Regulations Amending the Air Transportation Regulations and the Canadian Transportation Agency Designated Provisions Regulations: SOR/2019-176

Canada Gazette, Part II, Volume 153, Number 12

Registration
SOR/2019-176 June 3, 2019

CANADA TRANSPORTATION ACT

P.C. 2019-611 May 31, 2019

Whereas, pursuant to subsection 36(2) of the Canada Transportation Act footnote a, the Canadian Transportation Agency has given the Minister of Transport notice of the annexed Regulations;

Therefore, the Canadian Transportation Agency, pursuant to subsections 56(2) footnote b and 60(1), section 61, subsections 69(1), 71(1), 73(1) and 74(1), section 86 footnote c and subsection 177(1) footnote d of the Canada Transportation Act footnote a, makes the annexed Regulations Amending the Air Transportation Regulations and the Canadian Transportation Agency Designated Provisions Regulations.

Gatineau, April 30, 2019

Scott Streiner
Chairperson and Chief Executive Officer, Canadian Transportation Agency

Elizabeth C. Barker
Vice-Chairperson, Canadian Transportation Agency

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 36(1) of the Canada Transportation Act footnote a, approves the annexed Regulations Amending the Air Transportation Regulations and the Canadian Transportation Agency Designated Provisions Regulations, made by the Canadian Transportation Agency.

Regulations Amending the Air Transportation Regulations and the Canadian Transportation Agency Designated Provisions Regulations

Air Transportation Regulations

1 (1) The definitions ABC/ITC, advance booking charter or ABC, Canadian charter carrier licensee, common purpose charter or CPC, courier service, CPC educational program, CPC event, door-to-door transportation, entity charter, fifth freedom, fourth freedom, inclusive tour or tour, inclusive tour charter or ITC, inclusive tour price, permit, price per seat, public liability, third freedom, tour features, tour operator, transborder goods charter or TGC, transborder passenger charter or TPC, transborder passenger non-resaleable charter or TPNC, transborder United States charter or TUSC, transportation, United States charter carrier licensee and United States charterer in section 2 of the Air Transportation Regulations footnote 1 are repealed.

(2) Section 2 of the Regulations is amended by adding the following in alphabetical order:

charter flight means a flight that originates in a foreign country and is destined to Canada or originates in Canada and is destined to another country and that is operated according to a charter contract or arrangement for one-way or round-trip transportation of passengers or goods; (vol affrété)

goods charter means a charter flight that originates in a foreign country and is destined to Canada or originates in Canada and is destined to another country and that is operated according to a charter contract or arrangement to carry goods; (vol affrété de marchandises)

passenger foreign origin charter means a charter flight that originates in a foreign country and is destined to Canada and that is operated according to a charter contract or arrangement for the transportation of passengers; (vol affrété de passagers en provenance d’un pays étranger)

passenger non-resaleable charter means a charter flight that originates in Canada and is destined to another country, that is operated according to a charter contract or arrangement and that engages an aircraft on which the passenger seating capacity is not for resale to the public; (vol affrété de passagers non revendable)

passenger resaleable charter means a charter flight that originates in Canada and is destined to another country, that is operated according to a charter contract or arrangement and that engages an aircraft on which the passenger seating capacity is chartered for resale to the public; (vol affrété de passagers revendable)

third party liability means legal liability of an air carrier, arising from the air carrier’s operation, ownership or possession of an aircraft, for

2 Paragraphs 3(1)(a) to (g), (l), (n) and (o) of the Regulations are repealed.

3 (1) Paragraph 7(1)(a) of the Regulations is replaced by the following:

(2) Paragraphs 7(1)(a) and (b) of the Regulations are replaced by the following:

(3) The portion of subsection 7(3) of the French version of the Regulations before paragraph (a) is replaced by the following:

(3) Il est interdit au transporteur aérien de souscrire, pour se conformer au paragraphe (1), une assurance responsabilité comportant une clause d’exclusion ou de renonciation qui réduit l’étendue des risques assurés en cas d’accident ou d’incident en deçà des sommes minimales établies en vertu de ce paragraphe, sauf si cette clause, selon le cas :

(4) Paragraph 7(3)(b) of the Regulations is repealed.

(5) Subsection 7(4) of the French version of the Regulations is replaced by the following:

(4) Le transporteur aérien peut souscrire une assurance tous risques à limite d’indemnité unique lorsque sa responsabilité est couverte par une seule police ou par un ensemble de polices primaires et complémentaires, auquel cas cette assurance doit prévoir une protection pour une somme au moins égale aux sommes minimales d’assurance combinées établies en vertu des alinéas (1)a) et b).

4 The Regulations are amended by adding the following after section 7:

7.1 (1) The amount set out in paragraph 7(1)(a) by which the number of passenger seats on board the aircraft is multiplied is adjusted every five years starting on the day on which this section comes into force according to the following formula rounded to the nearest $5,000:

A (B/C)

where

(2) The amount of money set out in subparagraph 7(1)(b)(i) is adjusted every five years starting on the day on which this section comes into force according to the following formula rounded to the nearest $5,000:

A (B/C)

where

(3) The amount of money set out in subparagraph 7(1)(b)(ii) is adjusted every five years starting on the day on which this section comes into force according to the following formula rounded to the nearest $5,000:

A (B/C)

where

(4) The initial amount of money set out in subparagraph 7(1)(b)(iii) is adjusted every five years starting on the day on which this section comes into force according to the following formula rounded to the nearest $5,000:

A (B/C)

where

(5) The amount of money set out in subparagraph 7(1)(b)(iii) by which the number of kilograms of the MCTOW of the aircraft that exceeds 8 165 kg is multiplied is adjusted every five years starting on the day on which this section comes into force according to the following formula rounded off to the nearest $5:

A (B/C)

where

7.2 For the purposes of section 7.1,

5 Subsection 8.1(3) of the Regulations is replaced by the following:

(3) The financial requirements set out in subsection (2) do not apply to an applicant for a licence to operate an air service using medium aircraft if, at the date of issuance or reinstatement of the licence, the applicant operates one of the following air services:

(4) The financial requirements set out in subsection (2) do not apply to an applicant for a licence to operate an air service using large aircraft if, at the date of issuance or reinstatement of the licence, the applicant operates one of the following air services:

6 (1) Subsection 8.2(2) of the Regulations is replaced by the following:

(2) The licensee and the person who provides all or part of an aircraft with flight crew shall apply to the Agency for the approval at least 15 business days before the date of the first proposed flight.

