Decision No. 50-A-2001

February 2, 2001

File No. M4211/S466-2

Docket No. 010107

Sky King, Inc. (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 February 1, 2001.

By Diplomatic Note No. 288 dated May 25, 2000, the Government of the United States of America, pursuant to the provisions of the Air Transport Agreement between the Government of Canada and the Government of the United States of America dated February 24, 1995 (hereinafter the Agreement), has designated the applicant pursuant to the Agreement.

On January 19, 2001, the Minister of Transport issued an order exempting the applicant from the requirement to hold an air operator certificate for a period expiring no later than February 28, 2002. This exemption applies to the use of two United States of America registered Boeing 737-200 aircraft (registration N135TA or N147AW).

The applicant indicates that it has, contrary to section 59 of the CTA, sold, caused to be sold or publicly offered for sale in Canada an air service prior to obtaining a licence.

The Agency notes that the applicant holds a Part 125 certificate from the Government of the United States of America which authorizes it to engage in private carriage but does not allow it to offer its services to the general public.

The applicant also indicates that it has operated non-scheduled international air services into and out of Canada under the assumption that its U.S. certificate would allow it to operate air services without holding a licence issued by the Agency.

The applicant maintains that, immediately upon being made aware of Canadian requirements, it engaged Canadian legal counsel to obtain the Ministerial exemption and to make necessary applications to the Agency for interim and now permanent licence authority.

The Agency has carefully considered the matter and finds that, based on the evidence before it, the applicant has contravened section 59 of the CTA and that, in addition, it has operated a non-scheduled international service without holding a licence issued by the Agency, thereby contravening paragraph 57(a) of the CTA which states that no person shall operate an air service unless, in respect of that service, the person holds a licence.

The Agency notes that the applicant ceased its contravention of paragraph 57(a) and section 59 of the CTA as soon as it became aware of the Canadian licensing requirements. In addition, there is no evidence to indicate that the public was jeopardized by the actions of the applicant.

In light of the foregoing, pursuant to subsection 79(1) of the CTA, the Agency will not refuse to issue a licence to the applicant even though the applicant has contravened section 59 of the CTA.

In addition, the applicant meets the requirements of subsection 73(2) of the CTA. The Agency is also satisfied that the pertinent terms and conditions of the Agreement have been complied with.

The Agency notes that, as set out in Diplomatic Note No. 35 dated February 8, 1993, air carriers of the United States of America operating only under U.S. Part 125 authority are restricted to the operation of U.S. origin single entity passenger and single entity property charters and the equivalent Canadian origin charter types. In Diplomatic Note No. 218, the Government of the United States of America designated the applicant for the operation of these types of charters only. Therefore, any licence to be issued by the Agency should be restricted as provided for in the Diplomatic Note.

Accordingly, the Agency will issue to the applicant a licence to operate a non-scheduled international service to transport traffic on a charter basis between points in the United States of America and points in Canada.

Pursuant to subsection 74(1) of the CTA, the Agency deems it appropriate to include the terms and conditions set out below in the licence to be issued pursuant to this Decision.

The licence to be issued pursuant to this Decision shall be subject, in addition to the conditions prescribed by the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR), to the requirements to hold a Canadian aviation document issued by the Minister of Transport, and to have prescribed liability insurance coverage as set out in section 7 of the ATR, and to the following terms and conditions to which the licence is made subject pursuant to subsection 74(1) of the CTA:

1. The Licensee is authorized to transport international charter traffic between points in the United States of America and points in Canada, restricted to single entity passenger and single entity property charter originating in the United States of America and to the equivalent charter types for charters originating in Canada.
2. The Licensee is prohibited from carrying local traffic between points in Canada.
3. The operation of the non-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 the United States of America.
4. Unless terminated at an earlier date in accordance with the CTA or the Agreement, this licence shall terminate at the termination or expiration of:
   
   1. the exemption of the Minister of Transport dated January 19, 2001;
   2. the Agreement, or upon the effective date of any amendment to the Agreement which shall have the effect of eliminating the rights herein authorized.

With respect to the contraventions set out above, the issuance of this licence does not in any way preclude any actions that may be taken against the applicant pursuant to the Canadian Transportation Agency Designated Provisions Regulations.