Order No. 2021-A-3

February 10, 2021

APPLICATIONS by multiple air carriers for exemptions, pursuant to paragraph 80(1)(c) of the Canada Transportation Act, SC 1996, c 10 (CTA), from the tariff and service schedule filing time periods set out in subsections 115(1) and 138(3) of the Air Transportation Regulations, SOR/88-58 (ATR).

Case number: 
20-08779

BACKGROUND

[1] On July 17, 2020, the Agency issued the Notice to Industry: Applications for Exemptions from Subsections 115(1) and 138(3) of the ATR advising that the Agency would consider exercising its power to exempt air carriers, pursuant to paragraph 80(1)(c) of the CTA, from the tariff and service schedule filing time periods set out in subsections 115(1) and 138(3) of the ATR.

[2] Subsection 115(1) of the ATR requires air carriers providing an international service to file their tariffs and amendments to their tariffs with the Agency at least 45 days before those tariffs and amendments come into force, with some exceptions. Subsection 138(3) of the ATR requires air carriers providing an international scheduled service to file their service schedules and amendments to their service schedules with the Agency at least 10 days prior to their effective date.

[3] The Notice to Industry provided air carriers with an opportunity to file applications for exemptions with the Agency, specifying why they believe compliance with these provisions is unnecessary, undesirable or impractical.

[4] The Agency received 28 applications from individual air carriers and trade associations on behalf of their member carriers (applicants).

LEGISLATIVE FRAMEWORK

[5] Subsection 80(1) of the CTA states:

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.

[6] Subsection 115(1) of the ATR states:

Every tariff or amendment to a tariff shall be filed with the Agency at least 45 days before the tariff or amendment comes into force, except:

  1. where a different period is specified in an international agreement, convention or arrangement respecting civil aviation to which Canada is a party; or
  2. if the tariff or amendment is filed at least one working day before it comes into force to publish tolls for an additional aircraft to be used in, or to cancel tolls respecting an aircraft to be withdrawn from, a non-scheduled international service, other than a service that is operated at a toll per unit of traffic; or
  3. by order of the Agency.

[7] Subsection 138(3) of the ATR states:

Every service schedule or amendment thereto shall be filed with the Agency at least 10 days, commencing on its receipt by the Agency and not on mailing, prior to the effective date of the schedule or amendment.

SUBMISSIONS

[8] The Appendix to this Order lists the applicants who have sought exemptions. Some of the applicants have applied for an exemption from the requirements of subsection 115(1) of the ATR, while others seek exemptions from both subsections 115(1) and 138(3) of the ATR. Some applicants seek exemptions without conditions, while others have asked that the exemptions be granted on the condition that the notice required for filing be reduced to no more than one day before the coming into force of the tariff, service schedule, or applicable amendment.

[9] The applicants make several arguments in support of their assertion that compliance with the filing time periods set out in subsections 115(1) and 138(3) of the ATR is unnecessary, undesirable or impractical.

[10] The applicants submit that the filing time periods established in the ATR over three decades ago have become increasingly inconsistent with the way the industry operates and that the trend in Canada and around the world has been to reduce regulatory burdens of this kind in the civil aviation industry to encourage competitiveness and efficiency in the market.

[11] The applicants submit that the highly dynamic and competitive nature of the air transportation industry requires that air carriers have the ability to quickly and efficiently implement changes to their fares, rates, charges, terms and conditions and schedules. They also submit that this principle has been widely recognized through air transport agreements (ATAs), which have flexible tariff filing language allowing for filing on as few as one day’s notice for prices. According to the applicants, this approach reflects Canada’s Blue Sky Policy that guides the negotiation of ATAs with countries around the world and aims to encourage long-term and sustainable competition.

[12] It is a common theme in the applications that, at the time when notice requirements for international services were imposed, international travel was much more regulated. Now that the majority of ATAs are less restrictive, the applicants submit that there is no longer any reason to keep notice requirements for international travel or to draw a distinction between international and domestic travel.