(2) Paragraph 8.2(3)(c) of the Regulations is replaced by the following:

(3) The portion of subsection 8.2(4) of the Regulations before paragraph (a) is replaced by the following:

(4) The licensee shall maintain liability insurance covering injuries sustained by passengers and the death of passengers and third party liability insurance coverage for an air service for which another person provides all or part of an aircraft with flight crew, at least in the amount as determined under section 7,

(4) Paragraph 8.2(4)(b) of the Regulations is replaced by the following:

(5) Subsection 8.2(5) of the Regulations is replaced by the following:

(5) Where the licensee is named as an additional insured under the policy of the person who is providing all or part of an aircraft with flight crew, there must be a written agreement between the licensee and the person to the effect that, for all flights for which the person provides all or part of an aircraft with flight crew, the person will hold the licensee harmless from, and indemnify the licensee for, all passenger and third party liabilities while passengers or cargo transported under contract with the licensee are under the control of the person.

7 (1) Paragraphs 8.3(1)(a) and (b) of the Regulations are replaced by the following:

(2) Section 8.3 of the Regulations is amended by adding the following after subsection (2):

(3) The notification referred to in paragraph (1)(c) shall be given at least five business days before the date of the proposed flight or the first flight of a series of proposed flights and shall contain

8 Subsection 10(2) of the Regulations is repealed.

9 Subsection 15(3) of the Regulations is repealed.

10 Section 16 of the Regulations is repealed.

11 Section 18 of the Regulations is renumbered as subsection 18(1) and is amended by adding the following:

(2) The condition set out in paragraph (1)(c) does not apply to advertising put on the exterior of the aircraft.

12 Section 20 of the Regulations is replaced by the following:

20 Every licensee who holds a non-scheduled international licence is subject to the condition that they must not operate a passenger non-resaleable charter with a person who obtains payment for the transportation of passengers and goods at a toll per unit.

13 Parts III and IV of the Regulations are replaced by the following:

PART III

International Charters

DIVISION I

General Provisions

Operation of International Charters

21 Subject to sections 28 and 29, an air carrier shall not operate an international charter unless the Agency has issued a charter permit to the air carrier, or the air carrier has been deemed to have been issued a charter permit, in respect of that charter.

22 If the Agency has issued a charter permit to a licensee for the operation of an international charter, the licensee must operate the international charter in accordance with the information that they submitted in order to obtain the charter permit.

Powers of the Agency

23 (1) The Agency may

(2) If the operation of an international charter is contrary to the Act, these Regulations or any international agreement, convention or arrangement respecting civil aviation to which Canada is a party, the international charter is not operated in accordance with the information that the licensee submitted in order to operate the international charter or the licensee who operates the international charter contravenes subsection 74(2) of the Act with respect to the operation of that international charter,

(3) If the operation of an international charter operated pursuant to a charter permit issued under section 37 is contrary to the Act, these Regulations or any international agreement, convention or arrangement respecting civil aviation to which Canada is a party, the international charter is not operated in accordance with the information that the licensee submitted in order to obtain a charter permit or the licensee who operates the international charter contravenes subsection 74(2) of the Act with respect to the operation of that international charter, the Agency shall require, by notice in writing, the licensee who is operating the international charter to apply for a charter permit in accordance with section 34 in which case the charter permit issued under section 37 is automatically cancelled.

(4) For the purposes of subsections (2) and (3), when determining whether the operation of an international charter is contrary to any international agreement, convention or arrangement respecting civil aviation to which Canada is a party, international reciprocity in matters of air transportation shall be taken into consideration.

Carriage of Goods in Passenger Charters

24 If a part of the bellyhold or main deck of an aircraft is not required for use pursuant to a charter contract or arrangement with respect to a passenger resaleable charter or passenger non-resaleable charter, a licensee may charter that part of the bellyhold or main deck for the carriage of goods if the goods are carried

Unused Space on Aircraft

25 A licensee may, on an aircraft that is to be used for a charter flight, utilize any unused space on the aircraft for the transport of the licensee’s own goods and personnel and the goods and personnel of another licensee if the licensee has the prior concurrence of the charterer.

Charter Permit

26 (1) A licensee that operates an international charter with aircraft having an MCTOW of 15 900 kg or less is deemed to have been issued a charter permit by the Agency for that purpose if the operation of the international charter is not contrary to the Act, these Regulations or any international agreement, convention or arrangement respecting civil aviation to which Canada is a party and the licensee does not contravene subsection 74(2) of the Act with respect to the operation of that international charter.

(2) For the purposes of subsection (1), when determining whether or not the operation of an international charter is contrary to any international agreement, convention or arrangement respecting civil aviation to which Canada is a party, international reciprocity in matters of air transportation shall be taken into consideration.

