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Marshall

Possible New Airline ?

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Determination No. A-2020-12

January 22, 2020
 

APPLICATION by Stuck in the Middle Airlines Limited carrying on business as SIM Air (applicant) for an exemption from the application of section 59 of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA).

 
Case number: 
19-07502
 

BACKGROUND

The applicant has applied to the Canadian Transportation Agency (Agency) for an exemption from the application of section 59, pursuant to section 80 of the CTA, to permit it to sell, cause to be sold or publicly offer for sale in Canada a domestic air service, using small aircraft, in the absence of a licence.

Section 59 of the CTA states that no person shall sell, cause to be sold or publicly offer for sale in Canada an air service unless, if required under Part II of the CTA, a person holds a licence issued under that Part in respect of that service and that licence is not suspended.

The applicant has applied to the Agency for a licence to operate a domestic air service. However, as the licence has not yet been issued, an exemption from the application of section 59 of the CTA has been requested.

The applicant indicates that it intends to commence operations in Canada as early as spring 2020.

The applicant states that it sought the exemption from the application of section 59 of the CTA to be able to market its service, without actually selling tickets at this time.

ANALYSIS

The Agency deals with applications for exemptions from the application of section 59 of the CTA on a case-by-case basis. Section 59 is a consumer protection measure intended to prevent situations in which consumers in Canada pay for a service to an entity that does not hold an Agency licence and are left out of pocket or experience any manner of inconvenience or hardship that may result if that entity does not commence operations on schedule.

Accordingly, the Agency, prior to granting an exemption from the application of section 59 of the CTA, considers whether the applicant is taking all the necessary steps to meet all licence issuance requirements and whether the applicant has demonstrated a high probability of obtaining the required licence prior to the proposed date for commencing operations.

In particular, an applicant for a domestic licence must establish that it:

  1. is Canadian;
  2. has the prescribed liability insurance coverage in respect of the service to be provided under the licence; and
  3. holds a Canadian aviation document (CAD) issued by Transport Canada.

In this case:

  1. The Agency is satisfied that the applicant is Canadian.
  2. The Agency is also satisfied that the applicant has the prescribed liability insurance coverage in respect of the proposed service.
  3. While the applicant has taken steps to obtain a CAD from Transport Canada, it does not yet have a CAD.

As its licence application is not yet complete, SIM Air has requested an exemption from the application of section 59 of the CTA. Specifically, the applicant wishes to market its service, without actually selling tickets at this time.

The applicant has requested an exemption from the application of section 59 "to generate [public] awareness and interest." The applicant has emphasized that the proposed activities will not be in the nature of ticket sales or acceptance of bookings.

Hence, the Agency has to determine if the applicant's proposed activities constitute a public offer for sale of an air service.

The Agency, in Decision No. 290 C A 2014, explains what constitutes an offer:

An offer is defined in Swan, A., Canadian Contract Law, (2d), at page 218, LexisNexis, 2009 as "[...] a complete statement of the terms on which one party is prepared to deal, made with the intention that it be open for acceptance by the person (persons) to whom it is addressed...."

On that basis, the proposed activities by the applicant do not constitute an offer to sell publicly an air service.

In the present circumstances, the Agency determines that an exemption from the application of section 59 of the CTA is not necessary, as the applicant does not intend to sell, cause to be sold or publicly offer the air service for sale.

Accordingly, the Agency does not exempt the applicant from the application of section 59 of the CTA. Should the applicant intend to sell, cause to be sold or publicly offer the air service for sale in the future, a licence would be required unless the applicant obtains an exemption from the application of section 59 of the CTA in order to perform these activities.

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Do they need to sell a bunch of tickets so that there is enough in the kitty to go buy some airplanes?

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10 hours ago, Marshall said:

BACKGROUND

The applicant has applied to the Canadian Transportation Agency (Agency) for an exemption from the application of section 59, pursuant to section 80 of the CTA, to permit it to sell, cause to be sold or publicly offer for sale in Canada a domestic air service, using small aircraft, in the absence of a licence.

I don't think this is an application for an airline.  Small A/C are under 12,500lbs GTOW

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an airline can still fly small aircraft.

Kenmore Air is an airline and their largest plane is a twin otter

 

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Correct, point taken.

At least it is not another start up ULCC or something similar.

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