Look up in the sky! It’s a plane! Is it Canadian?
That last question is a little harder to answer when it comes to a globalized aviation industry, as the CBA’s Air and Space Law Section notes in its response to the Canada Transportation Act Review Report. The Section’s response deals specifically with Chapter 9 of the report on air transport, and addresses issues of economic policy, aviation safety and customer complaints.
The Section suggests that economic policy and competition related to air transport should be the purview of the Canada Transportation Agency (CTA), not Transport Canada. Canada appears to be the only Chicago Convention signatory-nation where economic policy matters are addressed by the same regulator that oversees aviation security.
Recommendation 4 in the Air Transport chapter, which advises the government to allow foreigners to own up to 49 per cent of an air carrier, up from the current 25 per cent, raises the question of de facto control vs. de jure control. The Section notes that any time the Minister has previously allowed a foreign company 49 per cent ownership, this has, “notwithstanding regulatory decisions to the contrary, resulted in clear de facto control residing outside of the Canadian jurisdiction. For these reasons, should this recommendation be adopted, changes would also be necessary to the Act insofar as the de facto control provisions are concerned.”
The Section isn’t sure why investors would be more attracted to 49 per cent foreign investment, since “sophisticated investors do not traditionally make 49 per cent investments in entities without elements of control being in their favor. Indeed, most major corporations are controlled with a significantly lower equity interest than even the 25 per cent level presently allowed.”
Finally, it notes that Transport Canada defines “Canadian” differently than the Canada Transportation Agency. This can result in situations where a Canadian shell corporation predominantly owned and controlled by a non-Canadian can be approved to provide specialty air services domestically. Ownership is uncovered only when the operator is required to apply to the CTA. While in the short term those differences must be reconciled and addressed, in the long term “a more in-depth review of the de facto control requirements is required,” including a consideration of whether any Canadian control is necessary, and whether restrictions serve or impair air transport offerings for Canadians.
The Section is strongly opposed to the report’s Recommendation 8, which suggests “greater alignment between the regulatory and operational functions of aviation security.” It says that while this recommendation seems to relate to operational efficiencies, it raises questions about impartiality, and would result in lower levels of accountability and compliance. The Section supports the recommendation that the Canadian Transportation Act be amended so that only customers of a particular operator may make complaints against that operator. The Section says that while it supports the use of ADR measures to resolve complaints, the current CTA complaint process can be both inefficient and unduly complicated, and should be reviewed. It notes that, “the current language of the Act, which confers standing on ‘any person,’ is too broad and open to abuse,” drawing CTA resources away from other pressing issues. The Section also takes a moment to comment on a more general issue not related to the report: namely, the respective responsibilities of the Canada Transportation Agency and Transport Canada. The Section notes that Canada is alone in requiring its safety and security regulator to also address matters of competition and economics. Economic policy should be the purview of the Canada Transportation Agency, it says, and not Transport Canada.