WestJet wetlease - CTA Decision 471-A-2012

[CD]

Decision No. 471-A-2012
December 12, 2012
APPLICATION by WestJet, on behalf of itself and Thomas Cook Airlines Limited, pursuant to section 60 of the Canada Transportation Act, S.C., 1996, c. 10, as amended, and section 8.2 of the Air Transportation Regulations, SOR/88-58, as amended.

File No.: M4835-83-4

APPLICATION

WestJet, on behalf of itself and Thomas Cook Airlines Limited (Thomas Cook), has applied to the Canadian Transportation Agency (Agency) for an approval to permit WestJet to provide its scheduled international service between Canada and the United States of America using aircraft and flight crew provided by Thomas Cook, from December 13, 2012 to April 22, 2013. The application was received on October 26, 2012.

WestJet is licensed to operate a scheduled international service in accordance with the Air Transport Agreement between the Government of Canada and the Government of the United States of America signed on March 12, 2007.

EXEMPTION REQUESTED

WestJet has also requested an exemption from the application of subsection 8.2(2) of the Air Transportation Regulations (ATR), which requires the filing of an application for an approval at least 45 days before the first planned flight.

In Decision No. 426-A-2012 dated November 7, 2012, the Agency advised that the 45-day filing requirement will be strictly enforced for any new applications made after the date of issuance of that Decision, unless the applicant can demonstrate to the Agency that the requirements for a wet lease resulted from an unexpected or unforeseeable situation.

The Agency notes that the wet-lease Agreement between WestJet and Thomas Cook was signed on October 22, 2012, and the application was filed on October 26, 2012, prior to the date of issuance of Decision No. 426-A-2012. Therefore, the Agency will not enforce the filing time requirement in this case.

The Agency has considered the matter and finds that compliance with subsection 8.2(2) of the ATR is impractical in this case. Accordingly, the Agency, pursuant to paragraph 80(1)(c) of the Canada Transportation Act (CTA), exempts WestJet from the application of subsection 8.2(2) of the ATR.

WET-LEASE APPLICATION

In Decision No. 426-A-2012, the Agency found that the issues raised in Sunwing Airlines Inc.’s application for a wet lease suggest that it would be both timely and beneficial to clarify the Agency’s approach to wet lease applications. In that regard, the Agency advised that it will initiate a consultation to seek the views of the industry and other interested parties regarding the intent of the wet lease approval requirements. This consultation would include information required by the Agency for its assessment of necessity under paragraph 8.2(3)(j) of the ATR.

The Agency also ruled that until it provides further clarification on wet lease application requirements, the current approach will be maintained.

The Agency notes that WestJet provided an explanation for the wet-lease application; however, as set out in Decision No. 426-A-2012, the Agency will continue with its current approach until it has conducted a consultation. Following its consultation, the Agency will establish specific criteria that it will apply in the future.

The Agency is satisfied that the application meets the remaining requirements of section 8.2 of the ATR.

Accordingly, the Agency, pursuant to paragraph 60(1)(b) of the CTA and section 8.2 of the ATR, approves the use by WestJet of aircraft and flight crew provided by Thomas Cook, and the provision by Thomas Cook of such aircraft and flight crew to WestJet, to permit WestJet to provide its scheduled international service on licensed routes between Canada and the United States of America using aircraft and flight crew provided by Thomas Cook, from December 13, 2012 to April 22, 2013.

This approval is subject to the following conditions:

1.WestJet shall continue to hold the valid licence authority.
2.Commercial control of the flights shall be maintained by WestJet. Thomas Cook shall maintain operational control of the flights and shall receive payment based on the rental of aircraft and crew and not on the basis of the volume of traffic carried or other revenue-sharing formula.
3.WestJet and Thomas Cook shall continue to comply with the insurance requirements set out in subsections 8.2(4), 8.2(5) and 8.2(6) of the ATR.
4.WestJet shall continue to comply with the public disclosure requirements set out in section 8.5 of the ATR.
5.WestJet and Thomas Cook shall advise the Agency in advance of any changes to the information provided in support of the application.

FUTURE REQUESTS

WestJet is reminded that in any future wet‑lease application, it must provide an explanation, as required by paragraph 8.2(3)(j) of the ATR. Further, the Agency will continue to enforce the requirement to file such applications 45 days before the first planned flight. In this regard, the exemption granted in this Decision should not be relied upon for any future requests for an exemption.

