Decision No. 239-C-A-2013

June 18, 2013

COMPLAINTS by Alexander Brewer, Xian Cong Jow, Nan Liu, Jeffrey Kwok, Gerald Jacobs, Khang Tran, and Richard Wu against Swiss International Air Lines Ltd. also carrying on business as Swiss regarding the cancellation of tickets.

File No.: 
M4120-3/12-06617

INTRODUCTION

[1] Between December 10, 2012 and January 14, 2013, the Canadian Transportation Agency (Agency) received the complaints referred to in the title. In Decision No. LET-C-A-44-2013, the Agency noted that the issues raised in the complaints were similar. As such, to provide for a more expeditious process, the Agency, pursuant to section 6 of the Canadian Transportation Agency General Rules, SOR/2005-35, combined the seven complaints.

[2] The complainants object to the cancellation by Swiss International Air Lines Ltd. also carrying on business as Swiss (Swiss) of tickets purchased for travel from Yangon, Myanmar to Montréal, Quebec, Canada.

BACKGROUND

[3] On or about September 28, 2012, the complainants purchased a total of 15 one-way, multi‑segment tickets for travel from Yangon, with Montréal as the ultimate destination. All of the tickets were for travel with Swiss and consisted of three to five segments, in a combination of business and first class travel, with one exception. The tickets were purchased from Expedia or Travelocity (online travel agents) for a cost of between US$555.80 and US$856.87 per ticket.

[4] On or about October 4, 2012, the complainants received letters from Swiss stating that the tickets were cancelled, as the fares were erroneously published. Swiss has since provided refunds to all of the complainants in the total amounts that they paid for the tickets.

[5] The complainants’ trip details and remedies sought are set out below:

Mr. Brewer

[6] Mr. Brewer purchased a one-way ticket for travel on October 23, 2012, at a cost of US$770.20.

[7] After Swiss cancelled his ticket, Mr. Brewer purchased a replacement first class ticket for a one‑way, multi-segment trip on October 25, 2012 from Colombo, Sri Lanka to Washington, D.C., United States of America, at a cost of US$2,261.09. Mr. Brewer indicates that the replacement ticket that he purchased was the cheapest first class fare between Asia and North America that was available at the time he was originally scheduled to depart from Yangon to a United States of America destination. Mr. Brewer requests that the Agency direct Swiss to reinstate his original ticket, leaving all segments open-ended or, alternatively, reimburse him for the cost of the replacement ticket he purchased. To support his claim, Mr. Brewer provided the Agency with copies of his itineraries/receipts for both tickets.

Mr. Jow

[8] Mr. Jow purchased four tickets; two for himself and two for a companion. The first trip was entirely for business class travel on May 1, 2013, at a cost of US$693.60 per ticket. The second trip was for a combination of business and first class travel on June 13, 2013, at a cost of CAD$856.87 per ticket. Mr. Jow requests that the Agency direct Swiss to reinstate his business class travel at an equivalent travel class and distance, with a Yangon (or Southeast Asia) to Montréal (or North America) routing, at a time of his choosing.

Mr. Liu

[9] Mr. Liu purchased four tickets for himself and three family members for travel on August 5, 2013, at a cost of US$555.80 per ticket. Mr. Liu requests that the Agency direct Swiss to either reinstate all four tickets with open-ended dates on flights originating in Tokyo, Japan and ending in a North American gateway city, or reimburse him for the replacement first class tickets that he will purchase for travel from Yangon to Montréal.

Mr. Kwok

[10] Mr. Kwok purchased two tickets for himself and a companion for travel on May 1, 2013, at a cost of CAD$814.02 per ticket. Mr. Kwok requests that the Agency direct Swiss to either reinstate the tickets, or provide alternative tickets on Swiss-operated flights from an Asian point to Montréal with a similar stopover in Zurich, Switzerland. Alternatively, Mr. Kwok requests a replacement first class ticket for the one that he purchased to return home at a cost of CAD$2,453.32.

