Decision No. 248-C-A-2012

June 28, 2012

IN THE MATTER OF Decision No. LET-C-A-78-2011 issued in response to a complaint filed by Gábor Lukács against Air Transat A.T. Inc. carrying on business as Air Transat.

File No.: 
M4120/09-03570

INTRODUCTION

[1] In Decision No. LET-C-A-78-2011 dated August 8, 2011 (Show Cause Decision), the Canadian Transportation Agency (Agency) made preliminary findings with respect to the reasonableness of certain tariff provisions and directed Air Transat A.T. Inc. carrying on business as Air Transat (Air Transat), among other matters, to show cause why certain actions should not be taken respecting its Scheduled International Passenger Rules Tariff No. CTA(A) No.4 (Tariff) and in particular Rules 21(2) and 5.2(e). The Agency provided Air Transat and Gábor Lukács with the opportunity to address these preliminary findings.

[2] In its submissions dated September 6, 2011, in response to the Show Cause Decision, Air Transat advised that it does not contest the principles set out in the Show Cause Decision and, in “an attempt to respect and implement the spirit of that decision”, Air Transat provided proposed tariff amendments for Rules 21(2) and 5.2(e).

[3] Submissions were filed by Mr. Lukács in response to the proposed tariff amendments and Air Transat was provided with an opportunity to respond.

[4] As a result of the submissions filed, Air Transat made further revisions to its proposed revised tariff.

[5] The Agency, in Decision No. LET-C-A-132-2011 dated December 13, 2011, determined that as Air Transat does not contest the principles set out in the Show Cause Decision, it would turn its attention to Air Transat’s proposed tariff provisions. Accordingly, pleadings were reopened and both parties were given the opportunity to comment on Air Transat’s revised tariff provisions.

[6] In order to ensure that the parties’ submissions were focussed on the appropriate tariff provisions, the Agency required Air Transat to file a complete copy of the entire tariff provisions which Air Transat proposes to implement pursuant to the Show Cause Decision, which it did on December 19, 2011. Mr. Lukács was then given the opportunity to file a submission on these proposed tariff rules (Proposed Tariff Rules), which he filed on December 27, 2011. Air Transat filed a response on January 10, 2012.

[7] The Agency’s findings on the clarity and reasonableness of the Proposed Tariff Rules will be in relation to those  filed by Air Transat on December 19, 2011 which are set out in Appendix A.

[8] The Agency notes that Air Transat has not fully numbered the paragraphs in its proposed revised tariffs. For the purposes of this Decision only, the Agency has added numbering for ease of reference.

[9] In this Decision, the Agency will first provide its determination on the preliminary findings set out in the Show Cause Decision based on the submissions made by both parties on the complaint filed by Mr. Lukács and in response to the Show Cause Decision.

[10] The Agency will then consider whether the Proposed Tariff Rules are clear and reasonable.

FINAL DECISION ON THE SHOW CAUSE ORDER

The Agency’s preliminary findings

[11] The Agency made the following preliminary findings in the Show Cause Decision:

  • Overbooking and cancellation that are within Air Transat’s control constitute delay for the purpose of Article 19 of the Convention for the Unification of Certain Rules for International Carriage by Air – Montreal Convention (Convention).
  • With a presumption of liability for delay against a carrier, there is a concomitant obligation for a carrier to mitigate such liability and address the damage which has or may be suffered by a passenger as a result of the delay.
  • A circumstance-focussed approach is a reasonable approach to addressing the issue of overbooking and cancellation when the circumstances are made known to Air Transat. The Agency stated that the jurisprudence dealing with overbooking or cancellation takes a circumstance-focussed approach by generally looking to the particular circumstances of a situation to determine whether a carrier took all reasonable measures to avoid the damage caused by delay. For example, the time-sensitive nature of a passenger’s purpose of travel is a consideration in applying this approach.
  • Tariff Rule 21(2) is unreasonable as it outright precludes the possibility of reprotection on a flight with any carrier, except those for which an interline agreement has been established.
  • Tariff Rules 21(2) and 5.2(e) are unreasonable as Air Transat has not demonstrated why, given its commercial and operational obligations, it cannot refund the entire ticket cost and has not addressed the question of returning a passenger to their point of origin, within a reasonable time and at no extra cost, in cases where delay or cancellation occurs at a connecting point during travel with the result that a passenger’s travel no longer serves the passenger’s purpose.
  • Tariff Rule 21(2) is unreasonable as it gives to Air Transat the choice of option as to whether the passenger will receive a refund of the unused portion of their ticket or whether the passenger will continue on their journey on another flight.
  • Tariff Rules 21(2) and 5.2(e) are unreasonable as they do not give any indication of which rights and remedies a passenger might have under the applicable provisions of the Convention in the event of overbooking or cancellation and they do not indicate that passengers may have rights and remedies at law outside the Convention.

Submissions in response to the Show Cause Decision

[12] As noted above, in response to the Show Cause Decision, Air Transat submits that it does not contest the principles set out in that Decision.

[13] Air Transat also accepts the conclusion of the Agency that overbooking and cancellation, to the extent that they are within the control of the carrier, should fall within the meaning of “delay” as found in Article 19 of the Convention.

[14] In “an attempt to respect and implement the spirit” of the Show Cause Decision, Air Transat submitted proposed amendments to the Tariff in question.

[15] Mr. Lukács submits that he accepts the Agency’s conclusions on all four of the issues identified in the Show Cause Decision.

Analysis and findings

[16] In determining whether a tariff provision is just and reasonable, the Agency must strike a balance between an air carrier's statutory, commercial and operational obligations and the rights of passengers. In responding to the Show Cause Decision, Air Transat was given an opportunity to provide any submissions that it considered relevant including providing any statutory, operational or commercial reasons as to why the Agency should not determine that the tariff provisions at issue are unreasonable. However, Air Transat responded by stating that it does not contest the principles set out in the Show Cause Decision. Accordingly, in assessing the balance between Air Transat and its passengers, the Agency adopts as final the preliminary findings that it made in the Show Cause Decision and that are identified above.

Conclusion on the Show Cause Decision

[17] In light of the foregoing, the Agency disallows Tariff Rules 21(2) and 5.2(e) of the existing Tariff.

CLARITY AND REASONABLENESS OF THE PROPOSED TARIFF RULES

[18] The Agency will now consider the pleadings made in respect of Air Transat’s Proposed Tariff  Rules in order to determine if they are clear, as required by section 122 of the Air Transportation Regulations, SOR/88‑58, as amended (ATR) and  reasonable within the meaning of section 111 of the ATR. In making its determination, the Agency will take into account the principles developed in the Show Cause Decision, and will refer to the preliminary findings in the Show Cause Decision and the principles on which they are based in evaluating Air Transat’s Proposed Tariff Rules.

Clarity of Proposed Tariff Rules 21(2) and 5.2(e)

Applicable legislation

[19] The Agency's jurisdiction in matters respecting international tariffs is set out in Part V, Division II, International Tariffs of the ATR.

[20] Subsection 110(4) of the ATR requires that tariffs must be consistent with the provisions of the ATR, which includes section 122 of the ATR.

[21] A carrier’s tariff must conform to section 122 of the ATR which requires that, for international carriage, the terms and conditions of carriage contained in the carrier's tariff should clearly state the air carrier's policy in respect of, at minimum, certain enumerated matters.

