Decision No. 582-A-2007

November 16, 2007

File Nos. M4212-C575-4
M4820-F3

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APPLICATION

Corsair has applied to the Canadian Transportation Agency (hereinafter the Agency) for the authority set out in the title. The application was received on July 20, 2007 and amended on November 9, 2007.

BACKGROUND

Under Licence No. 975149, Corsair is authorized to operate a scheduled international service between France and Canada in accordance with the Agreement between the Government of Canada and the Government of the French Republic on Air Transport signed on June 15, 1976, as amended (hereinafter the 1976 Agreement).

Condition No. 1 of Licence No. 975149 states:

The Licensee is authorized to operate a scheduled international service on Route 1 of the French Route Schedule of the Agreement, between Paris, France and Montréal, Quebec/Toronto, Ontario, Canada.

Condition No. 2 of Licence No. 975149 states:

The operation of the 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 France.

Corsair is requesting the extra-bilateral authority to serve the point Québec as service at this point is not provided for in the 1976 Agreement. Under the terms of the 1976 Agreement, Corsair is authorized to serve Route 1 of the French Route Schedule which permits own aircraft services to only Montréal and/or Toronto.

Due to the extra-bilateral nature of Corsair's requested authority, the Agency, by letter dated August 29, 2007, gave notice of the application to parties that may have an interest, namely Air Canada, Air Transat A.T. Inc., carrying on business as Air Transat (hereinafter Air Transat), Zoom Airlines Inc., Skyservice Airlines Inc. carrying on business as Skyservice, the Montréal Pierre Elliott Trudeau International Airport and the Québec Airport. Air Transat and Air Canada filed interventions.

ISSUE

The issue to be addressed is whether to authorize Corsair to operate a scheduled international passenger service to and from Québec on an extra-bilateral basis.

POSITIONS OF THE PARTIES

Corsair refers to the 400th anniversary of Québec and the festivities scheduled throughout the 2008 summer period. Corsair submits that it is in a position to play a partnership role by promoting Québec as a destination. It also can provide a high quality air service that is customized. This service would be complemented by an integral tourist service provided by a tour operator of which Corsair is an affiliate. To this effect, Corsair intends to offer one weekly frequency Paris/Québec/Montréal/Paris from June 5 to October 23, 2008 and one weekly frequency Paris/Québec/Paris from June 30 to September 1, 2008.

Therefore, Corsair requests, pursuant to subsection 78(2) of the Canada Transportation Act (hereinafter the CTA), an extra-bilateral authority to operate scheduled flights between Paris and Québec during the tourist summer season of 2008, i.e. from June 5 to October 23, 2008.

Air Transat indicates that, as was the case in the past and in the absence of a liberalized arrangement, it has filed a request for extra-bilateral authority with the Canadian and French aeronautical authorities to operate, on a scheduled service basis, a program of 19,500 one-way seats in the Canada-France market that will be similar in nature and scope to Corsair's proposed program.

Therefore, Air Transat is prepared to support the current application by Corsair provided that the Agency includes a condition of reciprocity in its eventual ruling to the effect that Corsair's requested authority will only come into force when Air Transat's own application is approved by France's aeronautical authority.

Air Canada indicates that it continues to regret the fact that the Canada-France agreement is one of the most antiquated of Canada's agreements. Air Canada adds that it has often maintained that such extra-bilateral requests are to be discussed and resolved in the context of a long overdue modernization of the Agreement but that the Agency chose to use a different approach by granting extra-bilateral authority on the basis of reciprocal treatment by the French aeronautical authority on a comparable application.

Consequently, Air Canada asks the Agency to defer Corsair's request to the upcoming consultations between Canada and the European Commission which would allow for a balanced exchange of precious traffic rights sought by carriers of both countries.

Corsair did not respond to Air Transat and Air Canada's interventions.

ANALYSIS AND FINDINGS

The Agency has reviewed and considered the application and the interventions filed by Air Transat and Air Canada.

Pursuant to subsection 78(2) of the CTA, the Agency may vary the terms and conditions of a licence on a temporary basis for international air services that are not permitted in an agreement, convention or arrangement to which Canada is a party.

As noted in the pleadings, Corsair seeks extra-bilateral authority to operate a scheduled air service to Québec, a point not provided for in the 1976 Agreement. The Paris/Québec/Montréal/Paris service would be provided once a week from June 5 to October 23, 2008, and the Paris/Québec/Paris service would operate weekly from June 30 to September 1, 2008, for a total of 19,000 one-way seats destined to Québec.

In its review of Corsair's application, the Agency has considered the economic interests of the communities to be served. The Agency also notes that the year 2008 marks the 400th anniversary of Québec and that great efforts have been made by the tourism industry and Québec to promote this one time historical event. In this respect, the Agency recognizes that the proposed service could generate additional revenues for the tourism industry in the province of Quebec and in the city of Québec. In addition, if Corsair were authorized to serve Québec, it would provide direct air services between Québec and Paris, which would be convenient to passengers destined for Québec who will participate in the special events.

The Agency has also considered the economic interests of Canadian air carriers as well as the treatment by France of similar applications by Canadian air carriers.

With respect to Air Canada's suggestion to defer Corsair's request to the upcoming negotiations between Canada and the European Commission, the Agency finds it premature at this stage to conclude that an agreement between Canada and the European Commission would be reached in time for the next summer season. Moreover, it is unlikely that the granting of an extra-bilateral authority to Corsair for its proposed service would have a negative impact on the negotiations between Canada and the European Commission.

The Agency further notes that an application by Air Transat to operate, on an extra-bilateral basis, a series of scheduled flights on the routings Montréal/Marseille/Montréal or Montréal/Marseille/Montréal/Toronto, Ontario, Canada from April 28 to October 25, 2008 has been filed with the French aeronautical authority and that Air Transat is still awaiting a decision.

CONCLUSION

The Agency is of the opinion that Air Transat and Air Canada have not provided evidence of a lack of reciprocity of treatment by the French aeronautical authority in their consideration of similar applications by Canadian air carriers. In fact, the Agency notes that the French aeronautical authority has, in recent years, authorized extra-bilateral applications by Canadian carriers for additional points not covered under the Canada/France agreement.

Moreover, Air Transat and Air Canada have not indicated that the proposed flights by Corsair would adversely affect their services.

Consequently , pursuant to subsection 78(2) of the CTA, the Agency hereby varies Condition Nos. 1 and 2 of Licence No. 975149 to the extent necessary to permit Corsair to operate 31 round-trip flights on a scheduled international basis, on the routes Paris/Québec/Montréal/Paris and Paris/Québec/Paris from June 5 to October 23, 2008.

In all other respects, the service authorized herein shall be operated in accordance with the 1976 Agreement, as amended.

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

This Decision shall form part of Licence No. 975149 and shall remain affixed thereto as long as the said Decision is in force.

Members

• Raymon J. Kaduck
• J. Mark MacKeigan