Backgrounder - Air Canada, WestJet and Air Transat’s International Tariffs and Air C...
Backgrounder - Air Canada, WestJet and Air Transat’s International Tariffs and Air Canada and WestJet’s Domestic Tariffs Decisions
An air carrier’s tariff is the contract between the air carrier and the passenger. It contains their fares, rates, charges, and related terms and conditions such as size and weight of baggage, what happens in case of flight disruptions and when the carrier can deny boarding.
An air carrier is free to set the terms and conditions contained in its tariff so long as the terms and conditions meet certain legislative requirements, which include not being unreasonable, unjust or unduly discriminatory. Carriers are required to post their terms and conditions of carriage on their websites and to make them available to the public at their business offices. Provisions incorporated into a carrier's tariffs are enforceable by the Agency. This means that passengers can file complaints with the Agency if they feel an air carrier has not acted in a manner consistent with the tariff, or if they feel the tariff is unclear, unjust, unreasonable or unduly discriminatory.
In these contexts, the Agency has the authority to address the terms and conditions of carriage for domestic traffic on complaint and for international traffic on complaint and its own motion. It has the power to suspend, disallow or substitute the terms and conditions of carriage, and can order the air carrier to change its tariff and its terms and conditions.
Tariffs are governed by the Canada Transportation Act, the Air Transportation Regulations and the Montreal Convention. The Agency evaluated the tariffs in light of these instruments.
Canada Transportation Act and Air Transportation Regulations
The Air Transportation Regulations (ATR) state that all tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just and reasonable and shall, under substantially similar circumstances and conditions and with respect to all traffic of the same description, be applied equally to all traffic.
The Canada Transportation Act (CTA) also states that if, on complaint in writing to the Agency by any person, the Agency finds that the holder of a domestic licence has applied terms or conditions of carriage applicable to the domestic service it offers that are unreasonable or unduly discriminatory, the Agency may suspend or disallow those terms and conditions and substitute other terms or conditions in their place.
The Agency has stated in previous decisions that in order to determine whether a term or condition of carriage applied by a carrier is “reasonable” within the meaning of the ATR and the CTA, a balance must be struck between the rights of passengers to be subject to reasonable terms and conditions of carriage, and the particular air carrier’s statutory, commercial and operational obligations.
The terms and conditions or carriage are set out by an air carrier unilaterally without any input from passengers. The air carrier sets its terms and conditions of carriage on the basis of its own interests, which may have their basis in purely commercial requirements. There is no presumption that a tariff is reasonable.
When balancing the passengers' rights against the carrier's obligations, the Agency must consider the whole of the evidence and the submissions presented by both parties and make a determination on the reasonableness or unreasonableness of the term or condition of carriage based on which party has presented the more compelling and persuasive case.
The Convention for the Unification of Certain Rules for International Carriage by Air, commonly known as the Montreal Convention, is an international treaty that establishes uniformity and predictability of rules relating to the international carriage of passengers, baggage and cargo by air.
For international travel from and to Canada, rules are established by the Montreal Convention. The exception to this standard is in situations involving a one-way trip originating from, or destined to, a country that has not ratified the Montreal Convention. In this case, the Warsaw Convention would still apply.
Although domestic tariffs are not subject to compliance of the Montreal Convention, the Agency feels that passengers should expect and be entitled to consistency in treatment and that in appropriate circumstances domestic tariffs should be consistent with the principles of the Montreal convention.
Air Canada, WestJet and Air Transat’s International Tariffs and Air Canada and WestJet’s Domestic Tariffs Decisions
In June 2009, five complaints were filed with the Canadian Transportation Agency by the same individual against the international tariffs of Air Canada, WestJet and Air Transat and the domestic tariffs of Air Canada and WestJet. Air Transat does not operate domestic services. The complaints alleged that specific provisions of the tariffs of these air carriers relating to overbooking, cancellation, delay and rerouting, are unreasonable. The five complaints were treated by the Agency in separate formal adjudication proceedings.
The complaints do not extend to situations outside the control of the air carriers. Accordingly, the related Agency decisions are related to an assessment of situations that are within the control of the three air carriers.
In the course of the formal adjudication process to address the complaints, the Agency assessed relevant facts and circumstances, by way of written submissions, weighed the various factors and rendered decisions based on law and evidence presented by the parties involved in the cases. The Agency considered the responses of the parties involved and made determinations based on the clarity and reasonableness of the tariff provisions.
Decisions issued in August and December 2011 for Air Canada, WestJet and Air Transat (LET-C-A-80-2011, LET-C-A-129-2011, LET-C-A-79-2011 and LET-C-A-78-2011) contain findings on submissions made by all parties. In these interim decisions, the Agency made preliminary findings with respect to the reasonableness of certain tariff provisions and requested the air carriers, among other matters, to show cause why certain actions should not be taken respecting certain domestic and international tariff rules. The Agency provided the carriers and the complainant with the opportunity to address these preliminary findings.
