Determination No. A-2024-171

Application

Saudi Arabian Airlines has applied to the Canadian Transportation Agency (Agency) for extra-bilateral authority to permit it to operate one additional flight per week between Saudi Arabia and Canada, for the period of November 29, 2024, to March 29, 2025.

Saudi Arabian Airlines is licensed to operate a scheduled international service in accordance with the Arrangement between the Government of Canada and the Government of the Kingdom of Saudi Arabia set out in a Record of Discussion signed on December 11, 2012 (Arrangement).

Under the terms of the Arrangement, each country may allocate among its designated air carriers four weekly flights to be operated using their own aircraft, in each direction.

In its application, Saudi Arabian Airlines states that there is an increased demand for air travel between the two countries during the IATA winter season, and contends that no Canadian carrier has exercised its rights to operate the service under the Arrangement.

Therefore, Saudi Arabian Airlines requests extra-bilateral authority to operate a total of five flights per week to Canada.

Industry notice

Due to the extra-bilateral nature of Saudi Arabian Airlines' requested authority, the Agency gave notice of the application to parties that may have an interest, namely Air Canada, also carrying on business as Air Canada rouge and as Air Canada Cargo (Air Canada), as a designated carrier under the Arrangement; and to the Greater Toronto Airports Authority, as the five flights would be operated to Toronto.

Air Canada filed an intervention in respect of the application. No other intervention was filed.

Position of the parties

Air Canada states that it opposes the application. Firstly, it states that contrary to what was stated by Saudi Arabian Airlines, it operates codeshare services under the Arrangement.

Air Canada further adds that it has issues regarding its codeshare filings, and that Saudi Arabia unilaterally approves or disapproves commercial applications from foreign air carriers based on its domestic regulations, which favours Saudi Arabian Airlines.

Finally, Air Canada urges the Agency to address applications for extra-bilateral authority in a manner that allows the normal negotiation process between governments to unfold to ensure that rights within the Arrangement are reviewed as required.

Saudi Arabian Airlines, in its reply to Air Canada's opposition, states that Air Canada has not provided evidence of the lack of demand, and contends that air transport agreements do not specify the processes required to approve certain requests.

However, Saudi Arabian Airlines indicates that it has been informed by its aviation authority that all pending Air Canada matters would be immediately completed and that all future requests would receive the same expedited approval process.

Analysis and findings

Authority under subsection 78(2) of the CTA

The Agency may, pursuant to subsection 78(2) of the CTA, grant authority on a temporary basis for a service that is not permitted in a bilateral air transport agreement or arrangement.

The Agency has considered the application and finds it appropriate to deny this authority.

Although it claims that Air Canada did not provide evidence of the lack of demand, Saudi Arabian Airlines has itself not submitted any evidence to support its claim that there is an increased demand during the IATA winter season.

Therefore, the Agency cannot come to the conclusion that there could be potential consumer benefits of the application with regard to connectivity and service.

Accordingly, the Agency will not go beyond what was negotiated by the two countries and reflected in their bilateral agreement.

In this context, the Agency is of the opinion that it would be inappropriate at this time to approve the application.

Accordingly, the Agency, pursuant to subsection 78(2) of the CTA, denies the application by Saudi Arabian Airlines to operate one additional flight per week from November 29, 2024, to March 29, 2025.