[13] Several applicants allege that the tariff filing time periods can, in certain situations, tip the competitive balance in favour of foreign air carriers over Canadian air carriers, such as when a foreign air carrier is offering third-country services pursuant to an ATA that provides more open and flexible arrangements than those available to Canadian air carriers.

[14] The applicants also claim that the filing time periods are a barrier to providing more competitive fares and service offerings to the travelling public in an efficient and timely manner.

[15] Further, the applicants submit that contemporary challenges, such as those introduced by the COVID-19 pandemic, highlight the importance for air carriers to have the ability to react quickly to changes in the market and to government directives and requirements.

[16] Finally, the applicants state that the elimination of the filing time periods will not impact the Agency’s powers to raise concerns in respect of an air carrier’s tariff or service schedule, whether on its own motion or in response to complaints filed with the Agency.

ANALYSIS AND DETERMINATION

[17] The arguments made by the applicants are persuasive. Because the arguments made across the applications are similar, with respect to matters such as air transport agreements and industry changes, the Agency will not address each application individually but, rather, will deal with them as a group.

[18] The filing time periods were established in the ATR over three decades ago when tariffs and service schedules were managed in a less sophisticated electronic environment. With the advancement of information systems, technologies now exist that allow air carriers to process filings quickly and make them available to the public immediately.

[19] Moreover, there has been a dramatic change in market realities and the operating practices of air carriers since the filing time periods were introduced. The Internet is now the primary source for the dissemination of information regarding fares, rates and charges, and for the posting of tariff terms and conditions and service schedules. In a competitive market, air carriers should be able to quickly update their fares, rates and charges, terms and conditions, and schedules to respond to operational and competitive considerations, as well as government actions.

[20] Further, maintaining the tariff and service schedule filing time periods as set out in the ATR may limit Canadian air carriers’ ability to provide affordable, convenient, and efficient air services for customers and to respond to changes in demand and competitive pressures in the market in the same manner as foreign air carriers designated under an ATA with less onerous requirements. Among its objectives, Canada’s Blue Sky Policy provides a framework that encourages competition and the development of new and expanded international air services to benefit travellers, shippers, and the tourism and business sectors. It also provides opportunities for Canadian airlines to grow and compete successfully in a more liberalized environment. Providing all air carriers with the same filing time periods is in keeping with the Blue Sky Policy and will help create a level playing field, consistent with the National Transportation Policy set out in section 5 of the CTA.

[21] While a significant number of air carriers have submitted applications individually, and trade associations have made representations on behalf of their members, the number of air carriers offering an international service covered by sections 115(1) and 138(3) of the ATR remains large and not all air carriers to whom these sections apply may have filed an application.

[22] Given that the exemptions requested are related in large part to the need for air carriers to be competitive, allowing some, but not all, air carriers to benefit from the flexibility that such exemptions provide would run counter to the rationale for granting them.

[23] In light of the above, the Agency finds, pursuant to paragraph 80(1)(c) of the CTA, that compliance by air carriers with the filing time periods set out in subsections 115(1) and 138(3) of the ATR is undesirable. The Agency finds it appropriate for air carriers to file their fares, rates, charges and service schedules without any notice, such that they would come into effect immediately once filed with the Agency. However, the Agency finds that terms and conditions of carriage should be filed no less than one day prior to their coming into force to maintain the orderly submission and processing of this information.

ORDER

[24] Pursuant to paragraph 80(1)(c) of the CTA, the Agency exempts all air carriers operating an international service from the filing time periods set out in subsection 115(1) of the ATR, which requires air carriers to file a tariff or amendments to a tariff with the Agency at least 45 days before the tariff or amendment comes into force. This exemption is granted on the condition that terms and conditions of carriage be filed with the Agency at least one day before their coming into force. Fares, rates and charges may come into force immediately upon filing with the Agency.

[25] Pursuant to paragraph 80(1)(c) of the CTA, the Agency exempts all air carriers operating an international service from the filing time periods set out in subsection 138(3) of the ATR, which requires every service schedule or amendment be filed with the Agency at least 10 days prior to the effective date of the schedule or amendment. Service schedules may come into force immediately upon filing with the Agency.

