Order No. 2007-A-169

May 24, 2007

May 24, 2007

IN THE MATTER OF an application by Lan Airlines S.A. carrying on business as Lan Airlines and by Lan Cargo S.A. carrying on business as Lan Cargo for exemptions from the application of section 60 of the Canada Transportation Act, S.C., 1996, c. 10 and section 8.2 and paragraph 18(c) of the Air Transportation Regulations, SOR/88-58, as amended, in order to permit Lan Airlines S.A. carrying on business as Lan Airlines to operate its all-cargo non-scheduled international service using aircraft and flight crew provided by Lan Cargo S.A. carrying on business as Lan Cargo.

File Nos. M4212/L226-2
M4212/L225-2


Lan Airlines S.A. carrying on business as Lan Airlines (hereinafter Lan Airlines) and Lan Cargo S.A. carrying on business as Lan Cargo (hereinafter Lan Cargo) have applied to the Canadian Transportation Agency (hereinafter the Agency) for the exemptions set out in the title. The application was received on April 12, 2007.

Under Licence No. 030038, Lan Airlines is authorized to operate a non-scheduled international service to transport goods on a charter basis between points in Chile and points in Canada.

Under Licence No. 020121, Lan Cargo is authorized to operate a non-scheduled international service to transport goods on a charter basis between points in Chile and points in Canada.

The Agency has reviewed the application whereby the all-cargo services of Lan Airlines are to be operated using aircraft and flight crew provided by Lan Cargo. The Agency notes that Lan Cargo, as a "dominated company", is managed and controlled by Lan Airlines in the style of a division of the parent company rather than as a separate entity doing business at arm's length. The Agency considers this to be a unique relationship and the provision of aircraft with flight crew by Lan Cargo to its parent company Lan Airlines is significantly different from arrangements between separate entities which, given the potential for confusion or misrepresentation to the public, are subject to regulations concerning disclosure of the identity of the person operating the aircraft.

The Agency has considered the matter and is of the opinion that compliance by Lan Airlines and Lan Cargo with section 60 of the Canada Transportation Act (hereinafter the CTA) and section 8.2 and paragraph 18(c) of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR) is impractical in this case.

Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, hereby exempts Lan Airlines and Lan Cargo from the application of section 60 of the CTA and section 8.2 and paragraph 18(c) of the ATR with respect to the operation of the non-scheduled international all-cargo service of Lan Airlines under Licence No. 030038, for a period of one year from the date of this Order.

The approval granted herein does not exempt Lan Airlines and Lan Cargo from the requirements of other legislative acts or regulations, including those of Transport Canada.

Any request for extension of this authority shall be submitted to the Agency for approval by no later than April 15, 2008.

This Order shall be affixed to Licence Nos. 030038 and 020121.

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