[loopy]

Is this a 757 like they have used for the last couple of years?

[twinpratts]

Yep.
What's the news here again?

[gonnabeapilot]

I think the news here is the hypocrisy of WestJet on the wet-lease issue... From another thread concerning Sunwing's use of wet-leases and the CTA decision about it....

Quote:

[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

I would argue that at this point, the use of the Thomas Cook 757s in the winter to compete with Air Canada on the Alberta-Hawaii market can now be considered part of WestJet's business model and given Air Canada's reductions on its Alberta-Hawaii frequencies this winter, a successful part of the WestJet business model. Perhaps it's time for the pilot groups lobbying against Sunwing to at least acknowledge the fact that there isn't a single major airline in Canada right now that isn't guilty of the use of foreign pilots in some way and that their employers aren't the saints they like to pretend that they are when making comparisons to Sunwing's supposedly evil foreign pilot empire....

[snowball]

TC saved/created about 36 pilot positions for WJ due to the fact that WJ didn't return 3 leased aircraft back. Don't forget that.

[crj_705]

I think the news here is the hypocrisy of WestJet on the wet-lease issue... From another thread concerning Sunwing's use of wet-leases and the CTA decision about it....

Quote:

[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

I would argue that at this point, the use of the Thomas Cook 757s in the winter to compete with Air Canada on the Alberta-Hawaii market can now be considered part of WestJet's business model and given Air Canada's reductions on its Alberta-Hawaii frequencies this winter, a successful part of the WestJet business model. Perhaps it's time for the pilot groups lobbying against Sunwing to at least acknowledge the fact that there isn't a single major airline in Canada right now that isn't guilty of the use of foreign pilots in some way and that their employers aren't the saints they like to pretend that they are when making comparisons to Sunwing's supposedly evil foreign pilot empire....

++++1

The WJA wet lease of 2 B757 aircraft from TCX is nothing shy of a total scam and we all know it...

The only reason why it is being allowed by the WJA pilots is that a good 'business model' presentation was made to their pilot group. "Let us do this to build up a market and we'll get bigger airplanes", I can hear it now. As 'owners' it puts $$$ in their pockets, pure and simple!!!

The 'big picture' is becoming increasingly clearer as our piloting profession now descends into the abyss...

Those aircraft should be flown by WJA pilots just like the dry leases of six (6) B757's at Jazz for the past two winters. The Jazz ETOPS 120 program was going to be completed by April '12 with ETOPS 180 approval completed by Oct '12 just in time for the HNL schedule to start out of YYC, YEG and YVR. Why would TCX want to continue the Jazz dry lease relationship when they're allowed to dump excess aircraft AND pilots into a Canadian market, something TCX has an abundance of every winter in Europe. It's pure genius, NOT!!!!

The sooner our CDN government grows some balls and prohibits our Companies by allowing these 'new business models' types of arrangements, the better off we'll all be.

[Squid]

Sure a lot of "we would have and etops would have been done by...." in your statement. All past tense and where did it get ya?
That's the funny part. You priced yourself out of the competition but didn't look after the company.It's not wool pulled over the wj pilots, they simply dont have a good competitive response/product available just yet to compete....you just couldn't see for your own sweater over your head. Not sure if you knew or not, but there is a company called sky regional that started up doing the same work you do for a lot cheaper. Just a rumor I heard. Might be worth looking into - that's the real threat. Then when encore starts up and matches their working conditions and takes a stick to us, you can find them to blame too...flyer14 whatever will never sleep!

[bigskyjoc]

From another thread during a Colin Hunter interview:

AD: Recently, your competitors, backed by the Air Line Pilots Association (ALPA), accused you of unfair competition because you "import" European planes and pilots during the high season...

CH: They are hypocrites because they denounce a practice they happily engage in as well. Last year, WestJet employed American Airlines pilots to operate its South program. This year they will use Thomas Cook pilots.


Is he right or is he wrong? Are the airlines hypocrites or not?

[piloterror]

DELETED

[onetreehill]

Next winter the 757's will be flown by WJ pilots. Don't get your panties in a knot.

[flyer 1492]

Hey Squid,

I'll sleep just fine thank you. The new hires might be awake worring how they are going to pay their bills.

Flyer 1492

[True North]

Next winter the 757's will be flown by WJ pilots.

I highly doubt that.