27 (1) If the Agency requires a licensee to obtain a charter permit under paragraph 23(2)(b) for an international charter, the licensee shall provide the Agency with a written application for a charter permit at least two working days before the date of the proposed flight or the first flight of a series of proposed flights that contains the following information:

(2) The Agency shall issue a charter permit to a licensee to operate the international charter if the licensee has met the requirement set out in subsection (1) and the licence issued to the licensee authorizes the operation of the proposed flight or the series of proposed flights.

Notice and Post Facto Reporting

28 The following licensees that propose to operate an international charter with aircraft having an MCTOW greater than 15 900 kg do not have to obtain a charter permit in accordance with this Part if the proposed operation of the international charter would not be contrary to the Act, these Regulations or any international agreement, convention or arrangement respecting civil aviation to which Canada is a party, the licensee would not contravene subsection 74(2) of the Act with respect to the operation of that international charter and if they provide the Agency with a written notice before the date of the proposed charter flight or the first flight of a series of proposed charter flights that contains the information set out in paragraphs 27(1)(a) to (d):

29 A licensee that operates a passenger non-resaleable charter or a goods charter with aircraft having an MCTOW greater than 15 900 kg that is destined to, or originates in, the United States does not have to obtain a charter permit prior to operating the charter flight if the operation of the charter is not contrary to the Act, these Regulations or any international agreement, convention or arrangement respecting civil aviation to which Canada is a party, the licensee does not contravene subsection 74(2) of the Act with respect to the operation of that international charter and if, prior to the charter flight, they undertake to provide the Agency with a written report respecting the charter flights that were operated during the month in which the charter flight was operated within 30 days after the last day of that month and that contains the information set out in paragraphs 27(1)(a) to (d).

30 For the purposes of sections 28 and 29, when determining whether or not the operation of an international charter would be contrary or is contrary to any international agreement, convention or arrangement respecting civil aviation to which Canada is a party, international reciprocity in matters of air transportation shall be taken into consideration.

Evidence and Inspection

31 (1) A licensee that operated a charter flight or series of charter flights shall keep evidence that the licensee operated the charter flight or series of charter flights in accordance with the information that they submitted in order to obtain the charter permit that was issued for that charter flight or those series of charter flights including

(2) The licensee shall keep the evidence for a period of one year after the date of departure of the last charter flight authorized by each charter permit and make it available to the Agency during that period.

Commingling

32 When a licensee operates a passenger non-resaleable charter that is destined to a country other than the United States, the licensee shall charter with no more than three charterers, of which one or more may be foreign-origin charterers.

Flexible Return of Passengers

33 If a charterer has one or more international charter contracts with a licensee, a passenger transported on an outbound portion under one international charter contract may be returned to the passenger’s point of origin under the same international charter contract or under any of the other international charter contracts between the charterer and the licensee.

DIVISION II

Passenger Resalable Charters

Charter Permit

34 (1) A licensee that proposes to operate a passenger resaleable charter or series of passenger resaleable charters with aircraft having an MCTOW greater than 15 900 kg shall apply in writing to the Agency for a charter permit to operate the passenger resaleable charter or series of passenger resaleable charters as soon as possible after the licensee and the charterer have signed or amended the charter contract but not less than 15 days and not more than one year before the date of the proposed passenger resaleable charter or the date of the first of the series of proposed passenger resaleable charters.

(2) The application shall include

(3) The charter contract referred to in subsection (1) shall specify

(4) The charter contract referred to in subsection (1) shall include a statement by the licensee and charterer on the page of the charter contract that bears the signatures of both the licensee and the charterer stating that

(5) The dates of advance payments specified in paragraph (3)(g) shall be at least seven days before the date of each charter and shall be in accordance with the licensee’s tariff in effect on the date that the charter contract is signed.

(6) Every financial guarantee referred to in paragraph (2)(b) shall specify that

(7) The financial guarantee referred to in paragraph (2)(b) shall fully protect any advance payment in respect of the passenger resaleable charter or series of passenger resaleable charters from the time the advance payment is received by the licensee.

(8) Notwithstanding paragraph (6)(d), a financial guarantee may be terminated or amended on less than 45 days’ notice where the approval of the Agency is obtained, which approval shall be given if

35 The Agency shall issue a charter permit to a licensee to operate a passenger resaleable charter or series of passenger resaleable charters if the licensee has met the requirements set out in subsections 34(1) to (7) and the licence issued to the licensee authorizes the operation of the flight or the series of flights.

36 (1) A licensee shall not operate a passenger resaleable charter or series of passenger resaleable charters that use aircraft having an MCTOW greater than 15 900 kg without meeting the following requirements unless they have a charter permit issued under section 37 that authorizes the licensee to operate the passenger resaleable charter or series of passenger resaleable charters:

(2) Paragraph (1)(a) does not apply to a licensee if

37 (1) On request, the Agency shall issue a charter permit to a licensee, that is valid for a period of up to one year, to operate a passenger resaleable charter or series of passenger resaleable charters with aircraft having an MCTOW greater than 15 900 kg without the requirement to apply for a charter permit under section 34 if the licence issued to the licensee authorizes the operation of the flight or the series of flights and the licensee

(2) The monitoring, compliance and disclosure systems shall not be modified in any way during the period of validity of the charter permit without the prior written approval of the Agency, which approval shall be given if the requirements set out in subparagraphs (1)(c)(i) and (ii) continue to be met.

(3) During the period of validity of the charter permit,

38 The licensee shall submit to the Agency in writing, within 30 days after the end of each month, a report respecting the passenger resaleable charter or series of passenger resaleable charters that were operated during the previous month with aircraft having an MCTOW greater than 15 900 kg pursuant to a charter permit that was issued under section 37 that sets out

14 Section 108 of the Regulations is replaced by the following:

108 This Division applies to any air carrier that operates an international service other than an air carrier that operates a non-scheduled international service that transports traffic originating entirely in a foreign country.

15 Paragraph 115(1)(b) of the Regulations is replaced by the following:

16 Subsection 120(1) of the Regulations is replaced by the following:

120 (1) Tariffs may be filed with the Agency in paper or electronic form.

17 Division III of Part V of the Regulations is repealed.

18 (1) The Regulations are amended by replacing “public liability” with “third party liability” in the following provisions:

(2) Item 3 of Schedule I to the Regulations is amended by replacing “Public” with “Third Party”.

19 Schedule II to the Regulations is repealed.

20 Schedule XIII to the Regulations is repealed.

Canadian Transportation Agency Designated Provisions Regulations

21 Section 2 of the Canadian Transportation Agency Designated Provisions Regulations footnote 2 is replaced by the following:

2 The provisions, requirements and conditions set out in column 1 of the schedule are designated for the purposes of subsection 177(1) of the Act.

22 The schedule to the Regulations is amended by adding the following after item 2:

Item

Column 1

Provision, Requirement
or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

2.01

Paragraph 60(1)(b)

25,000

5,000

23 The portion of items 4 to 5 of the schedule to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2


Maximum Amount
Payable — Corporation ($)

Column 3


Maximum Amount
Payable — Individual ($)

4

25,000

5,000

4.1

25,000

5,000

5

10,000

2,000

24 Item 6 of the schedule to the Regulations is repealed.

25 The portion of item 7 of the schedule to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2


Maximum Amount
Payable — Corporation ($)

Column 3


Maximum Amount
Payable — Individual ($)

7

25,000

5,000

26 The schedule to the Regulations is amended by adding the following after item 13:

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

13.001

Subsection 84(1)

10,000

2,000

13.002

Section 85

10,000

2,000

27 Item 21 of the schedule to the Regulations is replaced by the following:

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

21

Subparagraph 8.1(2)(a)(vi)

25,000

5,000

21.1

Subparagraph 8.1(2)(a)(vii)

25,000

5,000

28 The schedule to the Regulations is amended by adding the following after item 22:

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

22.1

Subsection 8.2(5)

25,000

5,000

29 Item 24 of the schedule to the Regulations is repealed.

30 Items 26 to 28 of the schedule to the Regulations are replaced by the following:

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

26

Subsection 8.5(3)

10,000

2,000

31 The portion of items 29 to 31 of the schedule to the Regulations in column 1 is replaced by the following:

Item

Column 1

Provision, Requirement or Condition

29

Paragraph 18(1)(a)

30

Paragraph 18(1)(b)

31

Paragraph 18(1)(c)

32 Items 33 to 72 of the schedule to the Regulations are replaced by the following:

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

33

Section 21

25,000

5,000

34

Section 22

25,000

5,000

35

Subsection 31(1)

10,000

2,000

36

Subsection 31(2)

10,000

2,000

37

Section 32

10,000

2,000

38

Subsection 34(7)

25,000

5,000

39

Paragraph 36(1)(a)

25,000

5,000

40

Paragraph 36(1)(b)

25,000

5,000

41

Paragraph 36(1)(c)

5,000

1,000

42

Subsection 37(2)

25,000

5,000

43

Paragraph 37(3)(a)

5,000

1,000

44

Paragraph 37(3)(b)

5,000

1,000

45

Paragraph 37(3)(c)

25,000

5,000

46

Paragraph 37(3)(e)

25,000

5,000

47

Paragraph 37(3)(f)

5,000

1,000

48

Section 38

5,000

1,000

33 The portion of items 73 to 78 of the schedule to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2


Maximum Amount
Payable — Corporation ($)

Column 3


Maximum Amount
Payable — Individual ($)

73

5,000

1,000

74

5,000

1,000

75

5,000

1,000

76

25,000

5,000

77

5,000

1,000

78

5,000

1,000

34 The portion of item 82 of the schedule to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2


Maximum Amount
Payable — Corporation ($)

Column 3


Maximum Amount
Payable — Individual ($)

82

25,000

5,000

35 The schedule to the Regulations is amended by adding the following after item 83:

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

83.1

Any requirement imposed by a direction made under section 113.1

25,000

5,000

36 The portion of items 84 to 85.1 of the schedule to the Regulations in columns 2 and 3 is replaced by the following:

Item

Column 2

Maximum Amount Payable —
Corporation ($)

Column 3


Maximum Amount Payable — Individual ($)

84

25,000

5,000

84.1

25,000

5,000

85

10,000

2,000

85.1

25,000

5,000

37 The schedule to the Regulations is amended by adding the following after item 85.1:

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation ($)

Column 3

Maximum Amount Payable —
Individual ($)

85.2

Paragraph 122(a)

5,000

1,000

85.3

Paragraph 122(b)

5,000

1,000

85.4

Paragraph 122(c)

25,000

5,000

38 Items 89 to 96 of the schedule to the Regulations are repealed.

Coming into Force

39 (1) Subject to subsection (2), these Regulations come into force on July 1st, 2019.

(2) Subsections 3(2), (3) and (5) and section 4 come into force on July 1st, 2021.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Air Transportation Regulations (ATR) were registered on December 31, 1987, pursuant to the National Transportation Act, 1987 (which was replaced in 1996 by the Canada Transportation Act [Act]). While some amendments and additions were made to the ATR over the years, the regulations need updating in order to reflect changes in the domestic and international aviation industry.

Amendments to the ATR are required to

Background

On May 26, 2016, the Canadian Transportation Agency (CTA) launched its Regulatory Modernization Initiative (RMI) to review and modernize the full suite of regulations it administers to keep pace with changes in business models, user expectations, and best practices in the regulatory field.