[22] More specifically paragraph 122(a) of the ATR provides that:

Every tariff shall contain:

(a) the terms and conditions governing the tariff generally, stated in such a way that it is clear as to how the terms and conditions apply to the tolls named in the tariff;

Subparagraphs 122(c)(iii), (iv), (v) and (vi) of the ATR provide that:

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,

[...]

(iii) compensation for denial of boarding as a result of overbooking,

(iv) passenger re-routing,

(v) failure to operate the service or failure to operate on schedule,

(vi) refunds for services purchased but not used, whether in whole or in part, either as a result of the client's unwillingness or inability to continue or the air carrier's inability to provide the service for any reason,

[...]

[23] The Agency has previously stated that an air carrier meets its tariff obligation of clarity when, in the opinion of a reasonable person, the rights and obligations of both the carrier and the passengers are stated in such a way as to exclude any reasonable doubt, ambiguity or uncertain meaning1. Applying this standard with respect to clarity, the Agency will address below the specific provisions of the Proposed Tariff Rules21(2) and 5.2(e)(i) which Mr. Lukács, in his submission dated December 27, 2011, identifies as failing to meet the Agency’s legal test for the clarity of air carrier tariff provisions.

Proposed Tariff Rules 21(2) and 5.2(e) - the phrase “will consider” and the method used to define the amount of compensation

Positions of the parties

[24] Mr. Lukács submits that Proposed Tariff Rules 21(2) and 5.2(e) fail to clearly state the obligations of Air Transat because the phrase “will consider” is vague. In particular, Mr. Lukács submits that the Proposed Tariff Rules fail to provide a clear and verifiable method for calculating the amount of compensation.

[25] Air Transat submits that the phrase “will consider” is not always vague, and that the context must be considered. According to Air Transat, if a tariff were to simply state that the carrier “will consider” offering compensation (while leaving it open to the carrier to decide to decline to offer compensation), that might properly be said to be a vague undertaking which can provide the passenger no comfort as everything is left to the discretion of the carrier. Air Transat submits that, under its Proposed Tariff Rules, Air Transat has a clear obligation to define alternatives, and that in defining those remedies, Air Transat must consider certain circumstances.

[26] Air Transat asserts that this approach is in accordance with the directions given by the Agency. Air Transat submits that in the Proposed Tariff Rules, the basic obligation is clear; that is, to define the alternative remedies. Air Transat adds that the Proposed Tariff Rules then go on to impose restrictions which bind the carrier in defining those remedies.

Analysis and findings

[27] The Agency has identified Proposed Tariff Rules 21(2)(ii), 21(2)(iv) and 5.2(e)(i) as containing the phrase “will consider”. The Agency has identified Proposed Tariff Rules 21(2)(i), 21(2)(iii), 21(2)(iv) and 5.2(e)(i) as relevant to the question of the method used to define the amount of compensation.

[28] The Agency agrees with Air Transat’s submission that the context must be considered in determining the clarity of the phrase “will consider”. As explained by Air Transat, its Proposed Tariff Rules compel the carrier to consider certain circumstances relating to a delay or cancellation of a flight, with respect to available transportation services and the particular circumstances of the passenger affected by a delay or cancellation. This requirement reflects the circumstance-focussed approach which the Agency states in the Show Cause Decision is appropriate. The Proposed Tariff Rules, as noted by Air Transat, clearly establish the alternatives that Air Transat must offer to affected passengers. 

[29] With respect to the verifiable calculation method, the Agency notes that Mr. Lukács also raises issues respecting the reasonableness of these Proposed Tariff Rules. Those issues will be dealt with in the section that follows, which addresses the concerns of Mr. Lukács with the reasonableness of certain provisions of Proposed Tariff Rules 21(2) and 5.2(e).

[30] Subject to the review of reasonableness set out below, the Agency is of the opinion that the Proposed Tariff Rules are unambiguous in that the provisions of Proposed Tariff Rule 21(2), when read together, and proposed Tariff Rule 5.2(e)(i), clearly state that Air Transat, when determining the amount of the cash payment or travel credit to be offered a passenger will consider all circumstances of the case, including expenses which the passenger, acting reasonably, may have incurred. Air Transat states that the amount of compensation will be set with a view to reimbursing the passenger for all such reasonable expenses. It is clear that a circumstance-focussed approach will be applied.

[31] However, another issue to consider is whether reference in Proposed Tariff Rule 21(2) to “a cash payment in an amount which shall not be less than the amount of the unused ticket price” is clear. The Agency considered that same issue in reviewing WestJet’s domestic tariff in Decision No. 219-C-A-2005. The Agency pointed out that the tariff rule did not identify the basis upon which the “unused portion” would be calculated and that there appeared to be no other tariff provision that set out a general methodology that could be relied on to calculate the “unused portion”. The Agency concluded that a reasonable person would be left with a reasonable doubt as to the refund entitlement of a passenger and that, accordingly, the subject provision was not clear.

[32] The Agency refers Air Transat to that Decision because, although it concerned a domestic tariff, the principle remains the same and applies in the international context. Accordingly, the Agency is of the opinion that this portion of Proposed Tariff Rule 21(2) is not clear as a reasonable person would be left with a reasonable doubt as to what would be the lower limit of a potential monetary payment in a situation of overbooking or cancellation.

[33] To address this lack of clarity, the Agency is of the opinion that Air Transat must file a tariff that identifies the methodology by which a refund of the “unused portion” of a ticket will be calculated, or that makes reference to the methodology to be relied on to calculate the unused portion of the ticket.

Conclusion

[34] The Agency has determined that the phrase “will consider” in Proposed Tariff Rules 21(2) and 5.2(e) would be considered clear and not ambiguous if filed with the Agency.

[35] The Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), insofar as they concern compensation, are unambiguous in that they clearly state that Air Transat, when determining the amount of the cash payment or travel credit to be offered to a passenger in the event of delay, will consider all circumstances of the case, including expenses which the passenger, acting reasonably, may have incurred.

[36] The Agency, however, has also determined that Proposed Tariff Rule 21(2), as it relates to providing a cash payment in an amount which shall not be less than the amount of the unused ticket price, is not clear insofar as a reasonable person would be left with a reasonable doubt as to what would be the lower limit of a potential monetary payment in a situation of overbooking or cancellation. If this Proposed Tariff Rule were to be filed with the Agency, it would be considered to be contrary to section 122 of the ATR.

Proposed Tariff Rule 21(2) - circumstances under which each option will be made available to a passenger

Positions of the parties

[37] Mr. Lukács claims that Proposed Tariff Rule 21(2), in setting out the different options passengers may be given in the event of overbooking or cancellation, fails to clearly state under what circumstances each of the options will be made available.

[38] Air Transat argues that Proposed Tariff Rule 21(2) clearly states that it will consider the known circumstances and will take all measures that can reasonably be required to avoid or mitigate damages caused. Air Transat states that the options that are reasonable in a particular case can only be determined by considering the impact of the particular event on the passenger, and that it is not possible to state in advance which options will be appropriate in a particular case.

Analysis and findings

[39] The Agency has identified Proposed Tariff Rules 21(2)(i) and 21(2)(iii) as relevant to the circumstances under which each option will be made available to a passenger.

[40] Proposed Tariff Rule 21(2)(i) clearly sets out four options available to passengers in the event of overbooking or cancellation, and states that Air Transat will take into account all the circumstances of the case as known to it in providing the passenger with the option of accepting one or more of the four remedial choices. Proposed Tariff Rule 21(2)(iii) further states that taking into account the known circumstances, Air Transat will take all reasonable measures to avoid or mitigate damage.

