Order No. 2020-A-185

BACKGROUND

On March 18, 2020, Air Canada applied to the Canadian Transportation Agency (Agency) for a temporary exemption from the provisions of section 64 of the CTA to permit it to suspend the operation of air services between points in Canada, as it considered necessary, without having to provide the normal 120 days of notice or to engage in the consultations, as required by the CTA and the Air Transportation Regulations, SOR/88-58 (ATR).

On March 25, 2020, the Agency, by Order No. 2020-A-36, exempted all carriers that hold a domestic licence from the provisions of section 64 of the CTA until June 30, 2020, on the condition that once the exemption ended, carriers that had taken advantage of the exemption to temporarily reduce or suspend services on certain routes immediately resume those services and follow all the requirements of section 64 of the CTA if they wished to reduce or eliminate any services on a permanent basis.

On June 19, 2020, the Agency, by Order No. 2020-A-105, extended the period of the temporary exemption to October 15, 2020, and also permitted any carrier that, during the period the Order was in effect, provided notice and engaged in discussions for a period of at least 60 days in a manner consistent with section 64 of the CTA and section 14 of the ATR to permanently discontinue or reduce service without the need to first resume that service or engage in any further notice or consultation activities.

On October 6, 2020, Air Canada requested an extension of Order No. 2020-A-105 to March 31, 2021, or such longer period as the Agency may consider appropriate.

On October 15, 2020, the Agency, in Decision No. LET-A-66-2020, extended the period of the temporary exemption until March 31, 2021, and indicated it would provide detailed reasons at a later date. The following constitutes those reasons.

THE LAW

Pursuant to section 64 of the CTA:

1. Where a licensee proposes to discontinue a domestic service or to reduce the frequency of such a service to a point to less than one flight per week and, as a result of the proposed discontinuance or reduction, there will be only one licensee or no licensee offering at least one flight per week to that point, the licensee shall give notice of the proposal in prescribed form and manner to such persons as are prescribed.

1.1. If a licensee proposes to discontinue its year-round non-stop scheduled air service between two points in Canada and that discontinuance would result in a reduction, as compared to the week before the proposal is to take effect, of at least 50% of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services between those two points, the licensee shall give notice of the proposal in the prescribed form and manner to the prescribed persons.

1.2. A licensee shall, as soon as practicable, provide an opportunity for elected officials of the municipal or local government of the community of the point or points, as the case may be, to meet and discuss with the licensee the impact of the proposed discontinuance or reduction.

2. A licensee shall not implement a proposal referred to in subsection (1) or (1.1) until the expiry of 120 days, or 30 days if the service referred to in that subsection has been in operation for less than one year, after the notice is given or until the expiry of any shorter period that the Agency may, on application by the licensee, specify by order.

Pursuant to section 14 of the ATR:

1. For the purposes of subsection 64(1) of the Act, a licensee proposing to discontinue or to reduce the frequency of a domestic service to a point to less than one flight per week, where, as a result of the proposed discontinuance or reduction, there will be only one licensee or no licensee offering at least one flight per week to that point, shall give notice of the proposal

1. to the Agency, to the Minister and to the minister responsible for transportation in the province or territory where the area to be affected is located, by sending them a notice in the form set out in Schedule III; and
2. to holders of domestic licences operating in the area to be affected by the proposal and to persons resident therein, by publishing notice in the form set out in Schedule III in newspapers with the largest circulation in that area in each official language, the names of which newspapers shall be obtainable from the Agency on request by the licensee.

1.1. For the purposes of subsection 64(1.1) of the Act, a licensee proposing to discontinue a year-round non-stop scheduled air service between two points in Canada, where the proposed discontinuance would result in a reduction, as compared to the week before the proposal is to take effect, of at least 50% of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services between those two points, shall give notice of the proposal to the persons, and in the manner, referred to in paragraphs (1)(a) and (b).

2. The date of the notice referred to in paragraph (1)(b) shall be the same as the date on which the notice appears in the newspaper.

Pursuant to subsection 80(1) of the CTA:

The Agency may, by order, on such terms and conditions as it deems appropriate, exempt a person from the application of any of the provisions of this Part or of a regulation or order made under this Part where the Agency is of the opinion that

1. the person has substantially complied with the provision;
2. an action taken by the person is as effective as actual compliance with the provision; or
3. compliance with the provision by the person is unnecessary, undesirable or impractical

Pursuant to section 32 of the CTA:

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.

SUBMISSIONS BY AIR CANADA

Air Canada contends that the magnitude of the COVID-19 pandemic creates ongoing exceptional circumstances that warrant an extension of Order No. 2020 A-105. Air Canada states that it continues "to suffer a radical drop in demand and traffic and a corresponding decline in revenue."

Air Canada states that since Decision No. LET-A-66-2020 was issued, "government travel bans remain in place, advisories and recommendations for Canadians to stay home and restrict movements between regions have been issued, and new or extended travel restrictions have been imposed." Air Canada also indicates that "the Government of Canada has extended the travel restrictions applicable to foreign travelers indefinitely, imposing mandatory rules set out by the emergency orders under the Quarantine Act, mandating 14-day quarantine or isolation period for those entering Canada and in some cases, those travelling within Canada."

Air Canada states that many domestic regional routes cannot be re-started or maintained given the significantly reduced volume of local traffic.

Air Canada submits that it is impractical to comply with the provisions of section 64 of the CTA beyond the expiry of Order No. 2020-A-105 on October 15, 2020, including to post notices for services already suspended or for services temporarily suspended for an unknown period of time.

Furthermore, Air Canada asserts that, in the current circumstances, the posting of public notices of service discontinuance or temporary suspensions on its website should be as effective as compliance with the specific provisions of section 64 of the CTA.

ANALYSIS AND DETERMINATION

The COVID-19 pandemic clearly continues to have a significant impact on the Canadian aviation industry. The negative impact that the pandemic has had on domestic carriers' passenger volumes and revenues and, as a result, on their ability to manage their networks, makes it impractical to require domestic carriers to be subject to the provisions of section 64 of the CTA and section 14 of the ATR.

In light of these circumstances, pursuant to sections 32 and 80 of the CTA, the Agency found it appropriate to provide a further extension to March 31, 2021, subject to the same associated conditions.

The Agency also accepts that, during the period of the temporary exemption, the publishing by a carrier of notices of suspension or discontinuance on its website and the establishing of a dedicated webpage for this purpose that is easily accessible from its homepage are as effective as compliance with paragraph 14(1)(b) of the ATR. However, air carriers must continue to comply with paragraph 14(1)(a) of the ATR, which requires carriers to provide notice of the proposal to the Agency, to the Minister and to the minister responsible for transportation in the province or territory where the area to be affected is located, by sending them a notice in the form set out in Schedule III of the ATR.