The RMI encompasses the following four phases: accessible transportation, air transportation, air passenger protection, and rail transportation. Updating the ATR is the main focus of the air transportation phase of the RMI.

The ATR set out the criteria that air carriers must meet regarding the carriage of passengers and/or cargo by air, with respect to the issuance of domestic and international licences, the operation of transborder and international charters, the information that licence holders shall include in their tariffs, the content of service schedules, and terms and conditions of carriage of persons with a disability.

The CTA undertook a “stock-taking” exercise, through which it identified areas of the ATR that could be modernized, clarified and streamlined. These issues, which are grouped here under five themes, were selected based on the analysis and expertise of officials. The CTA then launched consultations with industry and the public to seek views on how best to address these particular issues. Participants were also invited to suggest further ATR-related issues to be addressed. The CTA had also previously consulted on the proposals to reduce burden for licensed operators (No. 4) and address other housekeeping items (No. 5) in 2010. These proposals were published in Part I of the Canada Gazette (CGI) on April 2, 2011, and were the subject of a 30-day comment period at that time.

1. Modernize air insurance provisions

(a) Minimum levels of insurance

The ATR require that carriers hold liability insurance in order to operate an international or domestic service. The minimum passenger and public liability insurance coverage requirements found in the ATR have remained unchanged at $300,000 for over 30 years and have been eroded by inflation. In most cases, industry insurance coverage standards have evolved beyond the minimum levels of coverage found in the ATR. In addition, the ATR minimum passenger and public liability insurance coverage requirements are not aligned with comparable jurisdictions (European Union and Australia). To ensure that there is better alignment and that Canadians are protected to the same degree as when the insurance requirements were first established, it would be necessary to update the minimum liability insurance requirements in the ATR.

(b) Alignment with the Montreal Convention

For international travel, limits of liability are subject to the Convention for the Unification of Certain Rules for International Carriage by Air (Montreal Convention). The Montreal Convention establishes liability insurance coverage limits for injuries sustained by passengers during embarkation or disembarkation of the aircraft, while the wording of the ATR creates ambiguity as to whether insurance must cover embarkation and disembarkation. To eliminate this ambiguity and align with the Montreal Convention, the ATR must be changed to specify that carrier liability insurance must cover injuries sustained by passengers during embarkation and disembarkation.

(c) Exclusions

Chemical drift can result from aerial spreading, or spraying of pesticides, from an aircraft. The ATR currently include chemical drift on a list of incidents that can be excluded from a carrier’s insurance coverage. However, given that aerial spreading is not an air service to which the Act or the ATR apply, it is unnecessary for the regulations to allow this exclusion.

The minimum public liability insurance requirements in the ATR cover all persons not on board the aircraft who are injured or killed, excluding the air carrier’s employees, as employees are entitled to workers’ compensation when working in the course of their duties. However, there could be a coverage gap for employees who are not acting in the course of their duties when involved in an accident not on board an aircraft. In these situations, employees may not be entitled to workers’ compensation, and the current ATR minimum public liability insurance requirements would not cover them. Amending the ATR to remove this exclusion would provide public liability insurance coverage to employees who are not acting in the course of their duties and not on board an aircraft.

(d) Alignment of terms

Certain sections of the ATR refer to “third party liability insurance coverage,” which is not a defined term in the regulations, whereas other sections refer to “public liability,” which is a defined term and is interpreted as having the same meaning as “third-party liability.” To ensure clarity, consistent terminology should be adopted in the ATR.

(e) Insurance provisions related to aircraft with flight crew arrangements

The current ATR insurance provisions for arrangements where one air carrier (the contracting carrier) uses the aircraft and crew of another air carrier (the operating carrier) do not entirely align with the CTA’s current policy and guidance in this area.

The ATR require that the contracting carrier hold liability insurance, either through its own insurance policy or by being named as an additional insured under the operating carrier’s policy.

To ensure that, in these cases, all liability related to the operation of the flight is assumed by the operating carrier, the ATR require that when the contracting carrier is an additional insured under the operating carrier’s policy, there must be a written agreement that the operating carrier will indemnify or hold harmless the contracting carrier for passenger and public liability.

To codify the CTA’s current policy and guidance in this area, a further requirement would have to be added to the ATR to specify that additional insurance afforded to the contracting carrier must be primary and without right of contribution from any other insurance policy that may be held by the contracting air carrier. This requirement would formally prohibit the insurance coverage of the contracting air carrier from paying and help avoid confusion and protracted litigation regarding which insurance policy would apply.

2. Amend charter provisions to reflect market realities

(a) Charter types

Charter transportation is a service in which a flight is operated under a contract by an individual or by an entity that resells transportation. Charter flights are not offered or sold to individual passengers by an airline as part of a regular schedule. Part I of the ATR defines eight different charter types originating in Canada, some of which no longer exist and many of which appear to be out of sync with today’s modern aviation industry. For example, Common Purpose charters for attendance of educational programs or events have not been used in decades. Taking into account today’s market realities, whereby carriers have been evolving their service offerings and marketing on an ongoing basis, it could be more effective from a regulatory perspective to consolidate the list of charter types in the ATR based on whether they are for resaleable or non-resaleable passenger transportation originating in Canada, passenger transportation originating in a foreign country, or goods transportation, and remove mention of obsolete terms.

(b) Charter provisions
(i) Originating in Canada

A number of provisions regarding charters originating in Canada found in the ATR (such as minimum advance booking, tour packages, maximum number of points served, minimum stay, minimum price per seat and prohibition of one-way travel) were established in order to strictly regulate competition between international scheduled services provided by Canadian air carriers and charterers. In recent years, the international air transportation industry has evolved to a more liberalized environment that provides for a greater variety and number of services in the marketplace, which are not accounted for in the ATR. This has led to the CTA issuing several exemptions. ATR charter provisions would have to be made to reflect this gradual industry shift.