[anonymity]

Quote:
Transat, Air Canada, WestJet and the Air Line Pilots Association, which represents Air Transat pilots, are opposed to the request, saying that resorting to foreign planes should be an exception but have become an important feature of Sunwing's business model.

Personally, we need all the help we can get on this issue, however shouldn't the ones fighting it, not be guilty of the same offence?

It has been brought up in another thread, by me, however in retrospect, it is not exactly the same thing or even remotely close to the same level. I don't agree with this practice at all, the fact Westjet does this could be chalked up to can't beat em join em syndrome. Two aircraft that do the work the current fleet can't is not the same as tripling your fleet of the same aircraft. What WJ is doing is on par with SWs summer program.

This is the main concern about this practice, hypocritical or not, if allowed to continue the other airlines in Canada will adopt the can't beat em join em policy and then where will we be?

[Realitychex]

From another thread during a Colin Hunter interview:

AD: Recently, your competitors, backed by the Air Line Pilots Association (ALPA), accused you of unfair competition because you "import" European planes and pilots during the high season...

CH: They are hypocrites because they denounce a practice they happily engage in as well. Last year, WestJet employed American Airlines pilots to operate its South program. This year they will use Thomas Cook pilots.


Is he right or is he wrong? Are the airlines hypocrites or not?

The difference is less than 2% of WJ's airframes are operated under this arrangement.

[whipline]

So just doing it a little bit is alright?

[Squid]

at which company flyer?

AC? WJ? Jazz? Sky? Porter? they all pay around 40 to start don’t they? Plus or minus a couple K. What did you make first year at Jazz? Do you even have a left seat in YYC or have the roll backs eroded your seniority and thus bidding ability more? Possibly a downgrade? How is that good? Just more to come my friend. Jazz is too rich for the service it does. Don’t think of it as an industry example...think of it as a high priced pseudo legacy having to deal with stiff competition. I wouldn’t worry about the others so much as to what is going on more over in your yard. Someone was asleep at the wheel with sky...don’t you agree? What are you doing about it? sleep tight.

Hey Squid,

I'll sleep just fine thank you. The new hires might be awake worring how they are going to pay their bills.

Flyer 1492

[Realitychex]

So just doing it a little bit is alright?

I don't see 9 frequencies a week from Canada to Hawaii for 6 months a year, operated by 2 airframes out of a fleet of 102 aircraft having any significant detrimental impact on the industry.

It's a pretty lazy schedule. WJ could quite easily move that to 11x weekly but have chosen not to.

Besides, everyone knows that flying will ultimately be brought in house. It's only a matter of time.

It's certainly nothing like the virtual airline Sunwing creates on a seasonal basis.

The far greater issue is the ever increasing numbers of Canadian's crossing the border to take advantage of the lower taxes and fees charged by various levels of US governments that results in far lower overall fares.

When one considers most airlines have 5-6 flight crews per airframe, and between 70 and 100 employees per aircraft, the direct job leakage in 2012 caused by this phenomina is likely in the order of about 3,000. Add in all the spin off jobs and it's probably twice as high.

.

[whipline]

So just doing it a little bit is alright?

[Legacy]

So just doing it a little bit is alright?

Whipline, that is just a silly response. Thats like saying that a couple of our VPs are American so according to you it must be wrong. Is the 757 wet leases costing canadian jobs? Like its been stated, TC helped with keeping jobs and/or iron. You have to weigh the entire package. By wet leasing 2 757s, WJ is probably using 20 or so of TCs pilots, if that. TC saved WJ 3 lease returns=about 36 pilots. Think about it.

[gonnabeapilot]

When making comparisons, make sure they are at least apples to apples. This winter Sunwing has 4 aircraft working under a wet-leased arrangement so when comparing it to WestJet's 2 aircraft being leased from Thomas Cook, the numbers are actually quite close. So I think Whipline's question is quite reasonable. If 4 aircraft being wet-leased requires an industry wide response led, in part, by WestJet to challenge it, does that mean only wet-leasing 2 aircraft makes it alright? What about 3? If Sunwing sends one wet-lease home does it make this all go away? Somehow I doubt it.