Mr. Jacobs

[11] Mr. Jacobs purchased a ticket for travel on March 22, 2013, at a cost of US$690. Mr. Jacobs requests that Swiss reinstate his ticket.

Mr. Tran

[12] Mr. Tran purchased two tickets for himself and a companion for travel on August 17, 2013, at a cost of CAD$807.67 per ticket. Mr. Tran requests, among other things, that Swiss compensate him for these tickets.

Mr. Wu

[13] Mr. Wu purchased a ticket for travel on February 14, 2013, at a cost of US$700.99. Mr. Wu requests that the Agency direct Swiss to reinstate his ticket.

PRELIMINARY MATTERS

Applicable tariff

[14] Rule 5(F) of Swiss’ International Passenger Rules and Fares Tariff, NTA(A) No. 496 (Tariff) on file with the Agency provides that:

Swiss reserves the right to cancel reservations and/or tickets with an erroneously quoted fare by reason of a technical failure prior to said erroneous quote being detected and corrected. Swiss reserves the right to void the purchased ticket and refund the amount paid by the customer and/or offer the customer the ticket at a published fare that should have been available at the time of booking.

[15] At the time that the complainants purchased their tickets, Swiss’ Tariff, as posted on its Web site, did not contain Rule 5(F). Mr. Brewer, Mr. Jacobs, Mr. Kwok and Mr. Jow argue that as the Tariff published on Swiss’ Web site did not include Rule 5(F) at that time, it is unreasonable for Swiss to rely on that Rule.

[16] Subsection 110(1) of the Air Transportation Regulations, SOR/88-58, as amended (ATR) provides that:

Except as provided in an international agreement, convention or arrangement respecting civil aviation, before commencing the operation of an international service, an air carrier or its agent shall file with the Agency a tariff for that service, including the terms and conditions of free and reduced rate transportation for that service, in the style, and containing the information, required by this Division. [Emphasis added]

[17] Subsection 110(4) of the ATR states that:

Where a tariff is filed containing the date of publication and the effective date and is consistent with these Regulations and any orders of the Agency, the tolls and terms and conditions of carriage in the tariff shall, unless they are rejected, disallowed or suspended by the Agency or unless they are replaced by a new tariff, take effect on the date stated in the tariff, and the air carrier shall on and after that date charge the tolls and apply the terms and conditions of carriage specified in the tariff. [Emphasis added]

[18] The Agency notes that, as a fundamental principle of law, a customer is not bound by provisions that are not disclosed in a contract. Air carriers cannot rely on terms and conditions that are filed with the Agency but not disclosed to customers on the carrier’s Web site or in other publicly‑available tariffs. In that sense, Swiss’ failure to maintain a current tariff on its Web site represents a contravention of section 116.1 of the ATR.

[19] When read together, subsections 110(1) and 110(4) of the ATR require a carrier to apply the terms and conditions of carriage appearing in the tariff on file with the Agency. The tariff filed with the Agency is the valid contract of carriage of the carrier and it is that tariff that is applicable.

[20] In this case, the Tariff on file with the Agency, and in effect when Swiss cancelled the tickets at issue, contains Rule 5(F).

Mr. Kwok’s complaint

[21] As stated above, Mr. Kwok was scheduled to travel with a companion. On February 8, 22 and 27, 2013, Agency staff requested Mr. Kwok to provide the Agency with a signed statement authorizing him to act on behalf of his companion. Mr. Kwok was informed that if such a statement was not provided, that part of his complaint concerning his companion’s travel could not be addressed. As Mr. Kwok did not provide such a statement, the Agency cannot address that part of Mr. Kwok’s complaint.

ISSUES

  1. Are Swiss’ terms and conditions of carriage relating to the cancellation of tickets with erroneously quoted fares clearly stated, as required by subparagraph 122(c)(vii) of the ATR?
  2. Is Tariff Rule 5(F) just and reasonable, as required by subsection 111(1) of the ATR?
  3. Did Swiss properly apply the terms and conditions of carriage relating to the cancellation of tickets with erroneously quoted fares as set out in Tariff Rule 5(F), as required by subsection 110(4) of the ATR?

