Decision No. 280-A-2012

July 12, 2012

IN THE MATTER OF Alpine Helicopters Ltd.’s licence and the Ministerial Exemption Order.

File No.: 
4352/12-00735

INTRODUCTION

[1] Alpine Helicopters Ltd. (Alpine) is licensed to operate a domestic service, small aircraft.

[2] One of the requirements to hold a licence is that an applicant must be Canadian as defined in subsection 55(1) of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA). However, pursuant to section 62 of the CTA, the Minister of Transport may, by order, on such terms and conditions as may be specified in the order, exempt a person from the Canadian ownership requirement set out in subparagraph 61(a)(i) of the CTA, where the Minister considers it necessary or advisable in the public interest.

[3] On February 12, 1999, the Minister issued an order exempting Alpine from the application of subparagraph 61(a)(i) of the CTA (the Exemption Order). By Orders dated March 3 and March 25, 2011, the Minister amended the Exemption Order (Amended Exemption Order) to include additional conditions.

[4] Specifically, Condition 5.1 of the Amended Exemption Order reads:

Alpine Helicopters Ltd. may offer domestic air services for contracts in effect as of March 3, 2011, the date of the Order Amending the Alpine Helicopters Ltd., Exemption Order – 1999, including potential renewal of such contracts, provided renewals do not exceed December 31, 2012, and for services it provides to Canadian Mountain Holidays.

[5] In its Order No. 2011-A-111 dated March 25, 2011, the Canadian Transportation Agency (Agency) ordered that the Amended Exemption Order shall form part of Alpine’s licence and required Alpine to comply with the conditions of the Amended Exemption Order.

[6] In November 2011, the Agency received information alleging that contrary to the conditions of the Amended Exemption Order issued in March 2011, Alpine had been hired to provide helicopter services. Prior to that, the services had been provided by another company. On December 1, 2011, following receipt of this information, an Agency designated enforcement officer sent a letter to Alpine requesting Alpine to provide information and documentation related to contracts entered into for the FIS Lake Louise ski races.

[7] In a submission dated December 13, 2011, Alpine provided its interpretation of Condition 5.1 of the Amended Exemption Order as follows. Alpine argues:

It is submitted that the purpose and intent of Condition 5.1 of the   Order Amending the Alpine Helicopters Ltd., Exemption Order – 1999 (“Condition 5.1”) was to ensure that during the exemption period, Alpine could not seek new customers to the detriment of other helicopter operators.

Having regard to the purpose and intent of Condition 5.1, understandings and arrangements with customers in existence as of March 3, 2011 would not be precluded by Condition 5.1. To interpret Condition 5.1 otherwise would lead to an interpretation draconian in nature and contrary to the purpose and intent of Condition 5.1.

[8] This matter, including the material previously filed in this respect, was referred to a panel of Agency Members for consideration and Alpine was informed of this on February 6, 2012.

ISSUES

[9] In reviewing the facts of this case, the Agency has determined that there are two issues to be decided:

  1. What is meant by the words “potential renewal of … contracts” in effect as of March 3, 2011 as stated in the Amended Exemption Order; and,
  2. Did Alpine’s contract with the Lake Louise World Cup Organization constitute a breach of Condition 5.1 of the Amended Exemption Order?

What is meant by the words “potential renewal of … contracts” in effect as of March 3, 2011 as stated in the Amended Exemption Order?

[10] Alpine’s interpretation of Condition 5.1 of the Amended Exemption Order contends that Alpine would not be restricted from entering into contracts with customers with which it had contracts in effect as of March 3, 2011.

[11] In this regard, the Agency notes the following:

  • The requirement to be Canadian is a fundamental aspect of the air licensing scheme in Canada.
  • Only the Minister of Transport has the discretion to exempt a person from this requirement, a power that has been exercised in a small number of cases.
  • In the case at hand, the Amended Exemption Order clearly establishes that the exemption is only for a temporary period not exceeding December 31, 2012 and that it is subject to certain specified conditions being met.

[12] In this context, the Agency finds that the very broad interpretation of what is meant by the Amended Exemption Order, in particular the words “renewal of such contracts” proposed by Alpine is inconsistent with the words as well as the intent of the Amended Exemption Order. Accordingly, the Agency finds that the Amended Exemption Order does not allow Alpine to enter into any contract with any customer with which it might have previously contracted. Rather, the Amended Exemption Order allows renewals of contracts that Alpine was a party to as of March 3, 2011, and only insofar as that extension does not extend past December 31, 2012. Furthermore, it does not permit Alpine to enter into new contracts with new customers, nor does it allow for an expansion of services provided to existing customers beyond services covered by contracts in effect as of March 3, 2011.