In response to numbers and percentages, I would point out that Jazz is approximately a 100 aircraft scheduled airline operation and was quite capable to train pilots to operate a small sub-fleet (6?) of Thomas Cook 757s for the last few years. To me this says that there is absolutely no excuse that WestJet can't be doing the exact same thing to operate the 2 aircraft they need. I am sure there are still plenty of CANADIAN ex-Skyservice or Zoom pilots who would be more than happy to contract their services to WestJet to allow them to get this program off the ground. Sunwing's training department is completely tapped out training the Foreign and Canadian contract pilots (now whether or not you agree with that is another issue completely). But the fact remains that Sunwing does not have the capability to train any more pilots and has turned to wet-leases instead. WestJet does have that capability and has still decided to Wet-lease Foreign crews. That makes them just as deserving as Sunwing when it comes to pressure from Canadian pilots.

As far as how operating the wet-leased aircraft saved 36 pilot jobs in Canada, I have my doubts. If there are 20 TC pilots here, that means that out of the 36 pilots who would have been impacted, 20 of them could have been trained to fly the 757s... thus saving their jobs. That would leave 16 pilots jobs that would be impacted. And I have no doubt, that a 100 aircraft operation that is also the country's most profitable airline and places it's employees (sorry, owners) ahead of almost everything else, could have easily found a way to accommodate an excess of 16 pilots for 3 months in the winter. I'm sorry, but if people are not willing to give any ground when it comes to Sunwing in this matter, the same standard should apply to the fine folks at WestJet.

[Gilles Hudicourt]

The way the Air Transportation Regulations (ATR) are presently worded and interpreted by the Canadian Transportation Agency (CTA), it would be perfectly legal for a Canadian airline to operate nothing but a single token Canadian aircraft to secure an OAC from TC, and then wet-lease any number of additional foreign aircraft to augment their fleet as long as all the foreign aircraft were engaged only in international transportation. Transat tried to argue with the CTA that because 8.2 (3) (j) of the ATR (http://laws-lois.justice.gc.ca/eng/regu ... index.html) required that wet-lease applicant provide a reason for which a wet-lease was required that such a reason should weigh in the decision process. Sunwing, on the other hand, argued that as long as any reason whatsoever was included in the wet-lease application, that the CTA had no other choice but to approve the application regardless of the reason provided. The CTA concurred with Sunwing but also stated that the regulations needed to be revised.......

I smiled when I read Mr Hunter's recent statement that Sunwing had no legal department. While maybe true that they have no internal permanent legal staff, they have at their disposal an army of external contracted lawyers (I can name the firms) who allow Sunwing to exploit the slightest flaw or loophole of every Canadian law or regulation to their advantage. Thanks to Sunwing's "brilliant business model", certain laws and regulations of this country will certainly have to be modified. If they are not, we will soon see the bulk of Canadian international travel fall into the hands of foreign interests.

When a "Canadian" airline dry-leases (short term leases) or wet-leases the majority of its fleet from foreign airlines, contracts the majority of its pilots and even some of flight attendants from foreign airlines, has foreign airlines do the heavy maintenance and overhauls of it's aircraft, trains its pilots overseas, when 49% of the airline, the maximum allowed under Canadian law, is foreign owned, what is left to call the airline "Canadian" ? A Canadian AOC issued by TC, some permits issued by the CTA and a token number of employees and aircraft to maintain the label. Almost the bare minimum in every case and getting worse year after year.

The Canada Gazette is the official publication where all Canadian laws and regulations are published. Often they also provide an insight for the reasons the laws were written the way they were.

I recently stumbled across a paragraph that explained a change in the Foreign licence validation certificates that Transport Canada issues to the foreign pilots who come to fly in Canada.

http://gazette.gc.ca/archives/p1/1999/1 ... 1-eng.html

CAR 401.07 (Validation of Foreign Licences)
The amendment to CAR 401.07 (Validation of Foreign Licences) prevents an applicant for a foreign licence validation certificate from being a permanent resident of Canada. Under existing regulations, the holder of a foreign flight crew licence issued by a contracting state(see footnote 2), other than Canada, must satisfy only the applicable requirements in the Canadian personnel licensing standards upon applying for a foreign licence validation certificate. This amendment adds the prohibition that the applicant may not permanently reside in Canada. The change emphasizes the transitory nature of the foreign licence validation certificate. Personnel Licensing and Training Standard 421.07 (Validation of Foreign Licences) limits the maximum duration for which such a certificate may be valid to one year from the date of issue. This Standard also sets forth the list of purposes for which such a certificate may be issued. While the issuance of the foreign licence validation certificate accepts the standards of training and operations within the original licensing country, these restrictions upon the duration and purposes of such a certificate minimize the potential exposure of Canadian operators and the Canadian licensing system to possibly less stringent standards.