Final Agency 2012 Decisions
In five separate decisions released on June 28, 2012, the Canadian Transportation Agency ruled on the reasonableness of international tariff provisions of Air Canada, WestJet and Air Transat, and domestic tariff provisions of Air Canada and WestJet relating to the overbooking, cancellation, delay and rerouting of flights.
Prior to these decisions, the tariffs of the three air carriers were more restrictive with regards to passenger rights. For example, when flights were overbooked or cancelled, the options for rebooking as well as choice for a refund versus rebooking was at the discretion of the carrier. As for situations in which a refund was warranted, the tariffs only provided for a refund of the unused portion of the tickets.
By applying consistency to the carriers’ international and domestic tariff provisions, the Agency is ensuring that consumers are protected while travelling with the airlines both within and to/from Canada. These decisions apply to only Air Canada, WestJet and Air Transat who were the subject of the complaints, and do not apply to other air carriers.
The final June 28, 2012 decisions put more options in the hands of passengers. When overbooking or cancellation situations occur, passengers now have the right to choose between obtaining a refund or continuing to travel. Passengers will also now have more rebooking options.
The final decisions increase the rights and remedies for passengers travelling with Air Canada, WestJet and Air Transat in the following ways:
In the event a flight is delayed, overbooked or cancelled:
Passengers can now choose whether they prefer a refund or to be rebooked to continue their trip.
Prior to these decisions, it was left to the carriers’ discretion to either rebook passengers or give them a refund. Now, the carriers must allow passengers to choose which option they prefer: continuing their trip or obtaining a refund.
In certain cases, carriers must consider rebooking passengers on the first available flight(s), including flights with non-partnered carriers:
Prior to these decisions, the air carriers’ tariffs only provided for rebooking or rerouting passengers on one of their own flights or one of their partner carrier flights. Now, the tariffs cannot be limited to only these rebooking options. The tariffs must now provide for the option of rebooking on a non-partnered carrier flight.
When overbooking or cancellation of a flight results in the passenger choosing to no longer travel:
Sometimes overbooking or cancellation may result in a passenger deciding that the trip is no longer worth taking. If this happens, the passenger will be entitled to a flight to go back home within a reasonable time, free of charge, and a full refund of the ticket price.
Tariffs need to clearly indicate to passengers what recourses they have when overbooking or cancellation situations occur
Passengers should be able to fully understand their rights and the remedies available to them simply by reading the tariff, which is the contract between the carrier and the passenger. Tariffs need to clearly indicate what recourses passengers have in situations of cancellation or overbooking.
Carriers need to clearly spell out in their tariff, the options passengers have when overbooking and cancellation situations occur, including their legal rights and recourses under the Montreal Convention, the Warsaw Convention, or under the law, when neither convention applies.
They have to also ensure that the applicable time limits for passengers to exercise their legal rights are those provided for by law.
For example, the tariffs cannot impose a 30-day time limit to take legal action when the Montreal Convention provides a 2-year time limit.
WestJet and Air Transat
Although WestJet and Air Transat have already filed proposed tariff amendments that meet most of these enhanced passenger rights, the Agency’s Decision Nos. 249-C-A-2012, 248-C-A-2012 and 252-C-A-2012 found that certain proposed amendments remain unclear or unreasonable. Both air carriers have until July 28, 2012 to revise their tariffs to incorporate the ordered tariff amendments set out in these Decisions.
In Decisions Nos. 250-C-A-2012 and 251-C-A-2012, the Agency also found that certain tariff provisions are unreasonable and is directing Air Canada to make amendments to its tariff provisions on overbooking, cancellation, delay and rerouting.
As WestJet and Air Transat had already filed proposed tariff wording related to passenger rights, the Agency refers Air Canada to the Agency’s findings on this tariff’s language as set out in the other carriers’ decisions. Air Canada has until August 12, 2012 to revise its tariffs in accordance with the Agency’s decisions.
About the Agency
The Canadian Transportation Agency is an independent administrative body of the Government of Canada. It performs two key functions within the federal transportation system:
As a quasi-judicial tribunal, the Agency, informally and through formal adjudication, resolves a range of commercial and consumer transportation-related disputes, including accessibility issues for persons with disabilities. It operates like a court when adjudicating disputes.
As an economic regulator, the Agency makes determinations and issues authorities, licences and permits to transportation carriers under federal jurisdiction.
Decisions of the Canadian Transportation Agency are legally binding. Should a party disagree with an Agency decision, there are two options for contesting the decision:
Under section 41 of the Canada Transportation Act, a party can apply to the Federal Court of Appeal within 30 days of the issuance of an Agency decision for leave to appeal the decision on a question of law or jurisdiction; and
Under section 40 of the Act, a party can petition the Governor in Council to vary or rescind any decision made by the Agency.