Decision No. 55-A-2005

February 4, 2005

February 4, 2005

APPLICATION by Zoom Airlines Incorporated on behalf of itself and Excel Airways Limited, for an approval pursuant to section 60 of the Canada Transportation Act, S.C., 1996, c. 10, and section 8.2 of the Air Transportation Regulations, SOR/88-58, as amended, to permit the use by Zoom Airlines Incorporated of aircraft and flight crew provided by Excel Airways Limited, and the provision by Excel Airways Limited of such aircraft and flight crew to Zoom Airlines Incorporated, in order to permit Zoom Airlines Incorporated to provide its non-scheduled international service from Ottawa, Ontario, Canada and Halifax, Nova Scotia, Canada to Varadero, Cuba on January 2, 9 and 16, 2005; from Ottawa and Dorval, Quebec, Canada to Puerto Vallarta, Mexico on January 3, 2005; from Dorval to Holguin, Cuba on January 14, 2005, and to provide its scheduled international service from Ottawa and Halifax to Puerto Plata, Dominican Republic on January 1, 8 and 15, 2005; and from Ottawa to La Romana, Dominican Republic on January 14, 2005, using aircraft and flight crew provided by Excel Airways Limited.

File Nos. M4210/Z11-2
M4210/Z11-4-1


APPLICATION

Zoom Airlines Incorporated (hereinafter Zoom), on behalf of itself and Excel Airways Limited (hereinafter Excel), has applied to the Canadian Transportation Agency (hereinafter the Agency) for the approval set out in the title. The application was received on December 17, 2004.

Zoom has also requested an exemption from the application of subsection 8.2(2) of the Air Transportation Regulations (hereinafter the ATR), which requires the filing of an application for approval at least forty-five (45) days before the first planned flight.

BACKGROUND

Under Licence No. 020150, Zoom is authorized to operate a non-scheduled international service, large aircraft, to transport traffic on a charter basis between Canada and any other country.

Under Licence No. 030154, Zoom is authorized to operate a scheduled international service, large aircraft, between points in Canada and points in the Dominican Republic.

Zoom advises that on November 29, 2004, it had entered into a sublease agreement with Air Atlanta Europe Limited (hereinafter Air Atlanta) to lease a B767-200 aircraft for the winter season commencing December 16, 2004 and terminating April 26, 2005.

Zoom adds that on December 14, 2004, it became clear that Air Atlanta was not going to be able to deliver the aircraft as a result of maintenance problems with respect to the aircraft. Zoom states that as a result, it contacted a number of Canadian air carriers namely Air Transat A.T. carrying on business as Air Transat (hereinafter Air Transat), Skyservice Airlines Inc. carrying on business as Skyservice (hereinafter Skyservice), Jetsgo Corporation carrying on business as Jetsgo (hereinafter Jetsgo), WestJet, I.M.P. Group Limited carrying on business as CanJet Airlines, among others, (hereinafter CanJet), Bradley Air Services Limited carrying on business as First Air, among others, (hereinafter First Air), Kelowna Flightcraft Air Charter Ltd. (hereinafter Kelowna) and Air Canada to determine whether a suitable Canadian aircraft would be available, either on a dry or wet lease basis. Zoom states that, while some carriers were able to provide certain aircraft for some flights, none of the carriers were able to provide an aircraft for all of the flights for the periods set out in the title.

On December 20, 2004, Canadian carriers and, at its request, the Air Line Pilots Association, International (hereinafter ALPA) were notified of the application and were asked to file comments before the Agency. Canadian carriers were provided until close of business, Thursday, December 23, 2004, to file comments and Zoom was provided until close of business, Tuesday, December 28, 2004, to reply to any comments.

On December 23, 2004, Kelowna, ALPA, WestJet and Air Transat filed comments in opposition to Zoom's application.

By letters dated December 28, 2004, Zoom replied individually to the above parties.

On December 29, 2004, Air Transat submitted further comments in response to Zoom's reply of December 28, 2004.

By Decision No. LET-A-359-2004 dated December 30, 2004, the Agency noted that the letter dated December 29, 2004, from Air Transat was filed outside the pleadings. The Agency considered the matter and found that the submission by Air Transat was necessary for its consideration of the matter and pursuant to section 6 of the National Transportation Agency General Rules, SOR/88-23, accepted the submission. The Agency found it appropriate to request additional comments from Zoom on the December 29, 2004 submission of Air Transat and specifically to explain the commercial and/or operational reasons for not accepting Air Transat's offer. Zoom was provided until 10 a.m. EST, Friday, December 31, 2004, to file these comments. Zoom responded, orally that it was not in a position to respond in writing to the Agency.

POSITIONS OF THE PARTIES

In its comments, Kelowna states that when it was initially contacted by Zoom, it was only requested to provide an aircraft for the first four flights and therefore responded that it was unable to accommodate Zoom's needs. Kelowna maintains that if Zoom had requested it to operate a series of flights as set out in the application, it may have been able to meet Zoom's needs. Therefore, Kelowna objects to the application on the basis that Zoom did not properly canvass the Canadian carriers.

ALPA objects to Zoom's application based on its view that there is sufficient domestic capacity to provide the necessary capacity. It also objects based on the preservation of Canadian jobs.

