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Drones, Accountability and the SCC: Three Important Updates in the Aviation Industry

September 8, 2023

The aviation sector is back in the maintenance hangar, focusing on tune-ups to drone regulations, accountability in the aviation sector and air passenger rights.

In late June 2023, Transport Canada announced Canada’s first proposed drone safety regulations for drones operated beyond visual line-of-sight (BVLOS) and many other major amendments to drone regulations. A few days later, Transport Canada introduced Bill C-52, the Enhancing Transparency and Accountability in the Transportation System Act in its continued effort to bolster air passenger rights in Canada.

These developments continue the enhancement of legal and regulatory frameworks as previously discussed in our Blakes Newsletter: Aviation & Aerospace Group and Blakes Bulletin: Navigating the Proposed Amendments to the Air Passenger Rights Regime.

Finally, in August 2023, the Supreme Court of Canada decided it will hear an appeal that will put the spotlight on air passenger compensation on international itineraries.

Clearing the Way for Liftoff

On June 23, 2023, the Minister of Transport (Minister), the Honourable Omar Alghabr, proposed the following significant amendments to the drone provisions under the Canadian Aviation Regulations (CARs).

New Rules for Routine BVLOS Operations

The most significant of the proposed amendments is the new regulations related to routine BVLOS operations with drones weighing up to 150 kilograms (kg) over sparsely populated areas, below 400 feet above ground level and in uncontrolled airspace. Under the current regulatory regime, drone operators must obtain a Special Flight Operations Certificate (SFOC) on a case-by-case basis from Transport Canada to perform these types of operations. However, the proposed amendments would remove this constraint.

In connection with the amendments for routine BVLOS operations, Transport Canada is proposing to introduce a new pilot certification process called Level 1 Complex Operations. To obtain a Pilot Certificate for Level 1 Complex Operations certification, the pilot will need to be at least 18 years old, attend mandatory “ground school,” successfully complete Transport Canada’s online examination for advanced operations and successfully complete an in-person flight test.

If such proposed regulations become law, Canada would rank among the first countries to adopt regulations for BVLOS drone operations.

Other Notable Amendments to Drone Regulations

  • Introduction of new requirements for medium drones flying within visual-line-of-sight (VLOS) near and over people, and in both controlled and uncontrolled airspace. Medium drones weigh above 25 kg and 150 kg. The new requirements would increase the minimum distance from people not involved in the operation and would introduce additional flight planning considerations such as weather and visibility. These proposed changes are aimed to mitigate the safety risks associated with such medium drones. 

  • Expansion of registration requirements with Transport Canada and associated fees to include all drones that weigh 250 grams (g) and above. Under the current regulatory regime, all drones weighing 250 g up to and including 25 kg must be registered with Transport Canada.

  • New technical standards for drones and their supporting systems. The proposed amendments would expand the existing declaration process for drone manufacturers. Transport Canada is introducing a new review process for higher-risk operations, called a “Pre-Validated Declaration.” Under the new voluntary process, manufacturers would determine which technical requirements their drones and supporting systems meet and whether they wish to declare such requirements to Transport Canada. Under this new framework, drones would not be able to operate in such higher-risk operating environments unless the manufacturer makes either a Declaration or a Pre-Validated Declaration. The new framework requires manufacturers to submit a Pre-Validated Declaration for their drones to be able to conduct i) VLOS operations with medium drones near and over people; and ii) certain BVLOS operations in uncontrolled airspace, below 400 feet and over sparsely populated areas. In addition, the proposed regulations would require manufacturers to follow annual reporting requirements for Pre-Validated Declaration and service difficulty reporting requirements.

  • New operating rules for extended visual line-of-sight (EVLOS) and sheltered operations. The current regulations would be expanded to allow current and future advanced pilot certificate holders to perform EVLOS operations and sheltered operations by adhering to certain rules relating to distance from the pilot, using a second person for operations and flying the drone outside of direct line-of-sight around an obstacle.

  • New requirement for pilots of any organization intending to fly BVLOS to obtain a Remotely Piloted Aircraft System (RPAS) Operator Certificate (ROC). This requirement would be modelled on the current traditional aviation requirements. A pilot or an organization would need to declare to Transport Canada that they meet certain requirements pursuant to the CARs. In addition, pilots and organizations would be required to establish policies and procedures that address certain points, for example:

    • Appointing an accountable executive;

    • Identifying a person who is responsible for maintenance;

    • Implementing a training program;

    • Implementing standard operating procedures during flight; and

    • Implementing a process to manage safety risks.

  • Finally, fees for many existing services would increase under the proposed regulations. The price of registering a drone would double to C$10, while SFOCs, which were previously provided at no charge, would cost C$150 and C$2,000 for the low and high complexity variants, respectively. A Level 1 Complex Operations certificate would cost C$125, an ROC would cost C$250, and manufacturers would have to pay C$1,200 for Pre-Validated Declarations.

The proposed amendments represent a step forward with respect to the general use of drones in Canada but would specifically represent a clearer path forward for the commercial use of drones. The proposed amendments and new regulations outlined above demonstrate that Transport Canada is now focused on providing organizations with a regulatory landscape in which they can confidently offer services such as package deliveries, building inspections and areal photography.

Technology used to manufacture and operate drones has been rapidly evolving. However, the new regulations demonstrate that Transport Canada is looking to traditional aviation for inspiration on a regulatory framework to anticipate the needs of the drone industry. These regulations represent a further step towards the harmonization of drones with traditional aviation.

