Air Transportation Regulations

8.1 (1) In this section, “applicant” means a Canadian who applies for

• (a) a domestic licence, non-scheduled international licence or scheduled international licence that authorizes the operation of an air service using medium aircraft, or for the reinstatement of such a licence that has been suspended for 60 days or longer; or

• (b) a domestic licence, non-scheduled international licence or scheduled international licence that authorizes the operation of an air service using large aircraft, or for the reinstatement of such a licence that has been suspended for 60 days or longer.

(2) Subject to subsection (3), an applicant shall

• (a) in respect of the air service specified in the application, provide the Agency with a current written statement of the start-up costs that the applicant has incurred in the preceding 12 months, with written estimates of start-up costs that the applicant expects to incur and with written estimates of operating and overhead costs for a 90-day period of operation of the air service, and establish that

  • (i) in respect of the start-up costs, the statement is complete and accurate and the estimates are reasonable,

  • (ii) in respect of the operating and overhead costs, the estimates are reasonable and are based on utilization of the aircraft solely on the specified air service under conditions of optimum demand, which utilization shall be no less than that which is necessary for the air service to be profitable,

  • (iii) subject to subparagraph (b)(i), the applicant has acquired or can acquire funds in an amount at least equal to the total costs included in the statement and in the estimates,

  • (iv) the funds are not encumbered and are comprised of liquid assets that have been acquired or that can be acquired by way of a line of credit issued by a financial institution or by way of a similar financial instrument,

  • (v) the terms and conditions under which those funds have been acquired or can be acquired are such that the funds are available and will remain available to finance the air service,

  • (vi) subject to paragraph (b), where the applicant is a corporation, at least 50% of the funds required by subparagraph (iii) have been acquired by way of capital stock that has been issued and paid for and that cannot be redeemed for a period of at least one year after the date of the issuance or reinstatement of the licence, and

  • (vii) subject to paragraph (b), where the applicant is a proprietorship or partnership, at least 50% of the funds required by subparagraph (iii) have been acquired by way of the proprietor’s or partners’ capital that has been injected into the proprietorship or partnership and that cannot be withdrawn for a period of at least one year after the date of the issuance or reinstatement of the licence;

• (b) where the applicant is or has been in operation,

  • (i) increase the amount of funds required by subparagraph (a)(iii) by the amount of any shareholders’, proprietor’s or partners’ deficit that is disclosed in the applicant’s current audited financial statements which are prepared in accordance with generally accepted accounting principles in Canada, and those additional funds shall be acquired by way of capital stock that has been issued and paid for in the case of a corporation, or by way of the proprietor’s or partners’ invested capital in the case of a proprietorship or partnership, which capital stock or invested capital is to be subject to the condition prescribed in subparagraph (a)(vi) or (vii), and

  • (ii) decrease the amount of the capital stock that is required by subparagraph (a)(vi) to be issued and paid for in the case of a corporation, or the amount of the proprietor’s or partners’ capital that is required by subparagraph (a)(vii) to be invested in the case of a proprietorship or partnership, by the amount of any shareholders’, proprietor’s or partners’ equity that is disclosed in the applicant’s current audited financial statements which are prepared in accordance with generally accepted accounting principles in Canada; and

• (c) file with the Agency, on request, any information that the Agency requires to determine whether the applicant has complied with the requirements of paragraphs (a) and (b).

(3) Subsection (2) does not apply to

• (a) an applicant that, at the proposed time of the issuance or reinstatement of the licence, operates an air service using medium or large aircraft in the case of an applicant referred to in paragraph (1)(a), or using large aircraft in the case of an applicant referred to in paragraph (1)(b), pursuant to

  • (i) a non-scheduled international licence or a scheduled international licence, or

  • (ii) a domestic licence in respect of which the applicant has, within 12 months before the proposed time of issuance or reinstatement of the licence, complied with subsection (2); and

• (b) an applicant for the renewal of a licence referred to in paragraph (1)(a) or (b).