Decision No. 618-A-2000

October 4, 2000

October 4, 2000

APPLICATION by Martinair Holland N.V. pursuant to subsection 78(2) of the Canada Transportation Act, S.C., 1996, c. 10, for authority to operate to/from Toronto, Ontario, Calgary and Edmonton, Alberta and Vancouver, British Columbia, while providing scheduled international passenger services between Canada and the Netherlands for the year 2001.

File No. M4212/M22-3-1

Docket No.000644AG


APPLICATION

Martinair Holland N.V. (hereinafter Martinair) has applied to the Canadian Transportation Agency (hereinafter the Agency) for the authorities set out in the title. The application was received on July 4, 2000.

Under Licence No. 975115, Martinair is authorized to operate a scheduled international service between the Netherlands and Canada in accordance with the Agreement between the Government of the Kingdom of the Netherlands and the Government of Canada relating to Air Transport signed on June 2, 1989, as amended (hereinafter the Agreement).

Condition No. 1 of Licence No. 975115 states:

The Licensee is authorized to operate the route(s) set out in the Agreement.

Condition No. 2 of Licence No. 975115 states:

The operation of the scheduled international service authorized herein shall be conducted subject to the provisions of the Agreement and to any applicable arrangements as may be agreed to between Canada and the Kingdom of the Netherlands.

Note 6 of the Route Schedule of the Agreement provides that the second designated airline of the Netherlands is limited to operating to/from two of the Canadian points named in the Route Schedule.

Martinair is currently providing non-scheduled passenger services between Amsterdam and Toronto and between Amsterdam and Western Canada (Calgary, Edmonton and Vancouver).

Martinair proposes to operate scheduled international passenger services between Amsterdam and Toronto, Calgary, Edmonton and Vancouver. Pursuant to the Agreement, Martinair, as the second designated airline for the Netherlands, is permitted to operate to/from only two of the Canadian points named in the Route Schedule annexed to the Agreement. Currently, the points in Canada named in the Route Schedule are Halifax, Montréal, Ottawa, Toronto, Calgary and Vancouver. Edmonton is not a point named in that Agreement.

Due to the extra-bilateral nature of Martinair's requested authorities, interested parties were given notice of this application on July 14, 2000.

The Edmonton Regional Airports Authority, Air Canada and Air Transat filed interventions in respect of the application.

ISSUE

The issue to be addressed is whether to allow Martinair to operate scheduled international passenger services to/from more than two points in Canada and whether to include Edmonton as a point to be served.

POSITIONS OF THE PARTIES

Martinair states that it wishes to operate its seasonal passenger services on a scheduled basis rather than on a non-scheduled basis. This would permit Martinair to use various distribution systems for airline seats only available for scheduled services. Martinair also points out that it is the only carrier providing direct air service between Edmonton and Amsterdam.

The Edmonton Regional Airports Authority intervened in support of Martinair's request. It submits that Martinair has demonstrated a commitment to the Edmonton market and that the provision of scheduled passenger service by Martinair will provide Edmonton with a better level of service.

Air Canada submits that Martinair's request to also serve Edmonton while providing scheduled passenger/combination services as well as its request in a separate application to operate all-cargo fifth freedom services between Montréal and Mexico City, separately or in combination, represent a valuable and significant enhancement in rights for the Netherlands and that such rights should be dealt with formally through bilateral air negotiations between governments. Air Canada supports such negotiations.

Martinair points out that no Canadian carrier has operated direct services between Western Canada and Amsterdam for nearly a decade, that Canadian carriers are not exercising the rights currently available to them and that, as such, the first request for extra-bilateral rights by Martinair should not result in formal negotiations.

Air Transat submits that it does not object to Martinair's application per se, but recommends that the authorities requested be granted only for six months at a time until completion of the review of Canada's International Air Policy which currently precludes Air Transat from operating scheduled international passenger services between Canada and the Netherlands. Air Transat submits that if the Canadian government then sees fit to institute an open designation policy in the Canada-Netherlands market, extensions to Martinair's authority should be conditional on the Government of the Netherlands permitting more than two Canadian carriers, a current restriction in the Agreement, to operate in the market and that negotiations should be sought to entrench these extra-bilateral rights for both sides in the Agreement.

In its response to Air Transat's submission, Martinair states that, pursuant to the current Agreement, a second Canadian carrier could be designated to serve the Netherlands. Martinair further submits that the decision by the Government of Canada to suspend any additional designations is an internal domestic situation that should not affect foreign relations.

ANALYSIS AND FINDINGS

The Agency may grant temporary authority pursuant to subsection 78(2) of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA) for a service which is not permitted in a bilateral air transport agreement.

The Agency has reviewed and carefully considered the application and the interventions filed in respect thereof.

The Agency notes that Martinair is serving the proposed points under a non-scheduled licence authority and that granting Martinair's requests would allow it to offer the same services pursuant to its scheduled services licence. As a result, Martinair would be able to avail itself of additional distribution systems, including direct sales to the public.

The Agency notes Air Canada's comment that Martinair is seeking a significant increase in traffic rights and that such rights should be dealt with formally through bilateral air negotiations between governments. The Agency, in a previous matter (Decision 546-A-2000 dated August 18, 2000), only granted a temporary authority conditional on the receipt, by the Government of Canada, of a diplomatic note from the Government of the Netherlands requesting formal negotiations as it determined that Martinair was seeking significant increase in rights in that case. The Agency is of the opinion that it is not necessary to impose such a condition in respect of this application because of the benefits of an additional scheduled transatlantic service which will accrue to Edmonton and Calgary.

However, the Agency finds that the period requested is too long and is only prepared to grant the necessary approvals for a shorter period of time.

CONCLUSION

Accordingly, pursuant to subsection 78(2) of the CTA, the Agency hereby varies Conditions Nos. 1 and 2 of Licence No. 975115 in order to authorize Martinair to operate scheduled international passenger services between Amsterdam and Toronto and Amsterdam and/or Calgary and/or Edmonton and/or Vancouver from March 25, 2001 until October 27, 2001 subject to the following condition:

No local traffic may be carried between points in Canada.

In all other respects, the service shall be operated in accordance with the Agreement and any applicable arrangements as may be agreed to between Canada and the Kingdom of the Netherlands.

This Decision shall form part of Licence No. 975115 and shall remain affixed thereto as long as the said Decision is in force.

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