WestJet states that it was contacted for aircraft availability for flights on January 1 and 2, 2005, but due to its contract with its tour operator, Transat Tours Canada (hereinafter TTC), it referred the call to TTC. WestJet also states that it stands ready, through TTC, to discuss the protection of the passengers.

In its submission, Air Transat states that it was only contacted to operate one flight on January 2, 2005, and not the total flights requested in Zoom's application.

Air Transat also states that it has an A310/259 seat aircraft available to meet Zoom's requirements and on December 23, 2004, it submitted a wet lease agreement to Zoom for its approval. Air Transat adds that TTC has chartered aircraft from Air Transat and WestJet and has advised it has seat availability on existing flights.

In response to Zoom's statement that there is reciprocity by the United Kingdom (UK) authority of wet leasing of Canadian aircraft, Air Transat submits that the UK process incorporates a right of first refusal and it maintains that if a British carrier were to object to a proposed Canadian wet lease operation on the basis of aircraft availability, it would not likely be approved.

In response to the objections, Zoom submits that it made every effort to canvass Canadian carriers considering the last minute emergency situation Zoom was facing.

Zoom also submits that the sufficiency of domestic capacity available to provide the capacity required, in this case, is not an issue when considering whether Zoom and Excel have complied with the requirements of section 60 of the Canada Transportation Act (hereinafter the CTA) and section 8.2 of the ATR.

Zoom advises that notwithstanding the last minute delivery difficulties with respect to the Air Atlanta aircraft, Zoom will be retaining the additional pilots that it had trained to operate the Air Atlanta aircraft, regardless of the eventual outcome of the delivery problems. There will, therefore, be no effect on airline pilot employment upon granting of the application.

Zoom also submits that at least one Canadian carrier has frequently wet leased aircraft to UK carriers and the UK authority has routinely granted these operations.

In addition, Zoom states that, upon reflection, it does not wish to have any further discussion with respect to the Air Transat aircraft.

ANALYSIS AND FINDINGS

In making its finding, the Agency has considered all of the submissions filed by the parties during the pleadings and the legislative requirements of section 60 of the CTA and section 8.2 of the ATR.

Section 60 of the CTA requires that a licensee obtain, where prescribed, an approval from the Agency prior to using aircraft and flight crew provided by another person.

Section 8.2 of the ATR sets out the information to be included in an application for an approval pursuant to section 60 of the CTA. The Agency notes that Zoom's application to use aircraft and crew provided by Excel was predicated on the unavailability of the aircraft it had arranged to lease from Air Atlanta.

The Agency notes that during the pleadings, Air Transat provided Zoom a contract proposal for a wet lease agreement for the flights in question, however, the carriers were unable to reach an agreement.

The Agency also notes WestJet's and Air Transat's submissions that there may be sufficient capacity for Zoom to protect its passengers, through TTC charters on both Air Transat and WestJet flights. While this may be possible, the Agency finds that there is no legislative requirement for the Agency to require Zoom to do so. The Agency also finds it reasonable that Zoom prefers to rely on an aircraft that is under its commercial control.

The Agency also notes the comments concerning reciprocity with the United Kingdom and does not find evidence to indicate a lack of reciprocal treatment of Canadian carriers with respect to wet lease arrangements.

With respect to the request for an exemption from the application of subsection 8.2(2) of the ATR, the Agency has considered the request and is of the opinion that compliance by Zoom with subsection 8.2(2) of the ATR is impractical in this case.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, hereby orders that Zoom be exempt from the application of subsection 8.2(2) of the ATR.

The Agency has reviewed the material filed in support of the application and is satisfied that it meets the remaining requirements of section 8.2 of the ATR.

Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the CTA and section 8.2 of the ATR, hereby approves the use by Zoom of aircraft and flight crew provided by Excel, and the provision by Excel of such aircraft and flight crew to Zoom, in order to permit Zoom to provide its non-scheduled international service from Ottawa and Halifax to Varadero on January 2, 9 and 16, 2005; from Ottawa and Dorval to Puerto Vallarta on January 3, 2005; from Dorval to Holguin on January 14, 2005, and to provide its scheduled international service from Ottawa and Halifax to Puerto Plata on January 1, 8 and 15, 2005; and from Ottawa to La Romana on January 14, 2005, using aircraft and flight crew provided by Excel, subject to the following conditions:

  1. Zoom shall continue to hold the required licence authority.
  2. Commercial control of the flights shall be maintained by Zoom. Excel shall maintain operational control of the flights and shall receive payment based on the rental of aircraft and crew and not on the basis of the volume of traffic carried or other revenue-sharing formula.

Zoom and Excel are reminded of the continuing requirement to comply with sections 8.2 and 8.5 of the ATR.

The authority granted herein does not exempt Zoom and Excel from the requirements of other legislative acts or regulations, including those of Transport Canada.

It should be noted that the authority granted in this Decision is based on the merits of the present application and should not be relied upon as justification for similar applications in the future as the Agency assesses each application on a case-by-case basis.

This Decision takes effect on December 31, 2004, the date on which this authority was communicated verbally to the parties of record.

Date modified: