Air Ruling OKs “Tour” Co’s

Dale Smith, www.blacklocks.ca
Companies carrying on business as “tour operators” can book and sell airline tickets on third-party aircraft without a federal license, regulators have ruled. The decision by the Canadian Transportation Agency revives Winnipeg-based discounter NewLeaf Travel Co. that offered low-cost flights on aircraft it had no license to operate.

“It seems an extraordinary action and on first glance doesn’t seem to be in the interests of consumers,” said Bruce Cran, president of the Consumers’ Association of Canada. “They seem to be blurring the definition of what an airline is.”

NewLeaf was grounded last January 21 after advertising low-cost flights on a company website flynewleaf.ca that depicted aircraft in NewLeaf colours. The company has no air carrier license. Tickets were sold on planes owned by a third-party licensee, Flair Airlines Ltd. of Kelowna, for flights between Halifax, Hamilton, Winnipeg, Regina, Saskatoon, Kelowna and Abbotsford, B.C.

“Many companies buy seats on aircraft when they are in their own right some kind of travel company, but this isn’t like that,” said Cran. Federal licensees are subject to consumer protection regulations.

The Transportation Agency said NewLeaf was mistaken in promoting itself as an airline rather than tour operator. Images of aircraft have since been removed from NewLeaf’s website. “The Agency finds that the most reasonable interpretation of what it means to operate an air service does not capture resellers as long as they do not hold themselves out to the public as an air carrier operating an air service,” regulators wrote in Agency Decision No. 100-A-2016.

‘Look Like A Vacation Company’

Under the Canada Transportation Act section 57, “no person shall operate an air service unless, in respect of that service, the person holds a license.” The law grounded discount start-up Greyhound Airlines in 1996.

Air Canada in a submission to regulators cautioned that reinterpretation of the rules “should not be rushed or done in a cursory manner”, and that it may allow firms to bypass 25 percent foreign ownership rules in the licensed air carrier trade. “An organization cannot, nor should it be permitted to, offer its services as equivalent to being an airline or holding out as such without the same conditions and requirements that are required of all other competitors who are, in fact, licensed airlines,” Air Canada wrote.

SunWing Airlines Inc. in submissions noted neither the U.K. nor other European Union countries “have an indirect carrier licensing concept”. EnerJet wrote, “We believe all providers of indirect air services selling directly to the public should be required to hold a license. This assures a level playing field for all participants accessing this market and does not hold aircraft operators to a higher standard than non-licensed sellers.”

Consumer advocate Dr. Gábor Lukács of Air Passenger Rights said the NewLeaf ruling lacked clarity. “Domestic air service is subject to very stringent regulatory requirements,” Lukács said. “They are trying to present themselves as a vacation company, but at the same time they are trying to run what looks like scheduled service. You cannot have both.”

Lukács earlier filed a lawsuit in the Federal Court of Appeal asking that judges overrule regulators’ authority to interpret the Transportation Act. “The Agency intends to fulfil its regulatory responsibility,” said Jack Branswell, spokesperson for the Agency.