[26] This Order is effective immediately.

[27] This Order does not exempt air carriers from the requirement to file fares, rates, charges, and terms and conditions, as set out in air carriers’ tariffs, pursuant to subsection 110(1) of the ATR, nor from the requirement to file service schedules pursuant to section 137 of the ATR.

[28] This Order does not affect the Agency’s authority to enforce the requirements of the ATR, the Air Passenger Protection Regulations, SOR/2019-150, or the Accessible Transportation for Persons with Disabilities Regulations, SOR/2019-244, including by rejecting, suspending or disallowing any tariff or service schedule at any time before or after the tariff or the service schedule comes into force.

[29] The Agency may rescind an exemption with respect to any individual air carrier if it does not comply with a condition of this Order or if the Agency deems it otherwise necessary.


APPENDIX TO ORDER NO. 2021-A-3

 

Applicant

Application for permanent exemption from the filing time period set out in subsection 115(1) of the ATR only

Application for permanent exemption from the filing time periods set out in subsections 115(1) and 138(3) of the ATR

Application for an exemption without conditions imposed by the Agency

Application for filing time periods in both subsections 115(1) and 138(3) of the ATR to be reduced to one day

1. 

A joint application by the National Airlines Council of Canada (NACC), on behalf of member carriers Air Canada, WestJet, Transat, Jazz, and by the International Air Transport Association (IATA), on behalf of member carriers licensed to operate an international service to and from Canada

-

Yes

Yes

YesFootnote *

2. 

Air North Charter & Training Ltd.

Yes

-

-

-

3.

Air Tahiti Nui

-

Yes

-

-

4. 

American Airlines, Inc.

-

Yes

Yes

YesFootnote *

5.

Cargojet Airways Ltd.

-

Yes

-

Yes

6.

Caribbean Airlines Limited

-

Yes

Yes

YesFootnote *

7.

Cathay Pacific Airways Limited

-

Yes

-

-

8.

Cayman Airways

Yes

-

-

-

9.

China Airlines Limited

-

Yes

-

-

10.  

China Eastern Airlines Corporation Limited

 

Yes

-

-

11.  

China Southern Airlines Company Limited

-

Yes

-

-

12.  

Delta Air Lines, Inc.

-

Yes

Yes

YesFootnote *

13.  

Ethiopian Airlines Group

-

Yes

Yes

YesFootnote *

14.  

Eva Airways Corporation

-

Yes

-

-

15.  

Finnair OYJ

-

Yes

-

Yes

16.  

Gol Linhas Aéreas S/A

-

Yes

Yes

YesFootnote *

17.  

Hong Kong Airlines Limited

-

Yes

-

-

18.  

Icelandair ehf

-

Yes

-

-

19.  

Koninklijke Luchtvaart Maatschappij, N.V. (K.L.M. Royal Dutch Airlines)

-

Yes

-

-

20.  

Lufthansa Group

(Austrian Airlines AG;

Brussels Airlines N.V./S.A.;

Deutsche Lufthansa Aktiengesellschaft (Lufthansa German Airlines);

Eurowings GmbH;

Lufthansa CityLine GmbH;

Swiss International Air Lines Ltd.)

-

Yes

Yes

YesFootnote *

21.  

Philippine Airlines, Inc.

-

Yes

-

-

22.  

Qatar Airways Group (Q.C.S.C)

-

Yes

Yes

YesFootnote *

23.  

Sata Internacional - Azores Airlines, S.A.

-

Yes

Yes

YesFootnote *

24.  

Société Air France

-

Yes

-

-

25.  

Sunwing Airlines Inc.

-

Yes

-

Yes

26.  

TYesrk Hava Yollari Anonim Ortakligi (Turkish Airlines Inc.)

-

Yes

Yes

YesFootnote *

27.  

Transportes Aéreos Portugueses, S.A.

-

Yes

-

-

28.  

Virgin Atlantic Airways Limited

-

Yes

-

-

Member(s)

Scott Streiner
J. Mark MacKeigan
Allan Matte
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