[41] The Agency agrees with Air Transat’s submission. Proposed Tariff Rules 21(2)(i) and (iii) clearly state that Air Transat will consider the known circumstances of the passenger in determining which options will be appropriate in a particular case. The language chosen by Air Transat is consistent with the circumstance-focussed approach set out in the Show Cause Decision.

Conclusion

[42] The Agency has determined that Proposed Tariff Rule 21(2), as it relates to the circumstances under which each option will be made available to a passenger, would be considered clear within the meaning of paragraph 122(c) of the ATR if it were filed with the Agency.

Proposed Tariff Rules 21(2) and 5.2(e) - choice of option to obtain cash payment or travel credit

Positions of the parties

[43] Mr. Lukács argues that Proposed Tariff Rules 21(2) and 5.2(e) refer to a “cash payment or travel credit” as a form of reimbursing passengers for out-of-pocket expenses, but fail to clearly state whether the choice of option lies with the passenger or Air Transat.

[44] Air Transat claims that it is clear that it will decide which form of compensation to offer, and that the passenger will decide whether the form of compensation is acceptable.

Analysis and findings

[45] The Agency has identified Proposed Tariff Rule 21(2)(iii) and 5.2(e)(i) as relevant to the choice of option to obtain a cash payment or travel credit.

[46] Proposed Tariff Rule 21(2)(iii) states that “Air Transat will in addition offer a cash payment or credit voucher”, while Proposed Tariff Rule 5.2(e)(i) states that “Air Transat will offer the passenger a cash payment or travel credit”.

[47] In Davies v. Air Canada, Decision No. 641-C-A-2007, the Agency dealt with a similar question relating to the choice of option as between cash or credit. In that case, Air Canada’s tariff contained a comparable provision stating that “AC will tender liquidated damages in the amount of $100.00 cash or a credit voucher (good for future travel on Air Canada) in the amount of $200.00”.

[48] In that Decision, the Agency held, at paragraph 28, that the subject tariff provision “...should be rewritten in such a way as to clearly state where the choice of option of compensation lies...” The Agency referred Air Transat to this passage from Davies in its ruling on the clarity of Rule 21 in Decision No. 478-A-2009.

[49] In its submissions in response to the Show Cause Decision, Air Transat has stated that it is clear that it will decide which form of compensation to offer. For the purposes of this part of the Decision addressing clarity, the Agency accepts Air Transat’s statement. However, in Davies the Agency stated that where a tariff provision leaves the choice of option of compensation to the carrier, while also stating that such acceptance will be in full satisfaction of the passenger’s claim against the carrier in the event of overbooking, the carrier should explain why that interpretation of the tariff is not unreasonable. The Agency notes that Mr. Lukács has raised issues respecting the reasonableness of these Proposed Tariff Rules concerning the availability of a cash payment or credit voucher. Those issues will be dealt with in the section that follows, which addresses the concerns of Mr. Lukács with the reasonableness of certain provisions of Proposed Tariff Rules 21(2) and 5.2(e).

[50] The Agency finds that the provisions are clear and not ambiguous.

Conclusion

[51] The Agency has determined that if Proposed Tariff Rules 21(2) and 5.2(e), as they relate to the choice of option between a cash payment or travel credit, were filed with the Agency, they would be considered clear and not ambiguous.

Proposed Tariff Rule 21(2) – alternative remedies

Positions of the parties

[52] Mr. Lukács maintains that Proposed Tariff Rule 21(2) fails to clearly state whether the “alternative remedies” listed in it are in addition to denied boarding compensation payable to passengers under the Proposed Tariff Rules.

[53] Air Transat responds that Proposed Tariff Rule 21(2) makes it clear that if a passenger affected by overbooking accepts alternative remedies proposed by Air Transat, the passenger does so in full and final satisfaction of all claims arising from the overbooking.

Analysis and findings

[54] The Agency has identified Proposed Tariff Rules 21(2)(i) and 21(2)(v) as relevant to the question of alternative remedies.

[55] The Agency notes that Mr. Lukács also raises issues respecting the reasonableness of full and final satisfaction of claims as set out in Proposed Tariff Rule 21(2). Those issues will be addressed in the section that follows.

[56] Subject to the review of reasonableness set out below, the Agency is of the opinion that this provision clearly establishes that if an alternative remedy is accepted by a passenger, denied boarding compensation will not be tendered. Proposed Tariff Rule 21(2)(i) clearly states that, if an aircraft  is overbooked or cancelled, Air Transat will provide the passenger with the option of accepting one or more remedial choices. Proposed Tariff Rule 21(2)(v) goes on to state that the passenger’s acceptance of a remedial choice is in full and final satisfaction of all claims.

[57] The Agency therefore finds that, in applying the test for clarity in the opinion of a reasonable person, the rights and obligations of both Air Transat and passengers respecting this matter are stated in such a way as to exclude any reasonable doubt, ambiguity or uncertain meaning.

[58] The Agency finds that the provisions are clear and not ambiguous.

Conclusion

[59] The Agency has determined that if Proposed Tariff Rule 21(2), as it relates to alternative remedies, were filed with the Agency, it would be considered clear and not ambiguous.

REASONABLENESS AND CONFORMITY WITH THE CONVENTION

[60] A carrier is required to not only clearly set out its policy with respect to overbooking and cancellation, but to also ensure that with respect to international flights, its tariff is just and reasonable within the meaning of subsection 111(1) of the ATR.

[61] Subsection 111(1) of the ATR states:

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.

[62] 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 subsection 111(1) of the ATR, 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 obligations2.

[63] The terms and conditions of 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.

[64] 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.

[65] In his submissions dated December 27, 2011, Mr. Lukács, in addition to his submissions setting out his concerns regarding the clarity and reasonableness of the Proposed Tariff Rules, provides submissions on whether the provisions are in conformity with the Convention. In keeping with past Agency decisions where the Agency has determined that a tariff provision that is contrary to the Convention is unreasonable, the Agency will consider the submissions of the parties on the issue of conformity with the Convention.

Reasonableness of Proposed Tariff Rule 21(2) - rerouting as an exclusive remedy

Positions of the parties

[66] In earlier submissions, Mr. Lukács argues that the remedial choices available to passengers pursuant to Proposed Tariff Rule 21(2) should not be an exclusive remedy. He claims that the proposed wording of the Rule as set out in Air Transat’s submission of September 6, 2011 suggests that a passenger who chooses to be transported by a service identified by the carrier as per Proposed Tariff Rule 21(2) will not be entitled to any other compensation, such as costs of meals, accommodation and other reasonable out-of-pocket expenses. This amounts to a provision tending to relieve Air Transat from the liability prescribed by Articles 19 and 22, and thus is contrary to Article 26 of the Convention.

[67] Air Transat agrees that Proposed Tariff Rule 21(2) should not be exclusive and in its proposed revised tariff of December 19, 2011, it added that it “will provide the passenger with the option of accepting one or more of the following remedial choices”. Air Transat also added text to the effect that if a passenger accepts (i) transportation to their destination at no additional cost, (ii) return transportation to their point of origin at no additional cost or (iii) a credit for future travel, but they nevertheless incur expenses as a result of the overbooking or cancellation, Air Transat will also offer a cash payment or travel credit.

Analysis and findings

[68] The Agency has identified Proposed Tariff Rules 21(2)(i) and 21(2)(iii) as relevant to the question of rerouting as an exclusive remedy.