ISSUE 1: ARE SWISS’ TERMS AND CONDITIONS OF CARRIAGE RELATING TO THE CANCELLATION OF TICKETS WITH ERRONEOUSLY QUOTED FARES CLEARLY STATED, AS REQUIRED BY SUBPARAGRAPH 122(c)(vii) OF THE ATR?

Positions of the parties

Mr. Wu and Mr. Brewer

[22] Mr. Wu submits that Swiss needs to clarify what it defines as a “technical” error and why the erroneous fares qualify as such an error. He contends that Tariff Rule 5(F) is unclear. Mr. Wu adds that the Rule is too broad and gives Swiss unreasonable power, in that Swiss can void any ticket or reservation, using “technical failure” as an excuse.

[23] Mr. Brewer states that Swiss’ conditions of carriage do not contain any stipulations for cancellation of tickets due to erroneous or mistake fares.

Swiss

[24] Swiss makes no submissions regarding the clarity of Tariff Rule 5(F).

Analysis and finding

[25] Subparagraph 122(c)(vii) of the ATR provides that:

122. Every tariff shall contain

[...]

(c) the terms and conditions of carriage, clearly stating the air carrier’s policy in respect of at least the following matters, namely,

[...]

(vii) ticket reservation, cancellation, confirmation, validity and loss,

[...]

[26] In Decision No. 2-C-A-2001, the Agency formulated the test respecting the carrier’s obligation of tariff clarity as follows:

[...] the Agency is of the opinion that an air carrier’s tariff meets its obligations of clarity when, in the opinion of a reasonable person, the rights and obligations of both the carrier and passengers are stated in such a way as to exclude any reasonable doubt, ambiguity or uncertain meaning.

[27] The Agency further stated in Decision No. 362-C-A-2004 that a carrier’s tariff meets its obligation of clarity when, in the opinion of a reasonable person, the rights and obligations of both the carrier and passengers are “easy to understand, self-evident or plain.”

[28] Tariff Rule 5(F) allows Swiss to cancel reservations or tickets with erroneously quoted fares, by reason of “technical failure.” The Agency notes that the Rule is silent regarding Swiss’ definition of what constitutes a “technical failure.” Furthermore, the Rule does not provide examples of situations where a “technical failure” may occur. Consequently, Swiss’ usage of that term provides it with relatively broad latitude in labeling various incidents, including human error, as a “technical failure.” In such a situation, passengers may be unclear as to specific circumstances under which Swiss may cancel their tickets. The Agency therefore finds that Tariff Rule 5(F) is unclear because it is stated in such a manner as to create reasonable doubt, ambiguity and uncertainty respecting its meaning.

ISSUE 2: IS TARIFF RULE 5(F) JUST AND REASONABLE, AS REQUIRED BY SUBSECTION 111(1) OF THE ATR?

Positions of the parties

Swiss

[29] In a letter sent to the complainants explaining the ticket cancellations, Swiss indicated that while it honours its commitment to the highest level of customer service and safety in air travel, it must also honour its obligations to its employees and stakeholders. Swiss asserted that it is not obligated to provide its services for compensation that is obviously erroneously published and commercially unfeasible. Swiss also noted that travel bargains are quickly recognized and booked; however, the principles of fair bargaining dictate that a service provider does not give away its services for almost free or at a loss.

[30] Swiss contends that as soon as it discovered the erroneous fares, their distribution/publishing was stopped and the correct fares were posted. Swiss adds that it immediately initiated an investigation into the matter of how the erroneous fares could have been posted.

[31] To support its position, Swiss provided a copy of a November 7, 2012 letter that it received from the Airline Tariff Publishing Company (ATPCO) which indicates that Swiss wrote to ATPCO to seek an explanation as to the cause of the publishing error.