The FLVC are meant to be limited in purpose and duration to

minimize the potential exposure of Canadian operators and the Canadian licensing system to possibly less stringent standards.

This is certainly not what has been going on at Sunwing or Canjet in recent years.

On that very basis, I am in the process of contesting the regulations under which FLVC are issued to foreign pilots to fly as line pilots for Canadian airlines under CAR 705. I think they are all illegal as the rules stand, unless they were all issued under an exception specifically allowed by the Minister of Transport. We'll see what TC rules on that matter.
Flying as line pilots for CAR 705 airlines are not listed in CAR 721.07 nor are the FLVC limited in time, since TC has adopted the practice of not only issuing these licences for one year, but of renewing them to the same pilots year after year. They are thus no longer limited in time either.

The CARs and ATRs both state that foreign airlines which wet-lease aircraft to Canadian airlines must be in possession of a Transport Canada-issued Foreign Airline Operating Certificate (FAOC). The CARs also stated that foreign airlines that dry-lease a foreign registered aircraft to a Canadian airline must also be in possession of an FAOC. Based on the above quoted Canada Gazette paragraph, could we not also state, in the same spirit, that in the case where such a foreign airline is not in Canada to fly its own passengers, but rather to fly Canadian passengers on behalf of a Canadian airline that:

"While the issuance of a Foreign Airline Operating Certificate (FAOC) accepts the standards of training and operations within the original licensing country, these restrictions upon the duration and purposes of such a certificate minimize the potential exposure of Canadian operators and the Canadian Airlines industry to possibly less stringent standards."

The problem with the Regulations as they are presently written is that there are no restrictions upon the duration and purpose for which a FAOC can be issued to a foreign airline for providing wet-leases to Canadian airlines. But there should be.

[bigskyjoc]

So just doing it a little bit is alright?

I don't see 9 frequencies a week from Canada to Hawaii for 6 months a year, operated by 2 airframes out of a fleet of 102 aircraft having any significant detrimental impact on the industry.

It's a pretty lazy schedule. WJ could quite easily move that to 11x weekly but have chosen not to.

Besides, everyone knows that flying will ultimately be brought in house. It's only a matter of time.

It's certainly nothing like the virtual airline Sunwing creates on a seasonal basis.

The far greater issue is the ever increasing numbers of Canadian's crossing the border to take advantage of the lower taxes and fees charged by various levels of US governments that results in far lower overall fares.

When one considers most airlines have 5-6 flight crews per airframe, and between 70 and 100 employees per aircraft, the direct job leakage in 2012 caused by this phenomina is likely in the order of about 3,000. Add in all the spin off jobs and it's probably twice as high.

.

Try telling that to an unemployed/underemployed type rated B757 pilot.

An argument could be made that the extra aircraft SWG brings adds hundreds of "spin off" jobs as well.

So if I steal 2 chocolate bars per week am I more of a thief than someone that steals one laptop a year?

Again, are the airlines hypocrites or not? Straight forward question.

[KAG]

It's not cost efficient to start a 757 program for 2 destinations for part of the year. As much as we want to fly them, it just doesn't make financial sense. We did not return our leases this year as a direct result of the Thomas cook narrow body flying they bestowed upon us. We’re employing more Canadian pilots as a result of what really isn’t our flying.
So yeah we sound hypocritical, but the gains far outweigh the losses.
Time will tell how this all plays out.

[Biff]

I think most people would agree that if the regulators do prevent Sunwing from continuing with their present practice of flouting the 1:1 reciprocity, Westjet should lose the ability to do it as well. There certainly is an argument for the difference in scale but the precedent would be set.

Bring it on. Hopefully the government will ban/restrict the current practice. At that point in time Sunwing will have a decision to make as will Westjet and that, I would suggest, would be good for all Canadian pilots!

[Realitychex]

Try telling that to an unemployed/underemployed type rated B757 pilot.

WJ, and other airlines in Canada, have hired hundreds of pilots over the past few years.

Encore alone will hire something in the order of 450 pilots over the next 5 years.

Perhaps there are other reasons why your resume is at the bottom of the deck and your search has been unsuccessful?

Having a type rating for an aircraft that isn't operated in a meaningful way in Canada isn't exactly going to improve your chances of domestic employment, anymore than being a VCR repair expert will help you find a secure career path in the field of electronics in 2013.

You need to remember that there isn't a business plan out there, in the past, present or future that is designed to provide you with employment.