Determination No. A-2018-265
APPLICATION by Sunwing Airlines Inc. (Sunwing) and TUI Airlines Belgium N.V. (TUI Airlines), pursuant to section 60 of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA), and section 8.2 of the Air Transportation Regulations, SOR/88-58, as amended (ATR).
Sunwing and TUI Airlines (applicants) have applied to the Canadian Transportation Agency (Agency) for an approval to permit Sunwing to provide its scheduled international services between Canada and each of the following countries: Cuba, Dominican Republic, Jamaica, Mexico and the United States of America, using one aircraft with flight crew provided by TUI Airlines, beginning on December 12, 2018 to April 24, 2019.
Sunwing is licensed to operate the relevant scheduled international services.
In their application filed on November 7, 2018, the applicants state that this application is for one additional aircraft, beyond the one already approved by the Agency, for a total of two aircraft to be wet-leased by Sunwing. They also state that Sunwing had 23 aircraft on its Air Operator Certificate (AOC) at the time of application.
The applicants have also requested an exemption from the application of subsection 8.2(2) of the ATR, which requires the filing of an application for an approval at least 45 days before the first planned flight. The Agency finds that compliance 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, exempts the applicants from the application of subsection 8.2(2) of the ATR.
When assessing wet-lease applications where Canadian carriers propose to enter into wet lease arrangements of more than 30 days with foreign carriers to provide international passenger services, the Agency must apply a direction issued by the Minister of Transport on June 24, 2014 entitled Ministerial Direction for International Service – Canada's Policy for Wet-Leasing (2014 Wet Lease Policy), and must specifically ensure that the 20-percent cap is respected at the time of application. The 2014 Wet-Lease Policy also states that the Agency should condition or deny an application if Canadian air carriers do not enjoy reciprocal opportunities to wet lease in the foreign jurisdiction of the lessor.
In its guide Applying for Wet-Lease Approval, the Agency indicated that it "intends to notify the industry in Canada of an application for any wet-lease approval when it deems, at its own discretion, there to be potential issues with respect to reciprocity or other matters not yet addressed by the Agency."
On matters of international reciprocity, the Agency's general practice is that reciprocity by the authorities of the lessor's country of origin, in this case Belgium, is assumed unless evidence is brought to the contrary. The Agency is not aware of any similar application by a Canadian carrier to the aeronautical authorities of the European Union and its Member States that has been denied.
Upon review of the application, the Agency determined that it did not raise issues with respect to reciprocity or other matters not yet addressed by the Agency. Consequently, the Agency did not provide notice to seek comments from industry in respect of the application.
Is the Agency satisfied that the application of the applicants meets the requirements of section 8.2 of the ATR and the criteria of the 2014 Wet-Lease Policy, specifically the 20 percent cap?
ANALYSIS AND FINDINGS
Section 60 of the CTA requires that a licensee obtain, where prescribed, an approval from the Agency prior to using aircraft with flight crew provided by another person.
Section 8.2 of the ATR sets out the information to be included in an application and the requirements to be met for an approval pursuant to section 60 of the CTA.
Pursuant to the 2014 Wet-Lease Policy, for wet-leases of more than 30 days, a number of aircraft equal to 20 percent of the number of Canadian-registered aircraft on the lessee's AOC may be wet leased from foreign lessors. The Agency notes that at the time of application, i.e., November 7, 2018, Sunwing had 23 aircraft on its AOC. Therefore, the application of the applicants meets the 20 percent cap requirement of the 2014 Wet Lease Policy.
The Agency has considered the application and the material in support and is satisfied that it meets the remaining requirements of section 8.2 of the ATR.
Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the CTA and section 8.2 of the ATR, approves the use by Sunwing of one aircraft with flight crew provided by TUI Airlines, and the provision by TUI Airlines of such aircraft and flight crew to Sunwing, to permit Sunwing to provide its scheduled international services on licensed routes between Canada and each of the following countries: Cuba, Dominican Republic, Jamaica, Mexico and the United States of America, using one aircraft with flight crew provided by TUI Airlines, beginning on December 12, 2018 to April 24, 2019.
This approval is subject to the following conditions:
- Sunwing shall continue to hold the valid licence authority.
- Commercial control of the flights shall be maintained by Sunwing. TUI Airlines shall maintain operational control of the flights and shall receive payment based on the rental of aircraft and crew and not on the basis of the volume of traffic carried or other revenue-sharing formula.
- Sunwing and TUI Airlines shall continue to comply with the insurance requirements set out in subsections 8.2(4), 8.2(5) and 8.2(6) of the ATR.
- Sunwing shall continue to comply with the public disclosure requirements set out in section 8.5 of the ATR.
- Sunwing and TUI Airlines shall advise the Agency in advance of any changes to the information provided in support of the application.