Mr. Wu

[32] Mr. Wu argues that consumers are not liable for Swiss’ responsibilities towards its shareholders. In addition, Mr. Wu points out that Swiss entered into a contract of carriage with consumers and, like consumers, Swiss has to abide by general contract principles.

Mr. Kwok

[33] Mr. Kwok refers the Agency to section 399.88(a) of the United States’ Code of Federal Regulations, which states, in part that: “It is an unfair and deceptive practice [...] for any seller of scheduled air transportation within, to or from the United States [...] to increase the price of that air transportation [...] after the air transportation has been purchased by the consumer [...]” Mr. Kwok submits that the fares at issue should be honoured because his part of the contract has been completed, namely, the acceptance of the e-ticket and payment from his credit card.

Analysis and findings

[34] Subsection 111(1) of the ATR provides 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 that traffic.

[35] To assess whether a term or condition of carriage is “unreasonable,” the Agency has traditionally applied a balancing test, which requires that a balance 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. This test was first established in Decision No. 666-C-A-2001 (Anderson v. Air Canada) and was recently applied in Decision No. 150‑C‑A-2013 (Forsythe v. Air Canada).

[36] An air carrier sets its terms and conditions of carriage on the basis of its own interests, without any input from passengers. These terms and conditions may have their basis in purely commercial requirements, and as such, there is no presumption that a tariff is reasonable.

[37] 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.

[38] Swiss argues that an air carrier cannot be expected to transport passengers for a loss, as Swiss has obligations to its employees and stakeholders. On the other hand, some of the complainants argue that there is no consumer protection in Tariff Rule 5(F).

[39] The Agency has considered the submissions of the parties on this matter, and finds that the complainants have presented a more compelling argument. Specifically, there is no protection afforded to consumers under Tariff Rule 5(F), as Swiss can revoke tickets that it claims to involve fares that have been erroneously quoted by reason of “technical failure.” Also, the Agency finds that the obligation that Swiss alleges it has to honour to its employees and stakeholders does not outweigh the interests of the complainants and other consumers to be subject to reasonable terms and conditions of carriage.

[40] While Swiss argues that it should not be obligated to provide services for compensation that is obviously erroneously published and commercially unfeasible, the Agency notes that Swiss provides no submissions concerning the effect that honouring the erroneously posted fares would have on Swiss’ commercial obligations. The Agency also notes that Tariff Rule 5(F) provides no time period within which Swiss may cancel a ticket that has been erroneously quoted due to technical error, nor does that Rule specify examples of situations that may lead to such an error. Furthermore, Rule 5(F) imposes no obligations on Swiss to ensure that it takes reasonable steps to prevent the issuance of erroneous fares.

[41] The Agency notes that it took Swiss six days to discover the erroneous fares, leaving at least one complainant with less than three weeks to make alternative travel arrangements.

[42] Considering the above, the Agency is of the preliminary opinion that the broad, undefined authority that Tariff Rule 5(F) affords Swiss is disadvantageous to consumers. Swiss has not demonstrated to the Agency’s satisfaction that Rule 5(F) considers or balances the passengers’ rights to reasonable terms and conditions of carriage with Swiss’ statutory, commercial and operational obligations. In light of the foregoing, the Agency finds, on a preliminary basis, that Rule 5(F) is unreasonable within the meaning of subsection 111(1) of the ATR.

ISSUE 3: DID SWISS PROPERLY APPLY THE TERMS AND CONDITIONS OF CARRIAGE RELATING TO THE CANCELLATION OF TICKETS WITH ERRONEOUSLY QUOTED FARES AS SET OUT IN TARIFF RULE 5(F), AS REQUIRED BY SUBSECTION 110(4) OF THE ATR?

Positions of the parties

Swiss

[43] Swiss admits that it cancelled the first class reservations and tickets for travel between Yangon and Montréal, and points out that it refunded every client the amount they paid. Swiss submits that it cancelled the reservations and tickets in view of the fact that they were issued at erroneous fares, and that the fares charged were, on average, US$150, excluding taxes, instead of US$15,000, or approximately one percent of the correct fare.