[69] With respect to Mr. Lukács’ concern that the initial draft wording of Proposed Tariff Rule 21(2) is exclusive and relieves Air Transat from liability prescribed by Articles 19 and 22 of the Convention, the Agency notes that Air Transat, in its proposed revised tariff of December 19, added text to the effect that a passenger may choose one or more remedial options, and may be entitled to additional compensation. While the Agency will evaluate the reasonableness of offering additional compensation in the form of a cash or credit voucher below, the Agency finds that the revised wording addresses Mr. Lukács’ concerns that the remedies should not be exclusive, and to this extent, the wording would be considered reasonable if filed with the Agency.

Conclusion

[70] The Agency has determined that Proposed Tariff Rule 21(2), as it relates to whether rerouting is an exclusive remedy, would be considered reasonable if it were filed with the Agency.

Reasonableness of Proposed Tariff Rules 21(2) and 5.2(e) - compensation of passengers

Positions of the parties

[71] Mr. Lukács submits that Proposed Tariff Rule 21(2) is unreasonable for using terms like “[h]aving taken all known circumstances into consideration” on the one hand, and “Air Transat will set the amount of compensation” on the other. According to Mr. Lukács, these provisions put passengers at the mercy of the carrier, contrary to the principle of balancing between the passengers’ rights and the carrier’s statutory, operational, and commercial interests. 

[72] Air Transat does not agree that this aspect of Proposed Tariff Rule 21(2) is unreasonable. According to Air Transat, the Agency has determined that it is not possible to determine in the abstract what the proper remedy is in any particular case as everything depends on individual circumstances. Air Transat also claims that the circumstances in which the need to propose solutions to the problems of individual affected passengers is such that it is not possible to secure the timely intervention of an independent third party. Air Transat concludes that the only workable solution is to allow the carrier, acting in good faith, to propose a solution and to allow the passenger to determine if the solution is acceptable given the carrier’s contractual obligations. 

[73] In response, Mr. Lukács claims that Proposed Tariff Rules 21(2) and 5.2(e) provide Air Transat with discretion about how to compensate its passengers and impose a “subjective” obligation upon Air Transat, namely, to consider certain factors. He believes that these Proposed Tariff Rules, as opposed to an “objective” test, are virtually unenforceable, throw passengers at the mercy of the carrier, and fail to consider at all the passengers’ right to be subject to fair and reasonable terms and conditions. In particular, he claims that these Proposed Tariff Rules fail to strike any balance between the carrier’s statutory, commercial, and operational obligations and the rights of passengers to be subject to reasonable terms and conditions of carriage. Thus, he finds that these Proposed Tariff Rules are unreasonable.

[74] Air Transat argues that a rule which fixed compensation to certain amounts which might vary with changing circumstances, for example the length of a delay, would be objective and easy to apply but would be contrary to the context-sensitive approach the Agency has outlined.

[75] Air Transat also submits that Mr. Lukács’ alternative is equally subjective. For example, the determination of when a flight no longer serves any purpose in relation to the passenger’s original travel plan requires subjective determinations of what those plans were and what might serve a purpose in relation to those plans. According to Air Transat, making a fair offer of compensation in the circumstances of flight cancellation and overbooking requires a subjective assessment of the impact of these events on an individual and also requires a subjective assessment of the ways in which that impact may be most reasonably alleviated.

Analysis and findings

[76] The Agency has identified Proposed Tariff Rules 21(2)(i), 21(2)(iii), 21(2)(iv) and 5.2(e)(i) as relevant to the question of compensating passengers.

[77] Mr. Lukács points out that Proposed Tariff Rules 21(2) and 5.2(e) are unreasonable as they merely set out a subjective obligation on Air Transat to consider certain factors  in determining compensation in cases of delay, and therefore leave it to Air Transat’s discretion as to how these considerations are taken into account.

[78] As reflected in Proposed Tariff Rules 21(2)(i), (iii) and (iv) and 5.2(e)(i) and as set out in the Show Cause Decision, Air Transat has stated that it “will take all the known circumstances into consideration”, that it “will consider all circumstances of the case”, or similar language.

[79] Air Transat’s Proposed Tariff Rule 21(2)(iii) states that, having taken all the known circumstances into consideration, it will take all measures that can reasonably be required to avoid or mitigate the damages caused by the overbooking or cancellation. In the Agency’s opinion, this is consistent with Article 19 of the Convention.

[80] In Proposed Tariff Rule 21(2)(iii), Air Transat also states that when a passenger accepts alternative transportation or a credit, but nevertheless incurs expenses as a result of overbooking or cancellation, Air Transat will, in addition, offer a cash payment or travel credit. In Proposed Tariff Rule 5.2(e)(i), Air Transat states that it will offer a cash payment or travel credit when no reasonable transportation can be arranged. In Proposed Tariff Rules 21(2)(iv) and 5.2(e)(i), Air Transat makes it clear that in determining the amount of compensation offered through cash or travel credit, it will consider any reasonable expenses the passenger may have incurred. In both Proposed Tariff Rules, Air Transat goes on to state that it will set the amount of compensation offered with a view to reimbursing the passenger for all such reasonable expenses. Air Transat explicitly states that the expenses may include costs for accommodation, meals or additional transportation.

[81] The Agency concludes that Air Transat has not taken a restrictive approach to determining how it will compensate a passenger for delay. It is clear from the Proposed Tariff Rules that Air Transat will consider the circumstances of the passenger’s situation. Proposed Tariff Rule 21(2)(iii) also states that Air Transat will take all measures that can reasonably be required to avoid or mitigate the damages caused by overbooking or cancellation. The Agency is of the opinion that these provisions reflect the circumstance-focussed approach set out in the Show Cause Decision and would therefore be considered reasonable if filed with the Agency.

Conclusion

[82] The Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), as they relate to compensating passengers, reflect the circumstance-focussed approach set out in the Show Cause Decision, and if these Proposed Tariff Rules were to be filed with the Agency, they would be considered to be reasonable.

Reasonableness of Proposed Tariff Rule 21(2) - refund of the entire ticket cost or transportation to the passenger’s point of origin

Positions of the parties

[83] Mr. Lukács submits that contrary to the Agency’s findings at paragraph 97 of its Show Cause Decision, Proposed Tariff Rule 21(2) fails to contain clear provisions concerning the refund of the entire ticket cost, or the transportation of passengers affected by an overbooking or cancellation to their points of origin by or at the cost of Air Transat.

[84] With respect to offering transportation to the point of origin, without additional costs, Air Transat agrees with Mr. Lukács and has modified Rule 21(2) which, as set out in its proposed revised tariff of December 19, reads “return transportation to the passenger’s point of origin at no additional cost.”

[85] Air Transat argues that with respect to a refund of the entire ticket cost, this is again a remedy which may be appropriate in a particular case, but it is not possible to define in advance which will be the appropriate case. Air Transat submits that the structure of Proposed Tariff Rule 21(2) requires the carrier to consider all the circumstances and make an appropriate offer and in some cases this may be the return of the entire ticket cost.

Analysis and findings

[86] The Agency has identified Proposed Tariff Rule 21(2)(i) as relevant to the issue of refunding the entire ticket cost or transportation to the passenger’s point of origin.

[87] With respect to Mr. Lukács’ reference to paragraph 97 of the Show Cause Decision and the issue of returning a passenger to their point of origin, the Agency refers to Air Transat’s proposed revised tariff of December 19 and in particular the addition of Proposed Tariff Rule 21(2)(i), which provides the remedial option of returning the passenger to their point of origin at no additional cost.