To better reflect the evolution of charter activities, the ATR could be updated to raise the limit placed on the number of aircraft charterers from one to three, for non-resaleable passenger charters. Doing so would provide greater flexibility for air carriers to market their products, while maintaining a distinction between charter and scheduled services.

The goods charter regime has also become more liberalized, with freight forwarders and other organizations tending to consolidate cargo shipments from several sources and obtaining payment for traffic carried at a toll per unit. Currently, the ATR does not allow for this type of operation and the CTA has issued a number of exemptions regarding this issue to reflect the fact that this has become a standard industry practice serving the needs of consumers. Adjusting the ATR to allow this type of operation would bring the regulation in line with current industry practices.

(ii) Originating in a foreign country

The current regulatory requirements for charters originating outside of Canada (charters originating in a foreign country) were established to create a regime in which the country of origin rules for charter traffic can be routinely accepted, consistent with international agreements and the CTA’s jurisdiction. This was established to avoid the extraterritorial application of Canadian laws to transportation services arranged and sold in a foreign country. Currently, the ATR provides two distinct processes for the acceptance of charters originating in a foreign country: transborder charters (i.e. a one-way or return charter that originates in Canada and is operated between Canada and concludes in the United States) and charter flights originating in a foreign country (non U.S.). These two processes could be streamlined to focus on certain basic requirements common to both.

The CTA has also identified a number of ATR requirements for charters originating in a foreign country that should be removed in order to reflect market realities. For example, requirements such as minimum advance booking before each flight, the obligation for passengers to purchase return transportation, and a minimum period of stay in a foreign country prior to return were designed to steer the non-discretionary traveller to use scheduled services. In today’s liberalized, open-skies environment, these constraints appear to no longer respond to the needs of the travelling public and impede the efficient operation of charter services without a true benefit for the operators of scheduled services.

(iii) Permit and notification filings

Replacing the existing ATR provisions requiring an application for and the receipt of a permit for non-resaleable and cargo charters with a requirement to provide advance notification to the CTA prior to each flight or the first of a series of flights would respond to changes in market practices regarding charters. This would retain the flow of information for regulatory oversight and monitoring, while reducing the administrative burden of a charter permit issuance process.

3. Clarify code-sharing and wet-leasing activities and amend provisions to reduce burden

(a) Distinguish code-sharing and wet-leasing

The ATR impose the same requirements on all arrangements under which a licensee proposes to provide a service by using all or part of an aircraft with flight crew provided by another person. This broad description captures commercial arrangements such as code-sharing footnote 3 as well as wet-leasing; footnote 4 however, it does not distinguish between the two.

(b) Amend approval requirements for code-sharing and wet-leasing

The ATR currently require that licensed air carriers seek prior approval from the CTA for code-sharing and wet-leasing arrangements, and submit their applications at least 45 days before the first flight. These provisions were introduced in 1996 and codified approval requirements that had existed since the 1980s. They reflect the expectation of the era that licensed carriers would provide the services, equipment, and facilities necessary for all their transportation services, operate those services under their own name and disclose the identity of the aircraft operator. The requirement also provided a means to verify that commercial relationships such as code-sharing were consistent with negotiated bilateral agreements.

Today, all but a few bilateral agreements now include code-sharing rights, and the industry’s use of these arrangements has become a standard way of providing air services among licensed air carriers. To the extent that bilateral agreements allow for such arrangements, a simple notification of code-share agreement to the CTA would allow for continued oversight while lessening the burden imposed by the CTA’s existing application and subsequent determination process. A change to the ATR language would be necessary to allow this process change for code-sharing arrangements.

The 2014 Wet-Lease Policy has made it clearer when applications involving longer-term wet-leasing arrangements between a Canadian carrier and a foreign company will and will not be approved. There is therefore less need today than there was in the past to undertake broad consultations on those applications. In addition, the CTA has shifted from paper to electronic submission of applications. These factors serve to reduce the minimum filing time for wet-leasing arrangements. For this reason, reducing the timeline set in the ATR for approving wet-lease applications would be justified.

Currently, the ATR specifies that two Canadian licensed air carriers that wish to enter into arrangements for either a domestic service or a service between Canada and the United States for the provision of aircraft with flight crew can do so without seeking the approval of the CTA.

Expanding this ATR provision to include arrangements for services between Canada and the United States when such service is operated by licensed air carriers that are either Canadian or U.S. carriers or both would ensure that the regulatory requirements on U.S. air carriers are not more burdensome than those imposed on Canadian air carriers, consistent with the Canada-United States Air Transport Agreement signed in 2007. Furthermore, this step could facilitate the introduction of more competitive air services for Canadian travellers.

4. Reduce burden for licensed operators

The CTA has identified several ATR requirements that are unduly burdensome and should be removed.

Currently, the ATR call for carriers licensed by the CTA to offer air services to make annual written declarations that they continue to have all of the qualifications needed to keep their licences valid. Removing this requirement would not result in the failure of licence holders to have all of the necessary qualifications. In addition, there are other existing provisions that ensure that licence holders continue to meet the requirements of the licence, such as section 82 of the Act, which requires licence holders to notify the CTA of changes that would affect their prescribed liability insurance coverage or their status as Canadians. Furthermore, the CTA would retain its powers to require carriers to provide this information during periodic air inspections or upon request.

Removing the requirement for licensees to meet the financial requirements when applying for a licence to operate a domestic air service using medium aircraft when they already hold a licence to operate a domestic air service using a large aircraft would support a reduction in regulatory burden, as licensees would not be required to meet the duplicative financial requirements found in the existing ATR.

