Determination No. A-2022-185

APPLICATION

Air Transat, on behalf of itself and SmartLynx, has applied to the Canadian Transportation Agency (Agency) for an approval to permit Air Transat to provide its scheduled international service between Canada and Cuba, the Dominican Republic, Jamaica and Mexico, using two aircraft with flight crew provided by SmartLynx, beginning on February 13, 2023, to May 14, 2023.

Air Transat is licensed to operate a scheduled international service, large aircraft, between Canada and each of the following countries: Cuba, the Dominican Republic, Jamaica and Mexico.

In its application filed on December 21, 2022, Air Transat states that it had 31 aircraft on its Air Operator Certificate (AOC) at the time of application.

POLICY

When assessing wet-lease applications where Canadian carriers propose to enter into wet-lease arrangements of more than 30 days with foreign carriers to provide international passenger services, the Agency must apply a direction issued by the Minister of Transport on June 24, 2014, entitled Ministerial Direction for International Service – Canada's Policy for Wet-Leasing (2014 Wet-Lease Policy), and must specifically ensure that the 20% cap is respected at the time of application. The 2014 Wet-Lease Policy also states that the Agency should condition or deny an application if Canadian air carriers do not enjoy reciprocal opportunities to wet lease in the foreign jurisdiction of the lessor.

PRELIMINARY MATTER

On matters of international reciprocity, the Agency's general practice is that reciprocity by the authorities of the lessor's country of origin, in this case Malta (European Community and its Member States), is assumed unless evidence is brought to the contrary. The Agency is not aware of any similar application by a Canadian carrier to the aeronautical authorities of Malta (European Community and its Member States) that has been denied.

Upon review of the application, the Agency determined that it did not raise issues with respect to reciprocity. Consequently, the Agency did not provide notice to seek comments from industry in respect of the application.

ISSUE

Is the Agency satisfied that the application of Air Transat meets the requirements of section 8.2 of the ATR and the criteria of the 2014 Wet Lease Policy, specifically the 20% ceiling?

ANALYSIS AND FINDINGS

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

Section 8.2 of the ATR sets out the information to be included in an application and the requirements to be met for an approval pursuant to section 60 of the CTA.

Pursuant to the 2014 Wet-Lease Policy, for wet leases of more than 30 days, a number of aircraft equal to 20% of the number of Canadian registered aircraft on the lessee's AOC may be wet leased from foreign lessors. The Agency notes that at the time of the application, i.e., December 21, 2022, Air Transat had 31 aircraft on its AOC. Therefore, Air Transat's application meets the 20% cap requirement of the 2014 Wet-Lease Policy.

The Agency has considered the application and the material in support and is satisfied that it meets the requirements of section 8.2 of the ATR. The Agency is also satisfied that the application satisfies the criteria of the 2014 Wet-Lease Policy.

Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the CTA and section 8.2 of the ATR, approves the use by Air Transat of two aircraft with flight crew provided by SmartLynx, and the provision by SmartLynx of such aircraft and flight crew to Air Transat, to permit Air Transat to provide its scheduled international service on licensed routes between Canada and Cuba, the Dominican Republic, Jamaica and Mexico, using two aircraft and flight crew provided by SmartLynx, beginning on February 13, 2023, to May 14, 2023.

This approval is subject to the following conditions:

1. Air Transat shall continue to hold the valid licence authority.
2. Commercial control of the flights shall be maintained by Air Transat. SmartLynx 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.
3. Air Transat and SmartLynx shall continue to comply with the insurance requirements set out in subsections 8.2(4), 8.2(5) and 8.2(6) of the ATR.
4. Air Transat shall continue to comply with the public disclosure requirements set out in section 8.5 of the ATR.
5. Air Transat and SmartLynx shall advise the Agency in advance of any changes to the information provided in support of the application.