Decision No. 76-P-A-2012

March 5, 2012

APPLICATION by Air Canada pursuant to section 32 of the Canada Transportation Act, S.C., 1996, c. 10, as amended.

File No.: 
M4120-3/12-00846

INTRODUCTION

[1] On February 9, 2012, Air Canada filed an application for a review of Decision No. 15-P-A-2012 (Decision) pursuant to section 32 of the Canada Transportation Act (CTA).

[2] In the Decision, respecting a complaint filed by Deryk Jackson, the Canadian Transportation Agency (Agency) determined that on December 16, 2010, Air Canada was the only person providing a domestic service between Toronto and Timmins within the meaning of section 66 of the CTA. The Agency also found that on December 16, 2010, the range of fares offered by Air Canada, in respect of its service between Toronto and Timmins, was inadequate.

[3] In the Decision, the Agency, pursuant to subsection 66(2) of the CTA, directed Air Canada to take the corrective measure of amending its tariff to increase the range of fares by offering one additional fare at the low end of each of its current Latitude, Tango Plus and Tango fare classes. Air Canada was also directed to amend its tariff no later than 30 days from the issuance of the Decision, and to provide the Agency with a copy of the new tariff. In the Decision, it was further directed that the new fares must remain in effect for one year.

PRELIMINARY MATTER

[4] Mr. Jackson has requested that the Agency consider applying paragraph 66(1)(c) of the CTA if Air Canada’s application for a review pursuant to section 32 of the CTA is granted.

[5] In the Decision, the Agency ruled that Mr. Jackson did not provide evidence to support a complaint with respect to an unreasonable fare pursuant to subsection 66(1) of the CTA, as no fare was specifically identified. As this part of Mr. Jackson’s pricing complaint was rejected on the basis of lack of evidence, the Agency does not have jurisdiction to impose a remedial order pursuant to paragraph 66(1)(c) of the CTA.

ISSUE

[6] Has there been a change in the facts or circumstances pertaining to the Decision since it was issued which would warrant a review, rescission or variance of the Decision?

SUBMISSIONS BY AIR CANADA

Material change in facts or circumstances

[7] Air Canada submits that since the issuance of the Decision on January 13, 2012, there have been two material changes in the facts or circumstances pertaining to the Decision and the accompanying remedial order. Firstly, Air Canada points out that on January 16, 2012, Porter Airlines Inc. (Porter) began offering daily air service between Toronto and Timmins and, secondly, that the presence of a new entrant and its desire to seize market share on the Toronto-Timmins route has resulted in a significant change between Air Canada’s December 16, 2010 tariff and the tariff in effect on January 16, 2012. Air Canada points out that each of these changes is sufficient to justify a review of the Agency’s remedial order.

[8] Air Canada asserts that Porter is a reasonable alternative domestic service such that the route is now competitive and the Agency no longer has jurisdiction to make a remedial order under subsection 66(2) of the CTA. Air Canada submits that it was not in a position to bring these new facts to the Agency until Porter actually began its scheduled service, as until that time the route was still a non-competitive route, despite the fact that Porter was taking bookings for service to begin on January 16, 2012.

SUBMISSIONS BY DERYK JACKSON

[9] Mr. Jackson states that:

The over arching point that I’ve taken away from the entire process is that regardless of argument or who makes the argument, Air Canada remains fixed to its illogical opinion that it was correctly pricing tickets on the Toronto to Timmins route during its monopoly. The fallacy of that opinion is most exposed in the airlines “new” fares under competition. These new fares are greatly lower than the complaint fare of December, 2010. No doubt, the airline continues to profit from the route - although not to the extent they were able to profit under their monopoly.

ANALYSIS

[10] The Agency’s jurisdiction under section 32 of the CTA is limited and only arises if there has been a change in the facts or circumstances pertaining to a particular Decision since its issuance. Accordingly, the Agency must first determine whether there has been a change in facts or circumstances pertaining to the Decision, and, if so, determine whether such a change is sufficient to warrant a review, rescission or variance of the Decision.