[13] This interpretation is now being applied to the facts of this case.

Did Alpine’s contract with the Lake Louise World Cup Organization constitute a breach of Condition 5.1 of the Amended Exemption Order?

[14] The Agency is of the opinion that Alpine’s contract with the Lake Louise World Cup Organization constituted a breach of Condition 5.1 of the Amended Exemption Order.

[15] The Agency notes that Alpine entered into a contract with the Lake Louise World Cup Organization on September 20, 2010 to provide medivac helicopter services at the Lake Louise World Cup Ski Races held in November and December 2010.

[16] Alpine filed a letter dated December 6, 1996 from the Lake Louise World Cup Organization and copies of annual Letters of Understanding between the organization and Alpine arising out of the December 6, 1996 letter. Alpine maintains that it is the long-term understanding which is confirmed by the annual Letters of Understanding up to and including 2011. Alpine also submits that the September 30, 2011 Letter of Understanding and the subsequent flying performed pursuant to that Letter of Understanding fall within the purpose and intent of Condition 5.1.

[17] The Agency is of the opinion that the letter dated December 6, 1996 submitted by Alpine does not constitute a contract between the Lake Louise World Cup Organization and Alpine that could be considered as an “existing” contract that was in effect as of March 3, 2011. The December 6, 1996 letter does not include a description of service, frequency, rates or signatures of the parties. While that letter expresses interest in a long and lasting relationship between the Lake Louise World Cup Organization Committee and Alpine, it does not constitute a contract or agreement between the parties as is contemplated by the Amended Exemption Order.

[18] The Agency finds that the contract signed on September 30, 2011 cannot be considered a renewal given that it includes services not included in the previous contracts. Specifically, the Agency notes that the medivac standby helicopter services for the 2011 Lake Louise World Cup Ski Races (clauses No. 6, 7 and 8, which refer to the provision of an additional aircraft Bell 206L Long Ranger for the sole purpose of medical evacuation of any athlete with severe trauma) is in addition to the services that were provided in previous years.

[19] As such, and consistent with the Agency’s interpretation above, the contract cannot be considered to constitute a renewal as intended by the Amended Exemption Order.

CONCLUSION

[20] In light of the foregoing and based on the documentation provided, the Agency concludes that:

  • the Amended Exemption Order allows Alpine to extend only those contracts that were in effect as of March 3, 2011, and only insofar as that extension does not extend past December 31, 2012.
  • the Amended Exemption Order does not permit Alpine to enter into new contracts with new customers, nor does it allow for an expansion of services provided to existing customers beyond services covered by contracts that were in effect as of March 3, 2011;
  • the September 30, 2011 contract is not a simple renewal of an existing contract as it includes the provision of services not included in the previous years’ contracts.

[21] On this basis, the Agency concludes that in entering into the September 30, 2011 contract with the Lake Louise World Cup Organization, Alpine has breached Condition 5.1 of the Amended Exemption Order. Non-compliance with one of the conditions of the Amended Exemption Order is a contravention of section 62 of the CTA.

[22] Pursuant to section 26 of the CTA, the Agency has the power to order Alpine to take corrective measures to stop the offence or bring it into compliance with the conditions of the Amended Exemption Order. As all the services under the September 30, 2011 contract have already been provided and the contract is no longer in effect, the Agency finds that no corrective measures can be ordered to stop the offence.

[23] The CTA provides the Agency with the authority to act where a licensee has contravened a provision of the CTA. This includes the power to suspend or cancel a domestic licence where the Agency determines that, in respect of the service for which the domestic licence was issued, the licensee has contravened an order made under Part II of the CTA. This includes non-compliance with an order made by the Minister pursuant to section 62 of the CTA.

[24] The Agency finds that a suspension or cancellation of Alpine’s domestic licence is not warranted in this case on the basis that Alpine may have in good faith believed that the contract was within the ambit of the Amended Exemption Order.

[25] However, Alpine should be aware that the Agency considers contraventions of provisions of the CTA to be serious and may take punitive action should the Agency identify other contraventions.

Member(s)

Geoffrey C. Hare
J. Mark MacKeigan
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