The appellant airlines purchased liquor abroad and stored it in customs bonded warehouses in Ontario for use on domestic and international flights.
The provincial liquor authorities charged markups and gallonage fees on the liquor.
The airlines sought restitution of the fees and a declaration that the provincial liquor monopoly was constitutionally inapplicable to their federal aeronautical undertaking.
The Supreme Court of Canada held that the liquor was subject to the federal Importation of Intoxicating Liquors Act and that the provincial monopoly applied, as providing liquor is not an integral part of an aeronautical undertaking.
However, the Court ordered the provincial authorities to make full restitution of the gallonage fees wrongfully collected under an inapplicable licensing regime.
