Federal government puts cap on airline 'wet-leasing'

[CFR]

http://www.ctvnews.ca/canada/federal-go ... -1.1442484

[Chaxterium]

Does this actually have any bite towards Sunwing's practices?

[Gilles Hudicourt]

Yes and No.

Last year, a law firm writing on behalf of Sunwing wrote to the CTA that the current legislation allowed Sunwing or any other airline in Canada to wet-lease any number of foreign aircraft they wanted, as long as they provided a "reason", but that the reason could be any reason. It thus claimed that it could, if it want, wet-lease any number of foreign aircraft, but had no intentions of abusing that right. To the dismay of all, the CTA concurred but also concluded that the rules needed to be modified.

https://www.otc-cta.gc.ca/eng/ruling/426-a-2012

[40] In this case, a number of interveners have expressed the opinion that in determining whether applicants meet the requirements of section 8.2 of the ATR, the Agency must consider the necessity of such arrangements pursuant to paragraph 8.2(3)(j) of the ATR and that in doing so, the Agency must consider a broad range of factors. WestJet and Transat suggest that wet lease arrangements were initially intended to address unexpected or unforeseen situations, not to be part of a business model. The Agency is of the opinion that as the air industry continues to evolve, the Agency must ensure that its regulatory framework and its administration continue to be relevant. While the Agency recognizes that it has not to this point typically chosen to exercise its discretion under paragraph 8.2(3)(j) of the ATR, the Agency considers that the responses to the Notice in this application raise fundamental issues of interpretation regarding the intent of the objectives of requiring Agency approval of all wet leases.

[41] The responses to the Notice and issues raised suggest that it would be both timely and beneficial to clarify the Agency’s approach to wet lease applications. Accordingly, the Agency will initiate a consultation to seek the views of the industry and other interested parties regarding the intent of the wet lease approval requirements, and what should be considered, including information required by the Agency for its assessment of “necessity” under paragraph 8.2(3)(j) of the ATR. This is consistent with the Agency’s ongoing commitment to ensure that the administration of its regulations is transparent and is understood by stakeholders.

I have not seen the details of the new regulations yet, but it seems that the CTA now limit the right to wet-lease foreign aircraft at 20% of an airline's fleet, and will also consider reciprocity, if the Canadian airline sent some of its aircraft to work overseas, as Sunwing does. The foreign wet-leases, I assume, would allow a Canadian carrier to wet-lease above and beyond the 20% cap to a number equal what it send overseas. This summer, Sunwing sent 7 aircraft overseas, so would probably be allowed to wet-lease 7 foreign aircraft.

This cap, does not limit the wet-lease of Canadian aircraft in any manner (so they would be able to wet-lease from Canjet for example, in addition to the 7 foreign wet-leases, which is fine)

That covered the "yes". Now for the "no"

Only part of Sunwing's foreign pilots came from wet-leases. So this CTA ruling has no effect on the other programs that Sunwing used to import foreign pilots.

It seems that CIC has decided no longer to honor the so-called reciprocal agreements that Sunwing had with foreign airlines that no work permits would be issued next winter under reciprocity. The reciprocity that will be allowed has been moved under the responsibility of the CTA, as explained above.

What remains are the LMO work permits under HRSDC. HRSDC has advised Sunwing that they had to reduce the number of LMOs application from one year to another, until they were weaned from the need to use foreign pilots over a number of years. Last year, they were provided with 119 LMOs but HRSDC, so we expect that number to be under 100 this year.

I however think it should be zero. With Suninwg allowed 7 wet-leased under the CTA, with about 84 foreign pilots, they should crew the rest of their aircraft with Canadian pilots. Claiming there is a shortage of Canadian pilots in order to excuse the use of foreigner is just not true, as we all know. There are plenty of qualified and well experience Canadian pilots to go around. Sunwing just wants to save a number of those jobs for the foreigners, whose aircraft Sunwing are dry-leasing and who would remain without work in Europe if Sunwing did not take them along with their aircraft. So they leave Canadians without work instead.........

[Chaxterium]

Well at the very least it seems like a much needed step in the right direction.