Decision No. 502-A-2010

December 15, 2010

File No. M4161/L245

Sky Regional Airlines Inc. (Sky Regional) applied to the Canadian Transportation Agency (Agency) for the determination set out in the title, in respect of a proposed air service to be operated between Billy Bishop Toronto City Airport and the Montréal Pierre Elliott Trudeau International Airport.

Sky Regional currently does not hold a domestic licence issued by the Agency. Sky Regional and Air Canada have entered into an agreement where, in the view of Sky Regional, Air Canada would be the entity operating the publicly available air service for which Air Canada already holds a domestic licence.

Agency licences are issued pursuant to Part II of the Canada Transportation Act (CTA) to persons who propose to operate publicly available air services in Canada.

Paragraph 57(a) of the CTA states that no person shall operate an air service unless, in respect of that service, the person holds a licence issued under Part II of the CTA.

Subsection 55(1) of the CTA defines an "air service" as "a service, provided by means of an aircraft, that is publicly available for the transportation of passengers or goods, or both."

The Agency has developed the following four overall factors that it considers relevant in determining whether a person is in fact or will be operating a publicly available air service:

1. Risks and benefits associated with the operation of the proposed air service;
2. Performance of key functions and decision-making authority with respect to the operation of the proposed air service;
3. Exclusivity and non-competition provisions; and
4. Use of firm name and style.

The Agency has considered the application and the material filed in support.

Sky Regional would not be assuming the majority of the risks nor be entitled to the majority of benefits associated with the operation of the air service. The risks and benefits associated with the proposed air service would rest with Air Canada. While Sky Regional would be operating aircraft with crew with respect to the air service, it would do so on behalf of Air Canada and would not be performing the other key functions or have the decision-making authority normally associated with the operation of an air service.

In addition, the flights to be operated on the proposed air service would be identified using Air Canada's designator code. While the agreement does not preclude Sky Regional from operating air services using its own designator code, it can only do so using aircraft other than those to be operated on behalf of Air Canada. The Agency therefore concludes that Sky Regional would not be operating the proposed publicly available service.

Accordingly, Sky Regional would not be required to hold a domestic licence for the proposed air service, as described in the application, as its role would be limited to providing aircraft and flight crew to Air Canada, for the purpose of providing an air service pursuant to Air Canada's domestic licence.

In providing the proposed air service, Sky Regional and Air Canada must comply with the requirements of section 60 of the CTA and section 8.2 of the Air Transportation Regulations (ATR) which address the provision of aircraft, with flight crew, to a licensee for the purpose of providing an air service pursuant to the licensee's licence.

As Sky Regional is not a licensee and section 8.3 of the ATR does not apply, Sky Regional requires Agency approval before it can provide an aircraft with flight crew to Air Canada for the purpose of providing an air service.

Sky Regional is reminded that should it decide to operate a publicly available air service, it will be required to obtain the appropriate licence authorities from the Agency.

Members

• Geoffrey C. Hare
• J. Mark MacKeigan