[44] In explaining the circumstances that led to the issuance of the erroneous fares, Swiss states that it is a participating member of the Tariff Coordinating Conferences of the International Air Transport Association (IATA), and as such, IATA electronically generates fares on behalf of Swiss and other member air carriers. Swiss submits that IATA transmits fares in the form of what is called a “fare tape” to ATPCO for publishing purposes, and that travel agents, including online travel agents, have access to such published fares and sell transportation based on these fares. Swiss states that while IATA transmitted a correct fare tape to ATPCO, ATPCO’s audit system failed, which caused the posting of erroneous fares. Swiss points out, however, that it discovered that the posting error had been committed by ATPCO after the relevant correct fare tape was sent to ATPCO by IATA. Swiss asserts that as soon as it discovered the erroneous fares, their distribution/publishing were stopped and the correct fares were posted. Swiss adds that it then immediately initiated an investigation into the matter of how these erroneous fares could have been published. Swiss points out that as the erroneous fares are the result of a “technical failure,” Swiss availed itself of Tariff Rule 5(F).

[45] Swiss asserts that several other factors led to the conclusion that the posting of the low first class fares was an error, such as the fact that economy and business class fares were not similarly reduced at the same time. Swiss adds that the result of the erroneous posting was that the first class fare was approximately 25 times lower than the economy fare. Swiss maintains that there is no connection between this matter and the spring 2012 devaluation of the Myanmar Kyat (MMK).

[46] To support its position, Swiss included a copy of a November 7, 2012 letter from ATPCO, wherein ATPCO states, among other things, that it has reviewed the procedures that led to the distribution of the low fares and has put in place additional audit procedures to prevent those types of low fares from being distributed again. Swiss asserts that in light of ATPCO’s clear admission, Swiss is of the opinion that the reason for the posting of the erroneous first class fares is indeed technical in nature and occurred out of Swiss’ control and unbeknownst to it.

Mr. Brewer

[47] Mr. Brewer submits that cancellation under Tariff Rule 5(F) requires that the fares in question be “erroneously quoted” due to “technical failure;” however, it is his position that Swiss has not established that any technical failure occurred. Mr. Brewer argues that where no evidence of a technical error occurred, no other condition in Swiss’ Tariff would permit such a cancellation, nor is such a cancellation permitted under the relevant IATA resolutions.

[48] Mr. Brewer submits that pursuant to the letter opening pleadings in this matter, Swiss was asked to provide “a detailed explanation of the technical incident that led to the air fares in question being made available to the various travel agencies used by the complainants when purchasing the tickets that were subsequently cancelled.” Mr. Brewer asserts that while Swiss provides a detailed explanation of the process by which IATA generic fares are published, Swiss does not establish that a technical failure occurred. He further claims that Swiss does not at any point explain how ATPCO’s audit systems failed, nor how that failure was technical in nature. Mr. Brewer is therefore of the opinion that Swiss has not provided any evidence that any error occurred, other than the fact that the fares were lower than what Swiss states is the “correct” fare.

[49] Mr. Brewer states that contrary to Swiss’ assertion, ATPCO makes no clear admission of guilt, but only claims to have reviewed the procedures that led to the distribution of the low fares and put into place additional audit procedures to prevent those types of low fares from being distributed again.

[50] Mr. Brewer disagrees with Swiss’ assertion that the fares charged were, on average, US$150 (excluding taxes). He claims that Swiss’ calculation is predicated on the common air carrier practice of including imposed fuel surcharges in the same line as imposed taxes. Mr. Brewer contends that the actual fare he paid, excluding taxes, was US$691.80.

[51] Mr. Brewer asserts that Swiss’ submission that there was no connection between the low fares and the spring 2012 devaluation of the MMK is dubious, and he points out that before the devaluation of the MMK, that currency was pegged to the US dollar at a rate of MMK6.41:US$1.00. He provides the following scenario as what likely happened: Swiss converted the base fare (the fare excluding taxes and air carrier surcharges) as published at MMK103930 to the US dollar at a rate of MMK873.36:US$1.00. He therefore argues that if this foreign currency fare were converted at the old rate of 6.41:1, one would see a base fare of approximately US$16,000, which is quite similar to the US$15,000 Swiss maintains was the “correct fare.”

