Imagine this scenario: a U.S. registered business aircraft arrives in Toronto following a short Part 135 charter flight from Buffalo, NY. The aircraft is going to spend a few days in Canada, and a local resident asks to charter the aircraft to Montreal. Is this allowed?
The answer is no, because such a practice is an example of cabotage – the commercial transportation of goods or people between two points in one country, onboard an aircraft registered in another. In essence, the U.S. charter operator would be acting as an airline, without the proper economic authority from the Canadian government, in violation of regulations intended to protect Canadian carriers, explains Sam Barone, president and CEO of the Canadian Business Aviation Association.
“A foreign commercial aircraft cannot come in empty for the purpose of carrying Canadians point-to-point within the country,” Barone says. “However, a charter aircraft with passengers who boarded in the United States may fly to several points within the country, as long as it the same charter flight with the same people onboard.
“Where the line becomes crossed is when you designate between a charter flight and a private flight,” Barone continues. “Where you have in some cases an aircraft that came in on a private flight that has an air carrier certificate onboard, they think they can make some money by then chartering the aircraft out within Canadian borders. If Customs finds out that someone said ‘I’ll pay for half the fuel,’ that’s a violation.”
Penalties for violation of cabotage regulations range from full repayment of all applicable duties and taxes, up to seizure or forfeiture of your aircraft.
A frequent question arises when speaking of company operators transporting Canadian residents on non-commercial flights for the purpose of business – for example, if a U.S.-based operator with an office in Calgary wishes to fly employees of that office to another Canadian city. That’s acceptable under the regs, as long as the travel is related to the business and, most importantly, no money changes hands for the flight.
“If a U.S.-based company flies in from Teterboro, they can fly into a Canadian airport and to another Canadian point with no issue,” Barone says. “They may also carry Canadians so long as they are not chartering the plane or paying for the flight. Employees can fly, clients can fly.”
The issue of cabotage will be among the topics discussed at the upcoming CBAA/NBAA Cross-Borders Issues Conference, to be held December 8-9 at the Hilton Toronto Airport Hotel. The Conference will bring together industry leading experts on cross-border issues, including government officials, aviation attorneys and international service providers. Additional subjects will include the economic and regulatory issues pertaining to cross-border flights, and information on trusted traveler programs such as CANPASS.