Order No. 2021-A-2

BACKGROUND

On March 18, 2020, Air Canada applied to the Canadian Transportation Agency (Agency) for a temporary exemption from the provisions of section 64 of the CTA to permit it to suspend the operation of air services between points in Canada, as it considered necessary, without having to provide the normal 120 days of notice and engage in the consultations required by the CTA and the Air Transportation Regulations, SOR/88-58 (ATR).

By Order No. 2020-A-36, dated March 25, 2020 (Order), the Agency exempted all air carriers who hold a domestic licence from the provisions of section 64 of the CTA until June 30, 2020, on the condition that once the exemption ended, air carriers who had taken advantage of it to temporarily reduce or suspend services on certain routes immediately resume those services and follow all of the requirements of section 64 of the CTA if they wished to reduce or eliminate any services on a permanent basis.

On June 19, 2020, the Agency, by Order No. 2020-A-105, extended the period of the temporary exemption to October 15, 2020, and also permitted any carrier that, during the period Order No. 2020-A-105 was in effect, provided notice and engaged in discussions for a period of at least 60 days in a manner consistent with section 64 of the CTA and section 14 of the ATR to permanently discontinue or reduce service without the need to first resume that service or engage in further notice or consultation activities.

On October 15, 2020, the Agency, in Decision No. LET-A-66-2020, extended the period of the temporary exemption until March 31, 2021, and also permitted any carrier, during the period Order No. 2020-A-185 was in effect, to comply with paragraph 14(1)(b) of the ATR by publishing notices of suspension or discontinuance on its website and by establishing a dedicated webpage for this purpose that was easily accessible from its homepage. The Agency published the reasons for this Decision on November 20, 2020, in Order No. 2020‑A-185.

On January 13, 2021, WestJet requested that the Agency grant a further extension until August 31, 2021, or such longer period as the Agency may consider appropriate.

On January 20, 2021, Air Canada requested that the Agency grant a further extension until June 30, 2021, or such longer period as the Agency may consider appropriate, and that it also shorten the notice period to 15 days.

LEGISLATIVE FRAMEWORK

Section 64 of the CTA requires, in part, that a licensee not implement a proposal to discontinue a domestic service referred to in subsection 64(1) of the CTA until the expiry of 120 days, or any shorter notice period that the Agency may specify by order, and that the licensee provide elected officials of the relevant municipal or local government with an opportunity to meet with the licensee to discuss the impacts of the proposed reduction or discontinuation of service.

Subsection 14(1) of the ATR provides that, for the purposes of subsection 64(1) of the CTA, a licensee proposing to discontinue or to reduce the frequency of a domestic service shall give notice of the proposal to the Agency, the Minister of Transport and the minister responsible for transportation in the province or territory where the area to be affected is located. Additionally, the licensee is required to advise holders of domestic licences operating in the area to be affected by the proposal and the persons resident therein, by publishing a notice in newspapers with the largest circulation in that area in each official language.

Pursuant to subsection 80(1) of the CTA, the Agency may, by order, on such terms and conditions as it deems appropriate, exempt a person from the application of section 64 of the CTA and section 14 of the ATR, where the Agency is of the opinion that

1. the person has substantially complied with the provision;
2. an action taken by the person is as effective as actual compliance with the provision; or
3. compliance with the provision by the person is unnecessary, undesirable or impractical.

SUBMISSION BY WESTJET

In support of its request for a further extension, WestJet indicates that since the Agency issued Decision No. LET‑A‑66-2020, it has suffered an additional drop in the demand for its services and its traffic and a corresponding decline in revenues as a result of the identification of new variants of COVID-19, increasing COVID-19 restrictions within provinces, territories, and municipalities; extended Canadian border restrictions; additional emergency orders under the Quarantine Act, SC 2005, c 20; and the announcement that passengers will be required to provide documentation of a negative COVID-19 test result prior to boarding a flight to Canada.

WestJet further states that it does not expect demand to resume for its suspended services by March 31, 2021, and that while it does not intend to permanently abandon any routes or airports, under the existing timeline requirements established by the Agency in Decision No. LET-A-66-2020, WestJet would have no choice but to provide notices of permanent suspension by January 30, 2021, which could create confusion and concern for its many stakeholders and may even hinder WestJet's return to those markets.

SUBMISSION BY AIR CANADA

Air Canada contends that it will not be in a position to re-establish its services under the terms of Decision No. LET‑A‑66-2020, as it is not in a position to operate routes that are not financially viable. Air Canada states that the persistent and prolonged effects of the pandemic, along with extended and new government measures and the public's perception of travel during the pandemic, have severely impacted demand for its services and have impacted its liquidity.

Air Canada also requests that the 60-day notification period in effect under Decision No. LET-A-66-2020 be further reduced to 15 days, as the current environment has profoundly changed all network planning and booking patterns.

ANALYSIS AND DETERMINATION

The COVID-19 pandemic continues to have major implications for the Canadian aviation industry. The negative impacts on domestic air carriers' passenger volumes and revenues and the challenges of managing their networks in the face of such declines and unpredictability make it impractical to require domestic air carriers to be subject to the full requirements of section 64 of the CTA and section 14 of the ATR.

In light of these circumstances, pursuant to section 80 of the CTA, the Agency finds it appropriate to provide a further exemption until August 31, 2021.

While the Agency recognizes that in the circumstances, there is some justification for further shortening the mandatory notice period for permanent service discontinuations or reductions, as Air Canada has sought, air carriers' challenges must be weighed against those faced by northern and remote communities, for whom air services often have particular significance. The Agency, therefore, finds it reasonable to shorten the notice period to 30 days rather than the 15 days requested by Air Canada.

CONCLUSION

The Agency extends the period of temporary exemption from the provisions of section 64 of the CTA and section 14 of the ATR for all carriers that hold a domestic licence, pursuant to section 80 of the CTA. Accordingly, air services may be or remain suspended without carriers having to provide the normal 120 days of notice or engage in the consultations, as required by those sections.

During the period this Order is in effect, a carrier:

• may permanently discontinue or reduce service without the need to first resume that service or engage in any further notice or consultation activities so long as it has provided notice for a period of at least 30 days in a manner consistent with section 64 of the CTA and section 14 of the ATR; and
• can comply with paragraph 14(1)(b) of the ATR by:

        a. publishing any notices of suspension, reduction or discontinuance on its website; and

                b. establishing a dedicated webpage for this purpose that is easily accessible from its homepage.

The exemptions and conditions contained in this Order will remain in effect until August 31, 2021.

Should there be no material change in the circumstances that gave rise to this Order as its end date approaches, the Agency will, on application, consider granting a further extension of this Order.