[88] The Agency notes that Mr. Lukács raised concerns on this issue and the Agency is of the opinion that Mr. Lukács’ concerns have been addressed, save and except for the question of returning a passenger to their point of origin “within a reasonable time”, which was raised by the Agency at paragraph 97 of the Show Cause Decision. The Agency notes that Air Transat provided no submissions in response to the Show Cause Decision as to why it could not return the passenger within a reasonable time.

[89] With respect to Mr. Lukács’ reference to paragraph 97 of the Show Cause Decision and the Agency’s preliminary finding that Air Transat had not demonstrated why it could not refund the entire ticket cost in cases of delay or cancellation, Air Transat is of the view that this is a remedy which must be considered on a case-by-case basis.

[90] As Air Transat has pointed out in its submissions, the revised tariff wording permits for the refund of the entire ticket cost in the appropriate circumstances.

[91] In the Show Cause Decision the Agency made a preliminary finding that Air Transat had not demonstrated why, given its commercial and operational obligations, it could not refund the entire ticket cost. Air Transat points out that the proposed tariff permits the refund of the entire ticket cost in appropriate circumstances. The Agency is of the opinion that the revised proposed wording would permit a passenger to get a full refund when the trip is interrupted and the passenger cannot carry out the intended purpose of the trip and is returned to their departure point.

Conclusion

[92] The Agency has determined that Proposed Tariff Rule provides a balance between the passenger’s right to be fairly compensated and the operational and commercial interests of Air Transat. Accordingly, the Proposed Tariff Rule, as it relates to a refund of the entire ticket cost and transportation to the passenger’s point of origin, would be considered reasonable if filed with the Agency.

[93] However, the Agency finds that in response to the Show Cause Decision, Air Transat has failed to address the issue of returning a passenger to their point of origin “within a reasonable time”. Accordingly, Proposed Tariff Rule 21(2), as it relates to this issue only, would be considered unreasonable if filed with the Agency.

Reasonableness of Proposed Tariff Rules 21(2) and 5.2(e) - full and final satisfaction clause

Positions of the parties

[94] Mr. Lukács opposes the proposed wording of both Proposed Tariff Rules 21(2) and 5.2(e) containing a “full and final satisfaction” clause and asserts that the effect of the Proposed Tariff Rules is to extinguish every and all legal rights of passengers who accept any kind of standard assistance from Air Transat in relation to an overbooking or cancellation scenario which is unreasonable and contrary to the principles laid down by the Agency. For example, while rerouting a passenger may be a way of satisfying the legal obligation to take all reasonable measures to avoid delay of passengers, the carrier’s liability depends on the effectiveness and timeliness of the rerouting. Passengers who are affected by flight overbookings and cancellations may incur a number of out-of-pocket expenses despite being rerouted, for which the carrier is nevertheless liable.

[95] Mr. Lukács further asserts that passengers should not reasonably be expected to make a decision that affects their legal rights against a carrier at an airport during an overbooking or cancellation situation when they are under stress, and without due access to legal counsel.

[96] In addition, Mr. Lukács argues that Proposed Tariff Rules 21(2) and 5.2(e) are clearly contrary to the Agency’s findings at paragraphs 103 to 105 of the Show Cause Decision.

[97] Air Transat responds that it does not propose to amend this clause, but that it proposes a number of modifications to its Tariff, and claims that when these are taken into account, the reasonableness of the clause would not be put into question.

[98] In response to the proposed tariff amendments made by Air Transat, Mr. Lukács claims that Proposed Tariff Rules 21(2) and 5.2(e) pre-empt the rights and cause of action of passengers who accept any of the alternative remedies offered by Air Transat. In particular, they purport to pre‑empt the claims of passengers under Article 19 of the Convention who agree to be reprotected and rerouted under Proposed Tariff Rules 21(2) and 5.2(e).

[99] For example, Mr. Lukács argues that if a passenger is delayed by 48 hours at a point of connection and accepts to be reprotected, then under Proposed Tariff Rules 21(2) and 5.2(e) the passenger will not be able to advance a claim for out-of-pocket expenses occasioned by delay pursuant to Article 19. He submits that Proposed Tariff Rules 21(2) and 5.2(e) condition the continuation of transportation on the passenger waiving rights under Article 19.

[100] According to Mr. Lukács, provisions of this nature (in the context of baggage liability), the aim of which is to create contractually a defense to claims under the Convention, have been held to be invalid and unreasonable by the Agency (Lukács v. WestJet, Decision No. 477‑C‑A-2010). In that Decision, the Agency held that freedom of contract and the doctrine of estoppel do not take precedence over the provisions of the Convention.

[101] Mr. Lukács further argues that the Proposed Tariff Rules fail to adequately address the issue of denied boarding compensation, and suggest that passengers’ rights to such compensation are also pre-empted by Proposed Tariff Rules 21(2) and 5.2(e). He asserts that this is clearly contrary to subparagraphs 107(1)(n)(iii) and 122(c)(iii) of the ATR, and as such, it cannot be just or reasonable.

[102] Thus, Mr. Lukács claims that the effect of the “full and final satisfaction” clause in Proposed Tariff Rules 21(2) and 5.2(e) circumvents Air Transat’s liability under Article 19 of the Convention which makes the Proposed Tariff Rules null and void by Article 26 of the Convention and not just and reasonable.

[103] Air Transat responds that Article 26 addresses contractual provisions which attempt to define rights before the transportation in question occurs. There is nothing in the Convention or applicable jurisprudence which prevents a party who has suffered a loss from giving a release to the carrier after the loss has occurred.

[104] Air Transat asserts that the Convention prevents an air carrier from unilaterally relieving itself of a liability imposed by the Convention. However, Air Transat submits that the settlement of claims is an everyday occurrence and the very nature of settlement is to relieve a party from further liability. Air Transat argues that it does not purport to define terms which the passenger must accept. Rather, it proposes to make offers of accommodation within the parameters defined in the Proposed Tariff Rules. According to Air Transat, that a passenger who accepts such an offer should do so in full and final satisfaction of a claim is not a surprising legal conclusion. Air Transat claims that a passenger is free to decline to accept an offer and exercise his or her legal rights, whether under the Convention or otherwise. According to Air Transat, the Proposed Tariff Rules simply reflect the fact that Air Transat and a passenger can come to an agreement respecting what is reasonable by way of compensation.

[105] Air Transat adds that the Proposed Tariff Rules make it clear that it may not simply offer reprotection and rerouting while ignoring other losses which may have been occasioned by the overbooking or cancellation.

Analysis and findings

[106] The Agency has identified Proposed Tariff Rules 21(2)(v) and 5.2(e)(ii) as containing a “full and final satisfaction” clause.

[107] It is clear that by the terms unilaterally imposed by Air Transat under Proposed Tariff Rules 21(2)(v) and 5.2(e)(ii), a passenger must decide between two options when the passenger’s flight has been overbooked or cancelled: either accept the carrier’s alternative remedies and give up any rights the passenger may have under the Convention or at law; or refuse the alternative remedies and be forced, at the passenger’s own initiative, to find alternative travel and incur any related expenses in order to retain legal rights.

[108] The Agency is of the opinion that these Proposed Tariff Rules are unreasonable. They do not provide the passenger with a reasonable opportunity to fully assess their options. Instead, the passenger must decide between two options as determined by the carrier, both of which have legal consequences on the passenger’s rights without a reasonable period of time to assess the full potential of the impact of selecting one over another. In such situations, the rights of a passenger should remain available as prescribed by the Convention.