Currently, if a licensee wishes to paint a name or logo on their aircraft, other than a name included on their licences, they must apply to the CTA for an exemption. Painting of an aircraft is a business decision, and the amendments to the ATR clearly state that the ATR is not contravened by advertising on the aircraft.

5. Other housekeeping items

A number of measures to address the following ATR housekeeping issues have been identified and are included in this regulatory proposal:

Objectives

Canada’s National Transportation Policy, as declared in section 5 of the Act, states that “a competitive, economic and efficient national transportation system that meets the highest practicable safety and security standards and contributes to a sustainable environment and makes the best use of all modes of transportation at the lowest total cost is essential to serve the needs of its users, advance the well-being of Canadians and enable competitiveness and economic growth in both urban and rural areas throughout Canada.” The Act indicates that these objectives are met when

In accordance with the National Transportation Policy, the intent of the proposed amendments to the ATR is to ensure that industry’s regulatory obligations are clear, predictable and relevant to a range of existing and emerging business practices, that the demands associated with compliance are only as high as necessary to achieve the purposes of the regulations and that the efficient and effective identification and correction of instances of non-compliance is facilitated.

Modernizing the air insurance provisions would help advance the well-being of Canadian passengers travelling by air and the members of the Canadian public by ensuring that all Canadians are afforded access to the same level of passenger and public liability insurance coverage that was provided for when the current amounts were established.

Amending charter provisions found in the ATR would create a regulatory regime that would better reflect a more liberalized international charter industry. The international charter market has changed immensely and now provides a greater variety and number of services. The ATR have not adjusted to these new market forces, and it is expected that the proposed changes to the ATR would help to support a reduction of the regulatory burden and administrative costs to licensees, while continuing to provide sufficient regulation to ensure public policy objectives are met.

Clarifying code-sharing and wet-leasing activities and amending provisions to reduce the burden would support viable and effective transportation services by allowing for a clear understanding of what services are being provided. The move to notification for code-sharing arrangements and a reduction to the timeline for wet-lease applications would allow for timelier introduction of new air services and could benefit both air carriers and the travelling public.

Description

The amendments were developed pursuant to the authority found in the Act; in the context of the current operating environment in the air industry; and by taking into consideration the views of, and the impacts on, domestic and international scheduled and non-scheduled licensed air carriers, insurance brokers and underwriters, and the travelling public.

1. Modernize air insurance provisions

2. Amend charter provisions to reflect market realities

3. Clarify code-sharing and wet-leasing activities and amend provisions to reduce burden

4. Reduce burden on licensed operators

5. Address other housekeeping items

“One-for-One” Rule

The regulatory proposal is considered an “OUT” under the “One-for-One” Rule because it is estimated that a total of $28,152 (annualized average in 2012 dollars over a 10-year period) in administrative burden costs will be saved for the airline industry once the amendments to the ATR are in effect. Calculations of the administrative burden costs are based on information provided by the airline industry.

It is expected that the amendments to reduce burden for licensees will result in annualized average administrative cost savings of $28,152 (in 2012 constant dollars) for all sizes of businesses. The annualized average administrative cost savings per business will be $51 (in 2012 constant dollars).

Small business lens

The small business lens applies since the amendments impose additional costs on small businesses. Specifically, the amendments impact approximately 163 small federally licensed air carriers, and the estimated present value of total industry costs over the 10-year period is approximately $1,755,888 (in 2012 dollars).

Additional costs to small businesses arise from direct compliance with the changes to the minimum amount of passenger and public liability insurance provisions and the ensuing increase in insurance premiums. Part of the costs are offset by savings from lesser administrative burden on small businesses due to changes to code-sharing arrangements. Currently, the majority of air carriers carry liability insurance far beyond the required level and are therefore already compliant with the amendments. However, licensees operating small aircraft often maintain insurance levels that are close to the current minimum insurance coverage requirement.

Cost calculations are based on industry estimates obtained via consultation. The following assumptions were made:

Based on these assumptions and this information, the estimated annualized increase in total industry costs is $249,999 (in 2012 dollars) for all affected small businesses and the average cost per small business is $1,534 (in 2012 dollars).

The CTA proposes a flexible option by providing a two-year transitional implementation period following the coming into force of the amendment to allow licensees who are holding close to the minimum levels of insurance time to adapt to the amendment.

 

Flexible Option (Preferred Option)

Initial Option

Short description

Increase minimum insurance coverage on public and passenger liability effective 2020.

Increase minimum insurance coverage on public and passenger liability effective 2018.

Number of small businesses impacted

163

163

Annualized Average ($2012)

Present Value
($2012)

Annualized Average
($2012)

Present Value
($2012)

Compliance costs (itemize if appropriate)

289,273

2,031,732

360,432

2,531,521

Administrative costs

(39,274)

(275,844)

(39,274)

(275,844)

Total costs (all small businesses)

249,999

1,755,888

320,708

2,255,677

Annualized Average ($2012)

Present Value
($2012)

Annualized Average
($2012)

Present Value
($2012)

Total costs per small business

1,534

10,772

1,968

13,839

Risk considerations

–

–

Consultation

The CTA conducted consultations with the public, the air industry and other interested stakeholders on the modernization of the ATR.

On December 16, 2016, the CTA launched its public consultations with the air industry and other key stakeholders. A discussion paper was issued that focused on key issues related to charters and advanced payment protection, licensing, monitoring and enforcement. In September 2017, the CTA provided stakeholders and the public with three additional discussion papers. The CTA discussion papers provided key contextual information and posed questions on how to address the identified issues. The CTA also held targeted consultation meetings with stakeholders.