Mr. Jow

[52] Mr. Jow submits that Swiss has not adequately proven beyond a doubt that the erroneous fares occurred by reason of a technical failure. He points out that while Swiss states in its answer that the error originated from a failure in ATPCO’s audit systems, this in itself, does not clearly establish that the error was technical in nature. Mr. Jow is of the opinion that to determine whether the error was human, technical or otherwise, Swiss should provide either the full chain of communication sent to ATPCO, as this would help to shed light on the matter, or clear evidence regarding what caused ATPCO to post the wrong fares despite being sent the correct fare tape by IATA.

[53] Mr. Jow states that Swiss’ argument that the fare charged was US$150, excluding taxes, is irrelevant to this matter, unless consumers have an option to purchase tickets without paying taxes and fuel surcharges. He indicates that he paid US$693.60 per ticket, which is four to five times the US$150 that Swiss claims consumers paid. Finally, Mr. Jow contends that Swiss’ claim that economy and business class tickets were not similarly reduced at the same time is inaccurate as the tickets he purchased also involved business class fares, and they were also cancelled by Swiss.

Mr. Liu

[54] Mr. Liu points out that in an e-mail Swiss sent to him on December 4, 2012, Swiss omitted to add that his tickets were cancelled “by reason of a technical failure prior to said erroneous quote being detected and corrected.” Mr. Liu adds that this omission may be due to Swiss’ realization that the fares were not the result of any technical failure, and as such, that Tariff Rule 5(F) did not apply. Mr. Liu indicates that in its initial correspondence to him dated October 4, 2012, Swiss used the term “inadvertent error” instead of “technical failure” or “technical error,” which Swiss uses in its communication with the Agency. He adds that Swiss’ published ticketing policy states that auto-quoted fares are guaranteed. Mr. Liu asserts that Swiss’ statement that the fares are out of its control is baseless, as Swiss voluntarily participated in these fares and, pursuant to IATA Resolution 111AT, section 3(c), could have requested an “exceptional update” at any time.

[55] Mr. Liu argues that even if the first class fares were published due to a technical error as alleged by Swiss, it provides no proof of this, nor did Swiss have grounds to cancel the tickets.

[56] Mr. Liu asserts that the exchange rates at the time of the ticket purchase almost undoubtedly lead to the conclusion that the fares were not an error or failure that was technical in nature. Mr. Liu agrees with Swiss that the first class tickets were available at a lower price than Swiss’ regular prices, but he points out that it is not unusual for air carriers to launch occasional sales or promotions for their premium cabins, such as the one published by British Airways Plc carrying on business as British Airways (British Airways) in November 2012.

Mr. Kwok

[57] Mr. Kwok argues that Swiss has not established that any technical failure occurred. Furthermore, Mr. Kwok asserts that Swiss voluntarily chooses to participate in the IATA “YY” fares, which is not a requirement of the IATA membership. Mr. Kwok points out that where no technical error occurred, no other condition in Swiss’ Tariff permits cancellation of a ticket.

Mr. Jacobs

[58] Mr. Jacobs points out that the Agency required Swiss to provide “a detailed explanation of the technical incident that led to the air fares in question being made available to the various travel agencies used by the complainants when purchasing the tickets that were subsequently cancelled.” As such, Mr. Jacobs submits that the crux of this matter is whether the failure, if it did occur, was technical in nature. Mr. Jacobs asserts that none of the documents provided by Swiss, including the document from ATPCO, explain any technical incident as a root cause of the claimed failure. Mr. Jacobs submits that it appears that, since November 7, 2012, Swiss has not made any follow-up with ATPCO regarding the nature of the failure. Mr. Jacobs adds that contrary to Swiss’ interpretation, ATPCO does not state that a failure occurred, but only that it regrets distributing low first class fares.

