Determination No. A-2020-28
DETERMINATION by the Canadian Transportation Agency (Agency) regarding Swoop Inc.’s (Swoop) application for an exemption from the application of paragraph 67(1)(b) the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA).
APPLICATION
[1] Swoop has applied to the Agency for an exemption, pursuant to paragraph 80(1)(c) of the CTA, from the application of paragraph 67(1)(b) of the CTA.
BACKGROUND
[2] On January 30, 2019, the Agency issued Determination No. A-2019-14, in which Swoop was granted a temporary 180-day exemption, in accordance with paragraph 80(1)(c) of the CTA, from compliance with paragraph 67(1)(b) of the CTA to identify a basic fare within its tariff. The Agency indicated that during that time, it would undertake consultations that would help inform a subsequent decision on whether the exemption should be extended or made indefinite. On July 25, 2019, the Agency granted Swoop an extension of the exemption until the Agency made its final determination on the matter.
[3] On November 18, 2019, the Agency, in Determination No. A-2019-211 (November 18 Determination), found that each carrier holding a domestic licence that offers fares to passengers must identify a basic fare, as defined in subsection 55(1) of the CTA, in its tariff. The Agency also established the following criteria for the consideration of air carrier requests for an exemption from the application of paragraph 67(1)(b) of the CTA:
- the carrier demonstrates that, for the routes for which it requests an exemption, it (or other carriers) has offered a fare with the features of a basic fare for a reasonable period of time and none of these fares were purchased;
- the carrier has an explicit business model that does not contemplate offering for sale, now or at any time in the future, any version of a fare with the features of a basic fare.
THE LAW
[4] The CTA requires that all Canadian air carriers holding a domestic licence have a tariff, which is a schedule of their fares, rates, charges and terms and conditions of carriage applicable to the provision of their services and other incidental services.
[5] As part of its tariff obligations, under paragraph 67(1)(b) of the CTA, the holder of a domestic licence must identify a basic fare for all the routes that it offers. “Basic fare” is defined in section 55 of the CTA as follows:
- the fare in the tariff of the holder of a domestic licence that has no restrictions and represents the lowest amount to be paid for one-way air transportation of an adult with reasonable baggage between two points in Canada, or
- where the licensee has more than one such fare between two points in Canada and the amount of any of those fares is dependent on the time of day or day of the week of travel, or both, the highest of those fares;
[6] Paragraph 80(1)(c) of the CTA allows the Agency to exempt a person from the application of any of the provisions of Part II of the CTA or of a regulation or order made under that Part where the Agency is of the opinion that “compliance with the provision by the person is unnecessary, undesirable or impractical”.
POSITION OF THE APPLICANT
[7] Further to the criteria established by the Agency, Swoop requests an indeterminate exemption from the basic fare requirement because it has an explicit business model that does not contemplate offering for sale, now or at any time in the future, any version of a fare with the features of a basic fare as defined in section 55 of the CTA. Swoop states that its business model is to provide unbundled fares, which allows passengers to purchase a low fare and choose to pay for the aspects of air travel that they are interested in, such as checked baggage, seat selection, etc. Swoop states that it does not offer and does not contemplate offering a fare equivalent to the “basic fare” as this would require a “fundamental re-shaping of Swoop’s business model”.
ANALYSIS AND FINDINGS
[8] Swoop has demonstrated that it operates as an ultra-low-cost carrier (ULCC) offering only “unbundled” fares for the provision of travel. On this basis, the Agency finds that it is impractical for Swoop to comply with the basic fare requirement, as it does not contemplate offering for sale, now or at any time in the future, any version of a fare with the features of a basic fare.
CONCLUSION
[9] The Agency, in accordance with paragraph 80(1)(c) of the CTA, exempts Swoop from the application of paragraph 67(1)(b) of the CTA. Furthermore, the Agency reminds Swoop that it must inform the Agency without delay if any of the relevant facts in its submission materially change in a way that would affect the basis for which this exemption has been granted.
Member(s)
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