, with the reasons why the Agency should not consider that the applicant has contravened section 59 of the CTA or that it has breached the undertaking dated April 24, 2002 that it filed with the Agency in response to Decision No. LET-A-116-2002.
On June 12, 2002, the applicant replied to the Agency Decision No. LET-A-162-2002, alleging that it had not contravened section 59 of the CTA for several reasons.
The applicant states that the document referred to by the Agency in its decision is not a final document but only a working document, and that this working document had been tampered with by an unknown person.
The applicant submits that the contract that was filed with the Agency is unenforceable and not valid as it does not indicate the applicable tariff, as it has no contract value, and as it does not provide for a standby letter of credit for the protection of consumers. The applicant maintains that any of these deficiencies would normally be sufficient for the Agency to reject the document and possibly deny the application.
Further, the applicant explains that it would be unreasonable for the applicant to negotiate a contract for services that would have commenced on May 20, 2002, given that on May 10, the day the document was signed, it still did not have a Foreign Air Operators Certificate issued by Transport Canada or a non-scheduled international licence issued by the Agency, nor had it filed with the Agency a valid tariff.
Finally, the applicant alleges that the subject document was filed "upon prodding and arm twisting from the charterer (who had its own problems and was advertising and selling without authority)." The applicant adds that it would find it unfortunate if as a result of unacceptable actions taken by the charterer that were beyond the control of the unsuspecting applicant and which misled and clearly led the applicant astray, it would now be subject to some Agency action or penalty pursuant to subsection 79(2) of the CTA. The applicant asserts that it did react in time and took the right and proper course of action by promptly withdrawing the document which, for all intents and purposes, was incomplete so as to make it inoperable and not enforceable.
Subsection 79(2) of the CTA states that where the Agency has suspended or cancelled the licence of a corporation under Part II of the CTA or where a corporation has contravened section 59 of the CTA, the Agency may, for a period not exceeding twelve months after the date of the suspension, cancellation or contravention, refuse to issue a licence in respect of an air service.
The Agency has considered the matter and notes that in its response to Decision No. LET-A-116-2002, the applicant indicated that it was aware of the serious nature of a possible violation of section 59 of the CTA. The Agency also notes that in its reply to Decision No. LET-A-162-2002, wherein the Agency pointed out the possible contravention of section 59, the applicant asserted that it had been clearly briefed by its agent about section 59 of the CTA and other regulatory matters, including the possibility of asking for an exemption to section 59 of the CTA, if needed. No such request was filed with the Agency.
In addition, the Agency has carefully considered the explanations offered by the applicant in its reply of June 12, 2002 to Decision No. LET-A-162-2002 and it has come to the following conclusions.
The Agency has considered the applicant's statement that the charter transportation agreement referred to by the Agency in Decision No. LET-A-162-2002 is not a final document but only a working document and that it has been tampered with by an unknown person. In this regard, the Agency notes that it was signed by an authorized officer of the company as well as by an authorized officer of the other contracting party prior to its submission with the Agency. Therefore, the Agency does not accept that it was a working document as it was duly signed, executed and filed with the Agency.
The Agency also notes the comments of the applicant relating to deficiencies in the agreement. The applicant should be aware that when a contract is filed with the Agency and deficiencies are discovered, Agency staff contact the party or parties to obtain additional documentation and or clarifications prior to forwarding it to the Agency for a decision. In this respect, the Agency points out that Agency staff did not request additional documentation or refer the request to the Agency for a decision as the application was withdrawn on May 16, 2002.
In light of the foregoing, the Agency is of the opinion that even though the applicant was fully aware of the requirements of section 59 of the CTA, an authorized officer of the company signed a charter transportation agreement and submitted it with the Agency. Therefore, the Agency is of the opinion that the applicant contravened section 59 of the CTA on May 10, 2002, the date that the applicant filed the charter transportation agreement referred to in Decision No. LET-A-162-2002.
Accordingly, pursuant to subsection 79(2) of the CTA and given the blatant disregard by the applicant for the requirements of the CTA, the Agency refuses to issue a licence to the applicant before October 31, 2002.
If the applicant meets the requirements of subsection 73(2) of the CTA, including no further contraventions of section 59 of the CTA after October 31, 2002, the Agency will issue it a non-scheduled international licence.
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