Letter Decision No. LET-A-51-2018

July 26, 2018

Show cause Hong Kong Airlines Limited (Hong Kong Airlines) – Extra-bilateral authority

Case number: 
18-03980

SUMMARY

On May 18, 2018, the Canadian Transportation Agency (Agency) issued Determination A-2018-111 (May 18 Determination), in which, pursuant to subsection 78(2) of the Canadian Transportation Act (CTA), it varied Condition No.1 of Hong Kong Airlines’ licence to the extent necessary to permit it to operate four additional weekly flights to Toronto, from October 28, 2018 to October 27, 2019.

On July 6, 2018, the Minister of Transport issued a Ministerial Direction (July 6 Direction) to the Agency pursuant to paragraph 76(1)(b) of the CTA, directing the following:

The Canadian Transportation Agency shall implement and administer the Agreement between the Government of Canada and the Government of Hong Kong Concerning Air Services including any subsequent arrangements, in a manner which ensures that, at any point in time, each country’s second and additionally designated carriers respect the capacity entitlements set forth in that Agreement or arrangements.   

For the reasons below, the Agency provides Hong Kong Airlines with the opportunity to show cause, by August 9, 2018, as to why the Agency should not rescind the May 18 Determination, pursuant to section 32 of the CTA, in light of the July 6 Direction.

THE LAW

Section 32 of the CTA states:

The Agency may review, rescind or vary any decision or order made by it or may re‑hear any application before deciding it if, in the opinion of the Agency, since the decision or order or the hearing of the application, there has been a change in the facts or circumstances pertaining to the decision, order or hearing.

Paragraph 76(1)(b) of the CTA states:

76 (1) Where the Minister determines that it is necessary or advisable to provide direction to the Agency in respect of the exercise of any of its powers or the performance of any of its duties or functions under this Part relating to international service,

[…]

(b) in connection with the implementation or administration of an international agreement, convention or arrangement respecting civil aviation to which Canada is a party,

[…]

the Minister may, subject to subsection (3), issue to the Agency directions that, notwithstanding any other provision of this Part, are binding on, and shall be complied with by, the Agency in the exercise of its powers or the performance of its duties or functions under this Part relating to international service.

ANALYSIS AND FINDINGS

When exercising its powers under section 32 of the CTA, the Agency first determines whether there has been a change in facts or circumstances pertaining to a decision or determination. If no such change exists, the decision stands. If, however, the Agency finds that there has been a change in facts or circumstances since the issuance of the decision, it then determines what action, if any - including possible rescission or variance of the decision or determination - is warranted in light of that change.

When considering an application for an authority to operate a service that is not otherwise permitted under an air transport agreement to which Canada is a party pursuant to subsection 78(2) of the CTA, the Agency weighs and balances a number of factors in light of the particular facts and circumstances of each application. These factors include, but are not limited to:

  1. Canada’s national policy and practices regarding scheduled international air services;
  2. impact on Canada's international air relations, air transport agreements and negotiations;
  3. demand for the proposed extra-bilateral service which is not otherwise met;
  4. stakeholder interest: the consideration of, and the balancing of, the interests of Canadian air carriers, the travelling public, shippers, airports, and regional and community economic interests; and
  5. reciprocity: the treatment by a foreign country of similar applications by Canadian air carriers.

The May 18 Determination found, on balance, that a one-year variation of Condition No.1 of Hong Kong Airlines’ licence permitting it to operate four additional weekly flights to Toronto was warranted.

The Agency’s powers under Part II of the CTA relating to an international service are subject to any direction issued by the Minister under section 76 of the CTA. Accordingly, a ministerial direction may affect, depending of the circumstances, the relative weight the Agency gives to the factors it considers in the context of a determination pursuant to subsection 78(2) of the CTA.

The July 6 Direction directs the Agency to implement and administer the Agreement, including any subsequent arrangements, in a manner which ensures that, at any point in time, each country's second and additionally designated carriers respect the capacity entitlements set forth therein.

The Agency is required, pursuant to subsection 76(1) of the CTA, to comply with such a direction in the exercise of its powers or the performance of its duties or functions under Part II of the CTA relating to an international service.

The Agency therefore finds, on a preliminary basis, that the July 6 Direction constitutes a change in the facts or circumstances pertaining to the May 18 Determination that warrants its rescission.

DIRECTION TO SHOW CAUSE

The Agency provides Hong Kong Airlines with the opportunity to show cause as to why the Agency should not rescind the extra-bilateral authority granted in the May 18 Determination.

Hong Kong Airlines will have until 5 p.m. Gatineau time on August 9, 2018 to provide its response to this show cause.

Hong Kong Airlines is advised to refrain from selling tickets for the four additional weekly flights to Toronto until such time a final decision is made in the present matter considering the impact of areview, rescission or variance of the May 18 Determination could have on the travelling public.

Member(s)

Scott Streiner
Elizabeth C. Barker
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