[109] In addition, although Air Transat might, in appropriate circumstances, in situations of delay offer passengers the option of accepting one or more remedies, this does not necessarily mean that the carrier will have met the requirements of Article 19. In effect, Air Transat’s Proposed Tariff Rules are a predetermination that the alternative measures offered by it are reasonable measures pursuant to Article 19, and that offering these measures relieves Air Transat from liability under that Article.

[110] The Agency is of the opinion that Air Transat is depriving the passenger of the passenger’s rights under the law through a contract of adhesion which it has unilaterally developed and imposed on the passenger.

[111] Although the Agency acknowledges that Air Transat’s Proposed Tariff Rules provide that it may not simply offer reprotection and rerouting while ignoring other losses arising from overbooking or cancellation, the Proposed Tariff Rules leave to Air Transat the determination as to what is a reasonable remedy for delay which might be appropriate for circumstance-focussed determinations pursuant to the Proposed Tariff Rules, but might not be appropriate for the purposes of Article 19.

[112] Air Transat has argued that there is nothing in the Convention or applicable jurisprudence that prevents a party who has suffered a loss from giving a release to the carrier after the loss has occurred. While Air Transat argues that nothing in the authorities prevents it from obtaining such a release, Air Transat has not directed the Agency to any authorities to support its position the Proposed Tariff Rules do not tend to relieve it from liability under Article 26 of the Convention.

[113] Air Transat has argued that obtaining a release, in itself, is permissible under the Convention. However, it has not demonstrated why unilaterally imposing the terms of a release in its Tariff does not tend to relieve it from liability under Article 26 of the Convention. The Agency is therefore of the opinion that Air Transat has not shown that Proposed Tariff Rules 21(2) and 5.2(e) are consistent with Article 26 of the Convention.

[114] Accordingly, the Agency finds that this provision would be considered unreasonable under the ATR if filed with the Agency.

Conclusion

[115] The Agency has determined that if the “full and final satisfaction” clauses contained in Proposed Tariff Rules 21(2) and 5.2(e) were to be filed with the Agency, they would be considered to be unreasonable, contrary to section 111 of the ATR.

Reasonableness of Portions of Proposed Tariff Rules 21(2) and 5.2(e) - wording relating to the phrase “In carriage which is not international” are unreasonable

Positions of the parties

[116] Mr. Lukács objects to the wording contained in the latter part of Proposed Tariff Rules 21(2) and 5.2(e), namely that part which begins with “In carriage which is not international...”.

[117] Mr. Lukács points out that the present case concerns Air Transat’s international Tariff.

[118] Further, Mr. Lukács asserts that the Agency held in Lukács v. Air Canada, Decision No. 291‑C‑A-2011, that passengers ought to be afforded the same protection against lost, damaged or delayed baggage as in the Convention regardless of whether the Convention applies. Similarly, in Lukács v. WestJet, Decision No. 483-C-A-2010, the Agency used the Convention as a persuasive authority for determining the reasonableness of WestJet’s domestic tariff provisions.

[119] Thus, Mr. Lukács submits that legal principles of the Convention ought to be applied to delay of passengers even on itineraries where the Convention does not apply.

[120] Mr. Lukács further submits that the statement that “times shown in timetables and elsewhere are not guaranteed by the carrier” found in Proposed Tariff Rules 21(2) and 5.2(e) is inconsistent with the principles of the Convention and is a reformulation of the infamous “Condition 9,” which was held to be invalid by American, British, and Canadian courts. In this respect, Mr. Lukács refers to the following cases in support of his position:

  • Cohen v. Varig Airlines, 380 N.Y.S.2d 450 (aff’d 405 N.Y.S.2d 44);
  • Jones v. Britannia Airways Limited (Chester County Ct, 5th November 1998);
  • Assaf (at paras. 5 and 11-12);
  • Zikovsky c. Air France, 2006 QCCQ 948 (at paras. 21-23 and 29-31).

[121] According to Mr. Lukács, the importance of time as part of a contract of carriage was also underscored in Daniel v. Virgin Atl. Airways Ltd., 59 F. Supp. 2d 986.

[122] Therefore, Mr. Lukács concludes that the sentence starting with “In carriage which is not international” ought to be disallowed and deleted from Proposed Tariff Rules 21(2) and 5.2(e).

[123] Air Transat responds that it is appropriate and necessary to refer to “carriage which is not international”. For licensing and tariff purposes, all carriage which is not solely between points in Canada is international. For the purposes of liability, carriage is international only if it falls within the definition of international carriage as set out in an applicable Convention. Practically, the two senses of international will coincide but that is not a necessary result.

[124] Air Transat adds that the words indicating that times in timetables are not guaranteed by the carrier are necessary to confirm that the applicable standard is the same as is applied in cases governed by the Convention.

[125] Air Transat asserts that to guarantee a result is to promise that an act will be carried out and it is important to distinguish between a promise of performance which amounts simply to an agreement to exercise reasonable care and a promise to produce a particular result which imposes an obligation greater than the exercise of care. 

[126] Air Transat submits that the Convention does not require the carrier to guarantee that timetables will be met and only imposes an obligation to take all necessary measures to avoid delay; that is, it imposes a standard of reasonable care. Accordingly, the Proposed Tariff Rules are a statement that the carrier does not, in cases not governed by the Convention, assume the more onerous standard of guarantee.

[127] Air Transat also asserts that the fact that timetables are not guaranteed does not mean that the carrier will never be liable for delay. Air Transat argues that it only means that any liability will not arise from a guarantee of producing a particular result, but rather from a failure to take that degree of care required by the governing law. It is Air Transat’s view that the nature of the carrier’s liability for delay, in cases not governed by the Convention, will depend upon the proper law of the contract or the proper law of tort and may differ depending upon the jurisdiction in which a claim is made.

[128] Air Transat points out that it was in large part to avoid the very difficult jurisdictional problems which may arise in carriage between different sovereign states that the Convention system was adopted in the first place. Air Transat submits that in most cases, the complexities are removed by an applicable Convention, but as there may be the very occasional case of non-Convention carriage, some reference should be included in the Tariff.

[129] Air Transat submits that Proposed Tariff Rules 21(2) and 5.2(e), which include such reference, do not misstate its obligation under the Convention or tend to relieve it from liability laid down by the Convention.

Analysis and findings

[130] The Agency has identified Proposed Tariff Rules 21(2)(vi) and 5.2(e)(iii) as containing wording related to “carriage which is not international”.

[131] With respect to Proposed Tariff Rules 21(2)(vi) and 5.2(e)(iii), Mr. Lukács has raised concerns respecting the last sentence of those provisions which begins, “In carriage which is not international...”.

[132] After considering the submissions of Air Transat, the Agency is of the opinion that it appears that this part of Proposed Tariff Rules 21(2) and 5.2(e) is not intended to cover domestic itineraries, but rather to cover the very limited situations where a Convention does not apply to international travel. Although Mr. Lukács raises the issue of unreasonableness, Proposed Tariff Rules 21(2)(vi) and 5.2(e)(iii) are ambiguous and uncertain and do not meet the test for clarity as set out in Decision No. 418-C-A-2011.

[133] Mr. Lukács points out that the principles of the Convention should be applied to delay of passengers even on itineraries where the Convention does not apply and cites a number of Agency decisions in support of this position.