[11] The burden of proof rests on the applicant requesting the review to demonstrate a change in facts or circumstances and to explain how the alleged change affects the outcome of the matter.

Has there been a change in facts or circumstances pertaining to the Decision since it was issued which would warrant a review, rescission or variance of the Decision?

[12] The Agency has considered the application and the material in support and finds, pursuant to section 32 of the CTA, that given Porter’s entry into the Toronto-Timmins market, there has been a change in facts or circumstances pertaining to the Decision, since it was issued, that warrants a review of the Decision. However, pursuant to subsection 66(4) of the CTA, the Agency’s jurisdiction over complaints concerning fares is extended to domestic routes served by more than one licensee where the Agency is of the opinion that none of the other services between those two points provides a reasonable alternative taking into consideration the number of stops, the number of seats offered, the frequency of service, the flight connections and the total travel time. Accordingly, the Agency must now consider whether Porter constitutes a reasonable alternative domestic service, which would warrant a review, rescission or variance of the Decision.

Reasonable alternative domestic service

[13] In making its findings, the Agency has considered Air Canada’s submissions as well as information concerning air services provided between Toronto and Timmins, including the Internet, the Official Airline Guide and published flight schedules. The Agency is of the opinion that, on January 16, 2012, in addition to being served by Jazz Aviation LP, as represented by its general partner, Aviation General Partner Inc. carrying on business as Air Canada Jazz, Jazz and Jazz Air (Air Canada Jazz), the Toronto-Timmins route was served by Porter. From the information available to the Agency, Air Canada Jazz’s service between Toronto and Timmins during the week of January 16, 2012 consisted of:

  • approximately 64 direct, non-stop flights;
  • service provided every day of the week;
  • small (Dash 8-100, 37 seats) and medium (Bombardier Q-400, 74 seats)aircraft1;
  • a total weekly capacity of approximately 3,401 seats;
  • a total travel time between Toronto and Timmins ranging from 1 hour 25 minutes to 1 hour 37 minutes

[14] Porter’s service between Toronto and Timmins during the week of January 16, 2012 consisted of:

  • approximately 36 direct, non-stop flights;
  • service provided every day of the week;
  • medium (Bombardier Q-400) aircraft;
  • a total weekly capacity of approximately 2,520 seats;
  • a total travel time between Toronto and Timmins of 1 hour 25 minutes.

[15] The Agency has analyzed the services provided by Porter between Toronto and Timmins during the week of January 16, 2012 and, on the basis of the factors set out in subsection 66(4) of the CTA, both individually and collectively, is of the opinion that the service offered by Porter provided travellers with reasonable alternative services to those offered by Air Canada.

[16] The Agency therefore finds that Air Canada was not the only person providing a domestic service between Toronto and Timmins within the meaning of section 66 of the CTA since January 16, 2012.

[17] In enacting subsection 66(4) of the CTA, the intent of Parliament was to give the Agency jurisdiction over fares on inadequately served routes but not routes on which there was a reasonable alternative service. This reflects an underlying assumption that appropriate pricing is established through competition. Furthermore, the remedy contained in subsection 66(2) of the CTA pertains to market failure relating to monopoly pricing. The Agency finds that the capacity Porter has deployed on the route constitutes a reasonable alternative service.

[18] Therefore, in keeping with the spirit and intent of section 66 of the CTA, the Agency finds that the remedial order is no longer necessary.

CONCLUSION

[19] Accordingly, the Agency varies the Decision by rescinding the order contained in paragraphs 70 to 74.

[20] This Decision takes effect as of February 27, 2012, the date on which it was communicated to the parties.


  1. As defined in the Air Transportation Regulations, SOR/88-58, as amended (ATR). The ATR categorizes aircraft into categories based on the number of seats: small (<39 seats), medium (39 seats < m<89 seats), and large (>89 seats).

Member(s)

Raymon J. Kaduck
Jean-Denis Pelletier, P.Eng.
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