Decision No. 801-A-1994

December 6, 1994

File No. M4895/U17-4-1

Docket No. 941083

United Parcel Service Company (hereinafter the applicant) has applied to the National Transportation Agency for the authority set out in the title. The application was received on June 16, 1994.

Under Licence No. 880730, the applicant is authorized to operate a Class 9-4 Charter non-scheduled international service to transport traffic between points in Canada and points in the United States of America.

Pursuant to Agency Order No. 1994-A-167 dated May 6, 1994, the applicant is exempted from complying with the requirements set out in paragraph 20(a) of the Air Transportation Regulations, SOR/88-58 (hereinafter the ATR) in order to charter its Group G aircraft to UPS Worldwide Forwarding, Inc. (hereinafter UPS) for the carriage of transborder courier traffic as defined by paragraphs 16(a) and (b) of the ATR from Hamilton, Ontario, Canada to Louisville, Kentucky, U.S.A. for a period of one year.

Paragraph 16(a) of the ATR stipulates that:

16. Notwithstanding section 20, the holder of a Class 9-4 licence authorizing the operation of services by means of aircraft in Group A, B, C or D may charter, at any one time, any aircraft in that Group to one courier service that obtains payment for traffic carried at a toll per unit if

1. the chartered aircraft is used solely for the transportation of packages that individually weigh no more than 50 kg (110 lb);

Notice of the application was published on July 5, 1994 in the newspapers of the area concerned. In addition, selected air carriers and others who may have an interest in the proceedings were notified of the application. An intervention opposing the granting of the application was filed with the Agency by Federal Express Corporation (hereinafter Fedex). The applicant replied to the intervention.

The pleadings form part of the public files and may be consulted in the offices of the Agency by anyone who so desires. In addition, copies will be provided by the Secretary of the Agency on request.

The Agency has considered the application and the intervention referred to.

In its intervention, Fedex states that it is restricted to the carriage of individual packages weighing 110 pounds or less and that it has been seeking to increase the weight limitation on the packages that it carries from 110 pounds to 150 pounds since 1988. The first application made by Fedex was denied by the Minister of Transport and a subsequent application filed in 1992 remains outstanding.

Fedex states that granting this application without granting its own will exacerbate the unfair competition which will be faced by Fedex. The applicant replied that it is not seeking any new rights but rather an extension of an existing right to provide transborder courier services from Hamilton, Ontario, Canada to Louisville, Kentucky, U.S.A.

Fedex operates a service pursuant to a scheduled international licence issued in accordance with sections 69 and 88 of the National Transportation Act, 1987 (hereinafter the NTA, 1987) and the exchange of diplomatic notes (L-12 and 273) between the Government of Canada and the Government of the United States of America. As of December 20, 1989, all applications for authority to operate services under the All-Cargo Notes are to be directed to the Minister of Transport. In response to the first application of Fedex to increase the weight limitation on packages carried from 110 to 150 pounds, the Minister of Transport stated: "... I do not believe that the change in weight limitation on package size sought by Federal Express would be consistent with the basis on which Fedex was originally granted its authority by the Canadian Transport Commission, i.e., to carry small, time-sensitive packages, and I will thus not authorize a change to the applicable condition on Federal Express' licence."

The application of Fedex pursuant to the All-Cargo Notes is subject to approval by the Minister of Transport. Consideration of the application of Fedex by the Minister does not in any way bind the Agency in its determination of the present application.

The applicant is authorized to use its Group G aircraft to satisfy a single customer, UPS Worldwide Forwarding, Inc., in a specific market through an exemption order issued by the Agency. The applicant is now requesting Agency approval for a further exemption from a provision of the ATR.

The granting of this further exemption is deemed inappropriate in that it would undermine and dilute the integrity of the licensing system by allowing a deviation from the ATR over and above the one already granted by Order No. 1994-A-167 to allow the applicant to charter to UPS a larger aircraft than normally allowed.

Carriage of courier packages are subject to the rules of the originating country. The U.S. authority does not limit carriers with respect to the weight of packages they may carry originating in the U.S. The only requirement on the part of the carrier is that the Agency be notified of all U.S. originating flights at least 48 hours prior to departure pursuant to the Nonscheduled Air Service Agreement between the Government of Canada and the Government of the United States of America. The carriage of packages from Canada to the U.S., on the other hand, must comply with paragraph 16(a) of the ATR which states, inter alia, that packages must individually weigh no more than 110 lbs. While there is a difference regarding the weight of courier packages carried between the two countries, when originating in one of the countries, both foreign and domestic carriers are subject to the same rules - Canadian based shipping customers are treated equally.

In arguing that the carriage of parcels restricted to 110 pounds is unnecessary, undesirable or impractical, the applicant states that "Canadian Customers have a need to economically ship packages weighing up to 150 pounds as part of their daily business and they require the ability to rely on one package distribution company to meet their shipping requirements." In addition, the applicant states that customers who ship a small number of packages in excess of 110 pounds would no longer be forced to use two carriers and the Canadian customer would benefit from door-to-door rates and services and customer pick-up without special arrangments.

While the applicant has given its opinion why this provision of the NTA, 1987 is unnecessary, undesirable or impractical, it has not provided the Agency with substantiated documentation which would permit the Agency to form an opinion in favour of the application.

The onus of justifying a need for a waiver of the weight limitation of packages from that provided for in the ATR rests with the applicant. No evidence supporting this application enabling the Agency to conclude that compliance with the weight limitation is unnecessary, undesirable or impractical as specified in section 70 of the NTA, 1987 has been filed. In addition, granting of this exemption to the applicant would undermine and dilute of the integrity of the licensing system.

Based on the foregoing, the application is hereby denied.