Decision No. 55-A-1988

May 4, 1988

File No. 2-F328-10A

Docket No. 10646

This application was filed with the Air Transport Committee of the Canadian Transport Commission. However, the National Transportation Agency is now responsible for the disposition of all matters filed with the Commission.

Rog-Air Limited carrying on business under the firm name and style of Frontier Air (hereinafter the applicant) has applied for the authority set out in the title. The application was received on October 22, 1987.

Under Licence No. A.T.C. 4263/86(NS), the applicant is authorized to operate a Class 3 Specific Point commercial air service using fixed wing aircraft in Groups B, C and D, serving the points Timmins, Hornepayne, Nakina, Fort Hope, Ogoki, Geraldton, Fort Albany, Kashechewan and Thunder Bay, Ontario.

By Decision No. 7-A-1988 dated March 21, 1988, the Agency approved an application by Rog-Air Limited carrying on business under the firm name and style of Frontier Air for amendment by the consolidation of Licence Nos. A.T.C 4263/86(NS) and A.T.C. 3596/83(NS) into one licence upon compliance with the requirements of the Agency as applicable.

Notice of the application was published on November 18 and 25, 1987 in the newspapers of the areas concerned and copies of the notice were sent to selected air carriers and to others believed to be interested. Interventions opposing the granting of the application were filed by Bearskin Lake Air Service Ltd. (hereinafter Bearskin) and Air Ontario Inc. (hereinafter Air Ontario). The applicant replied to the interventions. Thirteen interventions were filed in support of the application.

Pleadings closed on January 8, 1988. The pleadings form part of the public files and may be consulted in the Agency's offices by anyone who so desires. In additions, copies will be provided by the Secretary of the Agency on request.

The Agency has considered the application, the material in support thereof and the interventions referred to.

Air Ontario suggests that its unit toll service, which links Pickle Lake with not only Geraldton and Fort Hope but with Lansdowne House, Webequie, Sioux Lookout and Thunder Bay, would be adversely affected by the proposed service as Air Ontario's service can only be supported on the basis of serving all of the communities on a network basis. Origin and destination statistics filed by Air Ontario with the Aviation Statistics Centre indicate that demand for Air Ontario's service between Pickle Lake and each of Geraldton and Fort Hope has not been substantial. During 1985, 1986 and the first three quarters of 1987 Air Ontario carried 443, 850 and 243 origin and destination passengers, respectively, between Pickle Lake and Fort Hope. Air Ontario did not carry any origin and destination passengers between Geraldton and Pickle Lake in 1985 and it carried only a few passengers between these points in 1986 and the first three quarters of 1987. Further, the total of 865 origin and destination passengers carried by Air Ontario between Pickle Lake and either Fort Hope or Geraldton in 1986 represents only 8.4 percent of the 10,919 origin and destination passengers carried by Air Ontario between the points it includes in its network. More recent data indicate that the importance of Pickle Lake - Geraldton/Fort Hope passenger traffic to Air Ontario's network has decreased further. To illustrate, during the 12 month period ending September 30, 1987 Air Ontario's total origin and destination traffic between Pickle Lake and each of Geraldton and Fort Hope of 397 passengers constitutes only 2.6 percent of the 15,050 origin and destination passengers carried by Air Ontario on this network. Based on the foregoing, the Agency is of the view that although approval of this application would no doubt divert some traffic from Air Ontario, the overall effect on Air Ontario's service is not expected to be significant.

Bearskin intervened in opposition, but it is noted that the proposed service would not have an impact on this Licensee as it is not authorized to operate a unit toll service between Pickle Lake and either Geraldton or Fort Hope.

Although norOntair (Air Dale Limited) is authorized by Licence No. A.T.C. 2429/75(NS) to operate a Class 2 Regular Specific Point commercial air service between, inter alia, Pickle Lake and Geraldton, it does not provide direct service between these points and neither norOntair nor Air Dale Limited chose to intervene in opposition to the application.

