Decision No. 713-A-2004

December 31, 2004

December 31, 2004

APPLICATION by Cubana de Aviacion S.A., on behalf of itself and TACA International Airlines S.A., for an approval pursuant to section 60 of the Canada Transportation Act, S.C., 1996, c. 10, and section 8.2 of the Air Transportation Regulations, SOR/88-58, as amended, to permit Cubana Aviacion S.A. to operate flights using A-320 aircraft and flight crew provided by TACA International Airlines S.A. while providing its scheduled international service (excluding all-cargo international services) between Cuba and Canada.

File No. M4835-C16-3


Cubana de Aviacion S.A. (hereinafter Cubana), on behalf of itself and TACA International Airlines S.A. (hereinafter TACA), has applied to the Canadian Transportation Agency (hereinafter the Agency) for the approval set out in the title. The application was received on December 8, 2004.

Under Licence No. 975160, Cubana is authorized to operate a scheduled international service between Cuba and Canada in accordance with the Air Transport Agreement between the Government of Canada and the Government of the Republic of Cuba signed on February 12, 1998.

Air Transat A.T. Inc. carrying on business as Air Transat and Air Canada, the Canadian air carriers designated to serve Cuba, were advised of the application and no objections were received.

Cubana states in its application that it is wet leasing A-320 aircraft from TACA in order to offer its passengers the same high quality service as other competitive airlines do in the market. It adds that it is still in the process of obtaining its own A-320 aircraft which has not been possible to date.

By Decision No. 585-A-2003 dated October 20, 2003, the Agency authorized Cubana, while providing its scheduled international service (excluding all-cargo international services) between Cuba and Canada, to operate flights using A-320 aircraft and flight crew provided by TACA from November 1, 2003 to October 31, 2004.

The Agency also notes that the approval granted by Decision No. 585-A-2003 expired on October 31, 2004. The Agency has considered this matter and finds that Cubana, by continuing to operate a scheduled international service using aircraft and flight crew provided by TACA without the requisite authority, contravened section 60 of the Canada Transportation Act (hereinafter the CTA) and subsection 8.2(1) of the Air Transportation Regulations (hereinafter the ATR).

Cubana submits that its Station Manager, who was the person responsible for taking care of the requirements concerning the lease between Cubana and TACA, left the company leaving many things not finalized. Cubana maintains that this resulted in the new Station Manager and the new General Manager not being briefed and that these employees could not have foreseen this problem.

The Agency has considered Cubana's submission and notes that this is the third time that the Agency has discovered that Cubana failed to ensure that all necessary approvals are in place prior to operating its services. In fact, in its Decision No. 276-A-2004 dated May 26, 2004 (All Canada Express Inc. and Cubana wet lease), the Agency reminded Cubana of the importance of ensuring that all necessary approvals are sought in sufficient time to avoid an interruption of service. Further, in that case Cubana also cited the departure of the Station Manager as a factor which contributed to its failure to file the necessary application prior to the expiry date of the previous approval.

The Agency finds this repeated failure by Cubana to ensure that it complies with the provisions of the CTA and the ATR to be unacceptable, particularly in light of the fact that the departure of a Station Manager was noted in Decision No. 276-A-2004 dated May 26, 2004 and the fact that the Agency, in that same Decision, reminded Cubana of the importance of ensuring that all necessary approvals are sought in sufficient time to avoid an interruption of service. The Agency notes, however, that Cubana and TACA continued to maintain the required insurance during the operation of the flights in question in the current case. The Agency has decided, in this case, that it will not take action with respect to the relevant contraventions. Cubana should be aware, however, that the Agency deals with these matters on a case by case basis and may impose sanctions if any future contraventions occur.

Further, Cubana's attention is drawn to the Canadian Transportation Agency Designated Provisions Regulations, SOR/99-244, which designate provisions of the CTA and associated regulations for which a fine may be levied. A contravention of subsection 8.2(1) of the ATR is designated as a Level 3 infraction which carries a maximum financial penalty of $10,000. A first violation would normally be subject to a warning by an enforcement officer designated by the Agency pursuant to paragraph 178(1)(a) of the CTA. In this regard, Cubana was already given a warning by a designated enforcement officer on July 7, 2004.

With respect to the requirement of subsection 8.2(2) of the ATR, that applications be submitted 45 days before the first flight, the Agency has considered the matter and is of the opinion that compliance by Cubana with subsection 8.2(2) of the ATR is impractical in this case. Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the CTA, hereby orders that Cubana be exempt from the application of subsection 8.2(2) of the ATR.

The Agency has reviewed and considered the application and the material filed in support thereof and is satisfied that it meets the remaining requirements of section 8.2 of the ATR in this particular case.

Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the CTA and section 8.2 of the ATR, hereby approves the use by Cubana of aircraft and flight crew provided by TACA, and the provision by TACA of such aircraft and flight crew to Cubana, in order to permit Cubana, while providing its scheduled international service (excluding all-cargo international services) between Cuba and Canada, to operate flights using A-320 aircraft and flight crew provided by TACA, from December 9, 2004 to December 8, 2005, subject to the following conditions:

  1. The air services shall be operated under Cubana's scheduled international licence (Licence No. 975160).
  2. Commercial control of the flights shall be maintained by Cubana. Operational control of the flights shall be maintained by TACA which shall receive payment based on the rental of aircraft and crew and not on the basis of the volume of traffic carried.
  3. The air services approved herein shall only be provided as long as an Aircraft Leasing Agreement [Contrato de Arrendamiento A.C.M.I., (Fletamento) de Aeronave] providing for such services remains in effect.

Cubana and TACA are reminded of the continuing requirement to comply with sections 8.2 and 8.5 of the ATR.

Cubana is further reminded to provide the Agency with a copy of any new agreement, any amendments to their Aircraft Leasing Agreement, including any new or amended annex, without delay.

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

With respect to the contraventions set out above, this approval does not in any way preclude any actions that may be taken against Cubana pursuant to the Canadian Transportation Agency Designated Provisions Regulations.

This Decision takes effect on December 9, 2004, the date on which its content was verbally communicated to Cubana and TACA.

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