[134] On the assumption that this latter part of Proposed Tariff Rules 21(2)(vi) and 5.2(e)(iii) is intended to apply to international travel that is not subject to a Convention, the provisions provide that the rights of passengers will generally be governed by the contract of carriage which may provide a remedy in the case of delay. However, it is not clear what is the contract of carriage that Air Transat is referring to.

[135] In light of the fact that the Proposed Tariff Rules are unclear, it is not necessary for the Agency to determine whether they would be considered reasonable if filed with the Agency. Based on the lack of clarity, the Agency finds that Air Transat must revise these Proposed Tariff Rules.

Conclusion

[136] The Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), as they relate to carriage which is not international, are unclear and that Air Transat must revise these Proposed Tariff Rules.

Reasonableness of Proposed Tariff Rules 21(2) and 5.2(e) - discretion about the form of compensation (cash or travel credit)

Positions of the parties

[137] Mr. Lukács argues that Proposed Tariff Rules 21(2) and 5.2(e) provide Air Transat with discretion about the form of payment of compensation as between cash or travel credit, which is manifestly unreasonable. He claims that in Lukács v. WestJet, Decision No. LET-C-A-83-2011, the Agency held that compensation paid in accordance with the tariff is to be paid in the form of cash, cheque, credit to the passenger’s credit card or any other form acceptable to the passenger.

[138] Air Transat responds that it does not purport to require a passenger to accept an offer made. It states that the choice of acceptance or rejection lies with the passenger.

Analysis and findings

[139] The Agency has identified Proposed Tariff Rules 21(2)(iii) and 5.2(e)(i) as relevant to the discretion about the form of compensation as between cash or a travel credit.

[140] The Agency has specifically addressed the issue of compensation in the form of cash versus credit vouchers in Davies. In that case, the Agency noted that Air Canada seemed to maintain the discretion as to whether compensation would be issued in the form of cash or travel credit.

[141] The Agency noted at paragraph 27 that:

The options of cash or credit voucher are clearly different and may be of different value to a passenger depending on the immediate needs of the passenger or the future travelling intentions of the passenger. [...] if a choice is to be offered as full and final compensation, it is not unreasonable to interpret that choice as being one that should be in favour of the person who has been put at a disadvantage, in this case a passenger being denied boarding as a result of a carrier overbooking a flight.

[142] The Agency went on, at paragraph 28, to direct Air Canada to clearly rewrite its tariff in such a way as to state where the choice of option lies. The Agency also stated that if the choice of option were to remain with Air Canada, it should explain why that interpretation would not be unreasonable.

[143] The Agency considers that Air Transat’s Proposed Tariff Rules contain a comparable policy with respect to the payment of cash or credit vouchers. Air Transat has admitted that it retains the choice of which form of compensation it will offer. The passenger’s discretion is limited to deciding whether or not to accept the offer made.

[144] In Davies, the Agency found that where a full and final satisfaction clause is included in the tariff, the choice of option should be interpreted in favour of the passenger. The Agency was not, however, called upon to evaluate the reasonableness of Air Canada’s full and final satisfaction clause in Davies. It has been called upon to make that determination in this case.

[145] Air Transat’s Proposed Tariff Rules contain full and final satisfaction clauses, and the Agency, as set out above at paragraph 115, has found this clause to be unreasonable. However, the Agency considers that the principle in Davies continues to apply, namely that cash or credit vouchers can have a different value to a passenger and that the choice of option should remain with the passenger. Accordingly, the Agency is of the opinion that this principle should apply regardless of whether the tariff provides for a full and final satisfaction clause.

Conclusion

[146] The Agency has determined that it is unreasonable for Air Transat to retain the choice of option to issue compensation in the form of cash or travel credit. Accordingly, the Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), as they relate to the discretion about the form of compensation as between cash or a travel credit, would be considered unreasonable if filed with the Agency.

SUMMARY OF CONCLUSIONS

[147] In light of the foregoing, the Agency concludes the following:

Clarity

1. Proposed Tariff Rules 21(2) and 5.2(e) - the phrase “will consider” and the method used to define the amount of compensation

The Agency has determined that the phrase “will consider” in Proposed Tariff Rules 21(2) and 5.2(e) would be considered clear and not ambiguous if filed with the Agency.

The Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), insofar as they concern compensation, are unambiguous in that they clearly state that Air Transat, when determining the amount of the cash payment or travel credit to be offered to a passenger in the event of delay, will consider all circumstances of the case, including expenses which the passenger, acting reasonably, may have incurred.

The Agency, however, has also determined that Proposed Tariff Rule 21(2), as it relates to providing a cash payment in an amount which shall not be less than the amount of the unused ticket price, is not clear insofar as a reasonable person would be left with a reasonable doubt as to what would be the lower limit of a potential monetary payment in a situation of overbooking or cancellation. If this Proposed Tariff Rule were to be filed with the Agency, it would be considered to be contrary to section 122 of the ATR.

2. Proposed Tariff Rule 21(2) - circumstances under which each option will be made available to a passenger

The Agency has determined that Proposed Tariff Rule 21(2), as it relates to the circumstances under which each option will be made available to a passenger, would be considered clear within the meaning of paragraph 122(c) of the ATR if it were filed with the Agency.

3. Proposed Tariff Rules 21(2) and 5.2(e) - choice of option to obtain cash payment or travel credit

The Agency has determined that if Proposed Tariff Rules 21(2) and 5.2(e), as they relate to the choice of option between a cash payment or travel credit, were filed with the Agency, they would be considered clear and not ambiguous.

4. Proposed Tariff Rule 21(2) - alternative remedies

The Agency has determined that if Proposed Tariff Rule 21(2), as it relates to alternative remedies, were filed with the Agency, it would be considered clear and not ambiguous.

Reasonableness

1. Reasonableness of Proposed Tariff Rule 21(2) - rerouting as an exclusive remedy

The Agency has determined that Proposed Tariff Rule 21(2), as it relates to whether rerouting is an exclusive remedy, would be considered reasonable if it were filed with the Agency.

2. Reasonableness of Proposed Tariff Rules 21(2) and 5.2(e) - compensation of passengers

The Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), as they relate to compensating passengers, reflect the circumstance-focussed approach set out in the Show Cause Decision, and if these Proposed Tariff Rules were to be filed with the Agency, they would be considered to be reasonable.

3. Reasonableness of Proposed Tariff Rule 21(2) - refund of the entire ticket cost or transportation to the passenger’s point of origin

The Agency has determined that the Proposed Tariff Rule provides a balance between the passenger’s right to be fairly compensated and the operational and commercial interests of Air Transat. Accordingly, the Proposed Tariff Rule, as it relates to a refund of the entire ticket cost and transportation to the passenger’s point of origin, would be considered reasonable if filed with the Agency.

However, the Agency finds that in response to the Show Cause Decision, Air Transat has failed to address the issue of returning a passenger to their point of origin “within a reasonable time”. Accordingly, Proposed Tariff Rule 21(2), as it relates to this issue only, would be considered unreasonable if filed with the Agency.

4. Reasonableness of Proposed Tariff Rules 21(2) 5.2(e) - full and final satisfaction clause

The Agency has determined that if the “full and final satisfaction” clauses contained in Proposed Tariff Rules 21(2) and 5.2(e) were to be filed with the Agency, they would be considered to be unreasonable, contrary to section 111 of the ATR.

5. Reasonableness of portions of Proposed Tariff Rules 21(2) and 5.2(e) - wording relating to the phrase “In carriage which is not international” are unreasonable

The Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), as they relate to carriage which is not international, are unclear and that Air Transat must revise these Proposed Tariff Rules.