Most of the proposed regulations are anticipated to come into force in late 2024, while others would come into force in early 2025.

Accountability in the Aviation Industry

Further to the government’s recent introduction of Bill C-47, which largely focused on consumer and air passenger rights, the government has now introduced Bill C-52, the Enhancing Transparency and Accountability in the Transportation System ActNo, which would promote greater transparency and accountability throughout Canada’s major transportation networks, including air transportation. Bill C-52 proposes two major changes to the current regulatory regime:

  • Enactment of the Air Transportation Accountability Act. The proposed legislation would notably authorize the creation of regulations requiring airlines and airports to set service standards and publish performance metrics, such as bag arrival or security wait times. Additionally, the Minister would be able to require airports and other operators to provide certain information necessary for strategic decision-making. A noise consultation process and airport noise committees would also be established, and airport authorities would be required to report on and publish climate change action plans and targets. Federally incorporated airport authorities would also be required to publish diversity information regarding their directors and members of senior management.

  • Amendments to the Canada Transportation Act (CTA). The proposed amendments would create accessibility data reporting standards for transportation service providers under the legislative authority of Parliament, namely within international and inter-provincial air travel system. For example, the standards would include reporting on data related to complaints and accommodation requests. It would create an approach to identify, remove and prevent barriers to accessibility. The proposed amendments would permit Transport Canada and the Canadian Transportation Agency (Agency) to publish such data. In addition, the proposed amendments would create a new requirement for service providers (i.e., airlines) in the federal transportation system to establish a process for addressing accessibility complaints and accommodation requests.

Bill C-52 received its first reading on June 20, 2023.

Supreme Court of Canada to Rule on Air Passenger Rights Compensation on International Itineraries

In 2019, the Agency enacted the Air Passenger Protection Regulations (APPR) which regulates, among other things, air carrier obligations for flight delay, cancellation, denial of boarding, and loss of or damage to baggage.

In the same year, the Federal Court of Appeal (FCA) granted leave to the International Air Transport Association, along with 16 airlines (together, the Appellants), to appeal the validity of the APPR. This appeal challenged the validity of several of the APPR’s provisions. Most importantly, it challenged the liability provisions which impose pre-determined compensation for delays, cancellations, or denial of boarding and obligations regarding tarmac delays. The FCA addressed two aviation-specific issues when it rendered its decision in December 2022.

First issue: Is the minimum compensation to passengers required by the APPR in the case of delay, cancellation, denial of boarding and lost or damaged baggage, when applied to international carriage by air, authorized by subparagraph 86.11(b)(i) of the CTA and compatible with the Montreal Convention?

The Appellants argued that “delay” is not defined in the Montreal Convention and includes cancellation and denial of boarding. Thus, the APPR should not be allowed to regulate minimum compensation for cancellation and denial of boarding. Additionally, the Appellants submit that the requirement to reimburse baggage fees for lost or damaged baggage contravenes the Montreal Convention.

The FCA found that the APPR is more properly characterized as complementary to the Montreal Convention, and therefore does not infringe on it by virtue of the exclusivity principle. Also, the FCA ruled that the APPR’s required minimum compensation for cancellation and denied boarding falls outside the scope of Article 19 of the Montreal Convention. Therefore, the APPR can govern these matters. Finally, the FCA found that that the minimum compensation requirement to reimburse baggage fees does not contravene the Montreal Convention as it is compatible with State practice of many State signatories. However, given that the APPR only specifies “lost or damaged baggage” and not “temporary loss baggage,” the FCA stated that the provision imposing a liability for baggage lost for 21 days or less is found ultra vires (i.e., beyond the authority of the CTA).

Issue 2: Are any of parts of the APPR’s provisions governing communication, alternate travel or refund requirements, compensation and standards of treatment ultra vires the CTA insofar as they apply to international service because of an impermissible extraterritorial application?

The Appellants argued that the APPR has extraterritorial effects that violate the sovereignty of foreign states, but the FCA did not agree. The FCA specified that the APPR does not apply to the airspace above foreign states and that the obligations imposed by the APPR such as information at service desks, on printed tickets, at airport gates, or compensatory obligations related to delayed and cancelled flights do not affect or alter another state’s airspace, nor do they affect how air carriers operate in another jurisdiction’s airspace.

The Appellants applied to the Supreme Court of Canada (SCC) for leave to appeal the FCA’s decision.

Supreme Court of Canada to Hear the Appeal

On August 17, 2023, the SCC granted leave to the Appellants to appeal the 2022 FCA decision outlined above. The Appellants submit that the SCC should consider, among other things, the following question:

What is the proper scope of the Montreal Convention’s exclusivity principle and, specifically, can the APPR liability regime be applied to international itineraries and thus operate in parallel to the Montreal Convention regime?

The Appellants argue that the SCC should provide guidance on the proper scope of the Montreal Convention given that the FCA applied the dissent of the precedent on which it relied rather than the majority’s decision.

The Attorney General of Canada, as respondent, submits that the one issue to be decided is whether this case raises issues of public importance within the meaning of s. 40 of the Supreme Court Act and that the interpretation issue of the Montreal Convention does not warrant the SCC’s intervention and is not of public importance.

The decision will provide guidance to both air carriers and air passengers with respect to passenger compensation in relation with international flights either to or from Canada. The SCC’s decision to hear the appeal is a timely one given the government’s recent legislative push to enhance air passenger rights in Canada.

Blakes will provide further guidance once such appeal is heard.  

For further information, please contact any member of our Aviation & Aerospace group.