Canada: What Is "Air Service"?

Last Updated: February 3 2014
Article by Darryl Pankratz

The Canadian Transportation Agency recently published a decision which sets out how it determines what constitutes an "air service" and what criteria will be applied in making that determination. The Agency is mandated to administer, interpret and enforce the Canada Transportation Act ("CTA"). The CTA provides for various licensing requirements in respect of air transportation and those requirements apply to any person who operates or intends to operate an "air service" in Canada. Therefore, the answer to the question of whether one is operating an air service may have significant consequences on the obligations to comply with regulatory requirements. 

"Air Service" is defined in the CTA as "a service provided by means of an aircraft, that is publicly available for the transportation of passengers or goods, or both."  In its decision, the Agency stated that the fundamental issue in determining whether a person is operating an "air service" is determining whether that service is publicly available. That term is not defined in the CTA but has been historically decided by the Agency on a case-by-case basis and is fact-specific. Determination of whether the service is publicly available involves consideration of several factors including:

(a)  whether the air service has been offered through promotion, advertisement or solicitation;
(b)  whether the service has been offered to at least a segment or portion of the general public;
(c)  is the person to whom the service is being offered able to avail themselves of this service; and
(d)  is the person able to contact the air service provider and arrange for air transportation.

Over time, the Agency has published numerous decisions on whether a person is operating an "air service" and whether that service is publicly available. Despite the publication of these decisions, there is limited information of how the decision was reached. This is because of the need to maintain confidentiality of specific information regarding operators.  As a result, the public has the Agency's decision but no detailed information of its interpretation and analysis of the facts in determining whether the service was publicly available.

The CTA has a current three-year strategic plan and is committed to modernize its regulatory framework, including a desire to provide greater transparency and clarity of how it interprets and administers the legislation and regulations it is responsible for. With this recent decision, the Agency intended to set out a comprehensive list of those criteria which it utilizes to interpret what constitutes an air service and whether it is publicly available.

The Agency stated that any determination of whether a service is "publicly available" must be consistent with the purpose behind the CTA requirement for a person to hold an Agency license. The Agency noted that the licensing requirement exists in part so that a person will be subject to a number of consumer and industry economic protection provisions. The CTA's licensing requirements are intended to apply to the operation of a "commercial" air transportation service offered to the public. Accordingly, the Agency takes into consideration whether the person providing the air service is engaged in the business of transporting people or goods as part of a commercial undertaking or as "consideration" for other services.

The Agency set out the following four criteria which are fundamental in determining whether a person operates an air service which requires that person to hold a license.  Is the service:

  1. offered and made available to the public;
  2. provided by means of an aircraft;
  3. provided pursuant to a contract or arrangement for the transportation of passengers or goods; and
  4. offered for consideration.

The Agency notes that each case will be decided based upon its specific facts and merits but the application of these criteria are to be consistent and uniform.  Of some significance, the Agency took the somewhat unusual step of inviting people who had previously received a decision from the Agency on the issue of air service and the requirement for licenses to request a reconsideration of the matter if they felt that publication of these criteria might impact the earlier decision. While the Agency seeks to have uniformity in the interpretation and application of legislation and regulations to its decisions, they recognized that air transportation is continually evolving.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Darryl Pankratz
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