[59] With respect to Swiss’ submission that that the fares charged were, on average, US$150 instead of US$15,000, Mr. Jacobs submits that Swiss is only referring to one part of the fare, as he paid US$690 for his ticket. Mr. Jacobs acknowledges that the fares may be unusually low, but that sale promotions can entail similar offers, for example, a business class ticket offered by British Airways for 777 British pounds, the bulk of which consisted of taxes.

[60] Mr. Jacobs states that the MMK was suddenly devalued from approximately 7 MMK to 818 MMK per US dollar in the spring of 2012. He argues that this sudden devaluation, as well as the fact that premium class fares from Yangon have been unusually low at least during three periods, could almost perfectly explain why the base fare (excluding taxes) paid was about one percent of the “correct fare” as claimed by Swiss. Mr. Jacobs admits, however, that he has no evidence to contest Swiss’ claim that there is no connection between the erroneous fares and the devaluation of the MMK.

[61] Mr. Jacobs submits that Swiss has claimed from the beginning that it cancelled his ticket in accordance with Tariff Rule 5(F), and as such, the onus is on Swiss to provide evidence that a failure occurred and, more importantly, that it was of a technical nature. Mr. Jacobs states that more than five months after cancelling his ticket and despite requests during the Agency’s adjudication process, Swiss has not provided any evidence that the nature of the claimed failure was technical.

Mr. Tran

[62] Mr. Tran submits that Tariff Rule 5(F) only covers technical failure, and that Swiss’ explanation of “inadvertent mistake” does not represent such a failure. Mr. Tran points out that Swiss participates in IATA fares and that by virtue of that participation, Swiss agreed to IATA’s price‑setting, and thus, cannot claim that it was a mistake.

Mr. Wu

[63] Mr. Wu submits that the responses received from Swiss do not address the “technical error” issue.

[64] Mr. Wu states that he does not know what Swiss wrote to ATPCO, as he was only provided with ATPCO’s response. Furthermore, Mr. Wu points out that ATPCO never claimed that the fares were erroneous, let alone technical in nature.

[65] Mr. Wu disputes Swiss’ claim that a one-way ticket from Yangon to Montréal costs US$15,000, and states that one can find one-way tickets from around the same area to Canada for a price of US$2,500 to US$7,000 in “F,” including taxes and surcharges. Mr. Wu argues that it is pointless to compare base fares as often the surcharges and taxes are much higher than the base fares that an air carrier charges.

[66] Mr. Wu points out that while the price that he paid may seem low for a first class booking, other air carriers were offering similar bookings at the time of his booking.

Analysis and findings

[67] Section 113.1 of the ATR provides that:

If an air carrier that offers an international service fails to apply the fares, rates, charges or terms and conditions of carriage set out in the tariff that applies to that service, the Agency may direct it to

  1. take the corrective measures that the Agency considers appropriate; and
  2. pay compensation for any expense incurred by a person adversely affected by its failure to apply the fares, rates, charges or terms and conditions set out in the tariff.

[68] Tariff Rule 5(F) provides that Swiss reserves the right to cancel reservations and/or tickets issued with an erroneously quoted fare by reason of a technical failure prior to said erroneous quote being detected and corrected. The Rule also states that Swiss reserves the right to void the purchased ticket and refund the amount paid by the customer. The Agency notes that Swiss has refunded the total amount paid by the complainants for the voided tickets.

[69] Swiss asserts that the posting error had been committed by ATPCO after the correct fare tape was sent to ATPCO by IATA. In a November 7, 2012 letter, ATPCO states that it regrets the distribution of the low fares and has reviewed procedures that led to the distribution of those fares. ATPCO also indicates in that letter that it has put in place additional audit procedures to prevent those types of low fares from being distributed again. Swiss therefore argues that the posting of the erroneous fares was caused by a failure in ATPCO’s audit systems.