At the conclusion of the consultations, the CTA had received 15 formal written submissions and held 12 bilateral meetings with stakeholders. The CTA also requested comments on its current suite of guides and tools as they relate to the air sector. The input received was summarized in a What We Heard report and was made available on the CTA’s website.

The consultations indicated that there is wide support for the vast majority of the regulatory amendments. Stakeholders support simplifying and modernizing the ATR and indicated that any amendments should be responsive to the evolution of the business practices and avoid the imposition of an onerous administrative burden.

The CTA also held consultations on proposals to reduce burden and address other housekeeping items in 2010; these proposals were published in CGI on April 2, 2011. The regulatory package did not receive recommendation for publication in Part II of the Canada Gazette (CGII) prior to the change in government and was withdrawn.

Modernize air insurance provisions

Industry stakeholders felt that updating the minimum insurance coverage for inflation would be excessive and would not align with other jurisdictions. Given that many medium to large aircraft licensees already carry coverage in excess of the minimum requirements, the primary concern raised was the potential burden on small aircraft licensees, who maintain coverage at or close to the minimum coverage levels. Both consumer and industry stakeholders pointed out that travelling costs would likely increase as a result of the increased premiums.

The foregoing was taken into account when developing the regulatory proposal. The option provides a two-year transitional implementation period following the coming into force of the amendment to allow smaller licensees time to adapt to the amendment.

Amend charter provisions to reflect market realities

There was wide support from stakeholders regarding the elimination, modernization and streamlining of regulatory requirements related to charter provisions.

Clarify code-sharing and wet-leasing activities and amend provisions to reduce burden

While the majority of stakeholders support distinguishing code-sharing and wet-leasing activities in the ATR, one stakeholder was concerned that using unduly rigid definitions to distinguish between the two could hinder flexibility. In order to not narrowly define the nature of the activity and to allow the ATR to capture future business models, a principle-based approach was developed to capture these two very distinct activities.

Regarding the changes to the approval for code-sharing and wet-leasing activities, the majority of stakeholders supported the amendments.

Reduce burden for licensed operators and other housekeeping items

Stakeholders were in agreement with the proposals to reduce licensee burden and address housekeeping issues when the CTA consulted them in 2010. Key industry stakeholders were given the opportunity to express their opinions and engage in the discussion with the CTA, and the discussions were reflected in the proposals. These amendments were part of the regulatory proposal prepublished in CGI on April 2, 2011. No comments regarding the nature of the proposed changes were received during the 30-day comment period.

2018 Prepublication in the Canada Gazette

On December 22, 2018, proposed ATR amendments were published in CGI with a 60-day comment period for interested parties and stakeholders to submit comments. The CTA received three written submissions during the comment period.

Stakeholders expressed support for updating, streamlining and modernizing requirements related to insurance, charter categories, notification and permits. A stakeholder submitted that, while they support the regulatory amendments, modernization of the ATR should go farther and that there should be a broader initiative to update the regulatory framework that includes: tariff modernization, eliminating distinctions between charter types altogether, further streamlining information that must be provided in a codeshare notification, eliminating the requirement to file charter tariffs and fares, focusing on performance-based regulating, international alignment of pricing requirements, and adopting a less punitive approach to compliance.

The CTA believes that the ATR amendments strike an appropriate balance between reducing regulatory burden and maintaining necessary oversight over air industry activities. The suggestion regarding the need for further modernization or deregulation has been duly noted and will be considered in the context of future reviews and initiatives. For example, the CTA intends to bring forward further ATR amendments modernizing tariff requirements in Part V of the regulations.

Certain comments received addressed areas that are not the subject of CTA regulation, including timelines and conditions for ATR exemptions, and third party resellers of air services. The CTA has made note of these suggestions and will consider them.

Rationale

The changes to the ATR update these Regulations and help ensure that they can keep pace with changes in business models, user expectations and best practices in the regulatory field.

The provisions related to charters, code-sharing, and wet-leasing benefit the airline industry by aligning the ATR with current industry practices and reducing administrative burden. They also benefit the Government by streamlining internal application processes.

These regulatory changes primarily impact four parties: air carriers, insurance companies, the CTA, and air travellers in Canada.

Following the prepublication of the amendments in CGI, the CTA identifies certain areas requiring clarification or greater precision. Accordingly, the final regulations reflect the following adjustments:

Implementation, enforcement and service standards

The updated regulatory requirements come into force on July 1, 2019, with a two-year transition period for the new insurance levels. The CTA will update relevant guidance material and forms accordingly. These include guidance and forms related to air licensing for Canadian and foreign applicants, and applications for wet-leasing, code-sharing and the wide range of charter arrangements.

This proposal to update regulatory requirements does not change any compliance requirements or mechanisms to enforce the ATR. The CTA will continue to assess and approve applications and notifications required from carriers under the ATR, monitor compliance through inspections and investigations, and enforce compliance through corrective action orders and fines.

The DPR set out provisions of the ATR that should not be contravened. A contravention of one of these designated provisions is considered a violation of the Act and can be subject to a monetary penalty. The CTA may impose fines where a carrier has been found guilty of an offence as a result of contravening the ATR.

Certain ATR changes allow the CTA to streamline its internal processes. For example, replacing charter permit applications with advance notification means that approval CTA members would not be necessary.

Contact

Caitlin Hurcomb
Team Leader
Regulatory Affairs Division
Analysis and Outreach Branch
Canadian Transportation Agency
15 Eddy Street, 19th Floor
Gatineau, Quebec
K1A 0N9
Telephone: 819‑997‑6667
Email: Caitlin.Hurcomb@otc-cta.gc.ca