The Official Airline Guide dated January 15, 1988 indicates that Air Ontario provides return service each weekday between Pickle Lake and Geraldton, with three enroute stops, and between Pickle Lake and Fort Hope with two enroute stops. Air Ontario also provides service on Saturdays from Fort Hope to Pickle Lake with two enroute stops. Service between Geraldton and Pickle Lake takes at least three hours and service between Fort Hope and Geraldton takes approximatively two hours. The Agency is of the opinion that the public would benefit from the applicant's proposed service between Pickle Lake and each of Geraldton and Fort Hope since travel times would be reduced substantially and the inconvenience of multiple enroute stops would be eliminated.

The levels of passenger traffic attained by Air Ontario together with Air Ontario's submission that it carried a total of 60,000 pounds of cargo between Geraldton, Pickle Lake and Fort Hope from October 1986 to September 1987, suggest that the applicant's annual forecasts of 2,300 passengers and 200,000 pounds of cargo are optimistic. In this regard, both Air Ontario and Bearskin submit that the applicant's forecasts are not substantiated. Nonetheless, it is the Agency's view that the advantages of non-stop, time-effective service between Pickle Lake and each of Fort Hope and Geraldton will be attractive to many potential air service users. In addition, interventions from such supporters as Canadian Longyear Inc. and the Trappers International Marketing Service suggest that the service proposed would be supported not only by demand for origin and destination transportation between Pickle Lake and each of Fort Hope and Geraldton but also by demand for transportation between Pickle Lake and other communities served by Frontier Air such as Timmins and North Bay. While none of the 13 intervenors in support indicate specific utilization of the proposed service, many of the intervenors refer to potential advantages of the proposed service and indicate that operation of an alternative, competitive service would be beneficial. The interventions of the Township of Pickle Lake, the Geraldton District Air Commission of the Town of Geraldton, a member of Parliament and a member of the Legislative Assembly of Ontario provide evidence that the application has broad-based public support.

Air Ontario and Bearskin make reference to the Committee's denial, by Decision No. 10320 dated December 24, 1986, of Bearskin's application to operate a similar service to that proposed and the Minister's subsequent certified opinion upholding that Decision. Air Ontario also refers to the Committee's denial, by Decision No. 11165 dated December 1, 1987, of Northland Air Manitoba Limited's (hereinafter Northland) application to add the points Norway House and Cross Lake, Manitoba to its Class 3 licence; however, these Decisions were based on the individual merits of each case as detailed in the applicable Decision. Notwithstanding, it is observed that the subject application has more support than either Bearskin's application (no letters of support nor interventions in support) or Northland's application (one intervention in support).

In light of the foregoing, the Agency is of the opinion that there is a requirement for the proposed service which is not being met and thus the service will have only a minor adverse effect on existing licensees, which will be outweighed by the benefits of increased competition at the proposed point, that the applicant has the ability and resources to institute and continue to provide the proposed service meeting the public need therefor, and that the demand projected by the applicant supports the expectation that its service will be viable. Accordingly, the Agency is satisfied that the application to operate the proposed service should be granted. The application is hereby approved.

A licence to operate a Class 3 Specific Point domestic service serving the points Timmins, Hornepayne, Nakina, Fort Hope, Ogoki, Geraldton, Fort Albany, Kashechewan, Thunder Bay, Port Loring, Smoky Lake, North Bay/Trout Lake, Sudbury, Ottawa and Pickle Lake, Ontario will be issued to Rog-Air Limited carrying on business under the firm name and style of Frontier Air upon compliance with the requirements of the Agency as applicable.

The licence to be issued pursuant to this Decision shall, in addition to the conditions prescribed by the Air Transportation Regulations, SOR 88-58, be subject to the conditions respecting Appendix "A" points contained in the attachment, which are hereby made a part of this Decision, and to the following condition:

The Licensee is authorized to use fixed wing aircraft in Groups B, C and D.