[70] The Agency reminds Swiss that the obligation to properly apply the terms and conditions of carriage falls on the carrier, not on a party that is not part of the contract of carriage.

[71] When, as in this case, the Agency receives complaints that contest a carrier’s action, the carrier is given the opportunity to provide evidence in support of its position. In this case, Swiss was also required to provide a detailed explanation of the technical incident that led to the air fares in question being made available to the various travel agencies used by the complainants when purchasing the tickets that were subsequently cancelled. Swiss has failed to do so.

[72] The Agency notes that Swiss restricted its answer to the cancellation of erroneous first class tickets in this matter. The Agency also notes that Swiss cancelled Mr. Jow’s tickets for travel commencing May 1, 2013, and that these tickets strictly involved business class travel. As Swiss provided no comments regarding this issue, the Agency finds that in cancelling Mr. Jow’s May 1, 2013 tickets, Swiss did not properly apply Rule 5(F) of its Tariff.

[73] With respect to Swiss’ cancellation of the other complainants’ tickets, the evidence on file does not establish that a technical error occurred during ATPCO’s posting of the erroneous fares. While Swiss generally explains the process by which fares are generated and provided to ATPCO, Swiss does not provide any information explaining the point during the process at which the alleged error occurred, the cause of that error and why such an error is deemed to be technical in nature, as opposed to human. Furthermore, as indicated by many of the complainants, contrary to Swiss’ submission, ATPCO does not state in its November 7, 2012 letter that the fares were erroneous; rather, ATPCO refers to the erroneous fares as “low fares.”

[74] The Agency therefore finds that, on a balance of probabilities, Swiss has not established that a technical failure occurred at all and, consequently, Swiss has not demonstrated that it properly applied Tariff Rule 5(F) when it cancelled the complainants’ tickets.

CONCLUSION

[75] The Agency concludes the following:

Issue 1

[76] Tariff Rule 5(F) does not clearly set out Swiss’ policy with respect to the cancellation of tickets with erroneously quoted fares, contrary to subparagraph 122(c)(vii) of the ATR.

Issue 2

[77] On a preliminary basis, Tariff Rule 5(F) is unjust and unreasonable within the meaning of subsection 111(1) of the ATR.

Issue 3

[78] Swiss did not properly apply its terms and conditions of carriage governing the cancellation of tickets set out in its Tariff when it cancelled the complainants’ tickets, contrary to subsection 110(4) of the ATR.

DIRECTION TO SHOW CAUSE

[79] The Agency provides Swiss with the opportunity to show cause, by July 9, 2013, why the Agency should not disallow Tariff Rule 5(F) on the grounds that it is unjust and unreasonable, contrary to subsection 111(1) of the ATR. The complainants will then have seven days to provide comments, if any, on Swiss’ response to the show cause.

[80] If Swiss does not respond to the show cause direction, Tariff Rule 5(F) is disallowed effective July 9, 2013. Swiss must, in that case, remove all reference to the offending provision from its Web site as of that date.

[81] Swiss is instructed that it is not being provided an opportunity to re-argue the nature of the alleged technical failure. It is only being provided an opportunity to argue why Tariff Rule 5(F) balances the rights of passengers to be subject to reasonable terms and conditions of carriage with the air carrier’s statutory, commercial and operational obligations.

ORDER

[82] The Agency, pursuant to section 113.1 of the ATR, directs Swiss to:

  1. Compensate Mr. Brewer, by July 18, 2013, for any expenses that may have been incurred as a result of the cancellation of his ticket, as well as for the expenses incurred for the replacement ticket that he purchased, minus the cost of the original ticket, upon presentation to Swiss of both tickets and all receipts.
  2. Allow the other complainants and accompanying persons (where a signed statement of authorization was provided to the Agency) to be transported, for the same price and in the same class of service as originally booked and between the points specified in the original tickets issued by Expedia or Travelocity. Swiss must comply with this by June 18, 2014, upon presentation to Swiss of the original tickets.

Member(s)

Raymon J. Kaduck
Sam Barone
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