6. Reasonableness of Proposed Tariff Rules 21(2) and 5.2(e) - discretion about the form of compensation (cash or travel credit)

The Agency has determined that it is unreasonable for Air Transat to retain the choice of option to issue compensation in the form of cash or travel credit. Accordingly, the Agency has determined that Proposed Tariff Rules 21(2) and 5.2(e), as they relate to the discretion about the form of compensation as between cash or a travel credit, would be considered unreasonable if filed with the Agency.

ORDER

[148] Air Transat has stated that it does not contest the principles set out in the Show Cause Decision. Therefore, in recognition of the fact that existing Tariff Rules 21(2) and 5.2(e) do not reflect the Show Cause Decision, the Agency disallows existing Tariff Rules 21(2) and 5.2(e) pursuant to paragraph 113(a) of the ATR for being unreasonable within the meaning of subsection 111(1) of the ATR.

[149] Air Transat has filed Proposed Tariff Rules 21(2) and 5.2(e) in “an attempt to respect and implement the spirit” of the Show Cause Decision. Appendix A sets out Air Transat’s Proposed Tariff Rules 21(2) and 5.2(e). However, as set out in this Decision, the Agency has determined that certain provisions of Proposed Tariff Rules 21(2) and 5.2(e) are unclear or unreasonable.

[150] Considering that Air Transat has proposed tariff amendments in “an attempt to respect and implement the spirit” of the Show Cause Decision, and that the parties have filed extensive pleadings in this proceeding, including in relation to Air Transat’s Proposed Tariff Rules 21(2) and 5.2(e), the Agency considers it appropriate, in this case, to substitute tariff language pursuant to paragraph 113(b) of the ATR for certain provisions of Proposed Tariff Rules 21(2) and 5.2(e).

[151] Accordingly, Air Transat is required, within 30 days of the date of this Decision, to file with the Agency:

  1. The tariff provisions in Appendix A which the Agency found to be reasonable and clear.
  2. The following substituted wording:
    • In Rule 21(2)(i)(b), “return transportation to the passenger’s point of origin within a reasonable time at no additional cost”.
    • In Rules 21(2)(iii) and 5.2(e)(i), “The option of choosing between a cash payment or travel credit will be at the passenger’s discretion.”
  3. A reworded provision with respect to the methodology for calculating the “unused portion” of a passenger’s ticket, as found in Proposed Tariff Rule 21(2), that takes into account the Agency's finding on clarity set out in this Decision.

[152] Air Transat shall, within 30 days of the date of this Decision, make and file any consequential amendments to its Tariff that are required to respond to the ordered disallowance, substitution and rewording set out above.

[153] Pursuant to paragraph 28(1)(b) of the CTA, this disallowance and substitution are effective when Air Transat complies with the above or in 30 days from the date of this Decision, whichever is sooner.


APPENDIX A TO DECISION NO. 248-C-A-2012

PROPOSED TARIFF RULES 21(2) AND 5.2(E)

Rule 21(2)

(i) Given that passengers have a right to take the flight they paid for, if the plane is overbooked or cancelled , Air Transat will take into account all the circumstances of the case as known to it and will provide the passenger with the option of accepting one or more of the following remedial choices:

(a) transportation to the passenger’s intended destination at no additional cost;

(b) return transportation to the passenger’s point of origin at no additional cost;

(c) a cash payment in an amount which shall not be less than the amount of the unused ticket price;

(d) a credit for future air travel.

(ii) When determining the transportation service to be offered, Air Transat will consider:

(a) available transportation services, including services offered by interline, code sharing or other affiliated partners and, if necessary, other non-affiliated carriers;

(b) the circumstances of the passenger, as known to it, including any factors which impact upon the importance of timely arrival at destination.

(iii) Having taken all the known circumstances into consideration, Air Transat will take all measures that can reasonably be required to avoid or mitigate the damages caused by the overbooking or cancellation. Where a passenger who accepts option (a) or option (b) or option (d) nevertheless incurs expense as a result of the overbooking or cancellation, Air Transat will in addition offer a cash payment or travel credit.

(iv) When determining the amount of the offered cash payment or travel credit, Air Transat will consider all circumstances of the case, including any expenses which the passenger, acting reasonably, may have incurred as a result of the overbooking or cancellation, as for example, costs incurred for accommodation, meals or additional transportation. Air Transat will set the amount of compensation offered with a view to reimbursing the passenger for all such reasonable expenses.

(v) If a passenger accepts an option offered to him by Air Transat as set out in this provision, Air Transat’s performance (whether in the form of provision of alternative transportation or the payment of cash or travel credits) shall be in full and final satisfaction of all claims the passenger might have against Air Transat as a result of the overbooking or cancellation. However, the fact that Air Transat makes these offers does not itself deprive the passenger of any rights the passenger may have under the applicable law.

(vi) If a passenger declines to accept the alternative remedies offered by the Carrier, the passenger shall be entitled to exercise any legal rights it may have against the Carrier by reason of the overbooking or cancellation. In cases of international carriage those rights will generally be defined by the Montreal Convention. Article 19 of that Convention provides that an air carrier is liable for damage caused by delay in the carriage of passengers and goods unless it proves that it did everything it could be reasonably expected to do to avoid the damage. In carriage which is not international, the rights of the passenger will generally be governed by the contract of carriage, which may provide a remedy in the case of delay, although it should be noted that times shown in timetables and elsewhere are not guaranteed by the Carrier.

Rule 5.2(e)

(i) In the event of an involuntary re-routing of a flight, the Carrier will ensure that the passenger is routed or transported to his/her ultimate destination, as per the contract of carriage. If no reasonable transportation can be arranged, Air Transat will offer the passenger a cash payment or travel credit. When determining the amount of the offered cash payment or travel credit, Air Transat will consider all circumstances of the case, including any expenses which the passenger, acting reasonably, may have incurred as a result of the overbooking or cancellation, as for example, costs incurred for accommodation, meals or additional transportation. Air Transat will set the amount of compensation offered with a view to reimbursing the passenger for all such reasonable expenses.

(ii) If a passenger accepts an option offered to him by Air Transat as set out in this provision (whether in the form of provision of alternative transportation or the payment of cash or travel credits), Air Transat’s performance shall be in full and final satisfaction of all claims the passenger might have against Air Transat as a result of the overbooking or cancellation. However, the fact that Air Transat makes these offers does not itself deprive the passenger of any rights the passenger may have under the applicable law.

(iii) If a passenger declines to accept the alternative remedies offered by the Carrier, the passenger shall be entitled to exercise any legal rights it may have against the Carrier by reason of the overbooking or cancellation. In cases of international carriage those rights will generally be defined by the Montreal Convention. Article 19 of that Convention provides that an air carrier is liable for damage caused by delay in the carriage of passengers and goods unless it proves that it did everything it could be reasonably expected to do to avoid the damage. In carriage which is not international, the rights of the passenger will generally be governed by the contract of carriage, which may provide a remedy in the case of delay, although it should be noted that times shown in timetables and elsewhere are not guaranteed by the Carrier.


  1. Lukács v. WestJet, Decision No. 418-C-A-2011; Desrochers v. Aeroflot Russian Airlines, Decision No. 382‑C‑A‑2003.
  2. Lukács v. Air Canada, Decision No. 291-C-A-2011.

Member(s)

J. Mark MacKeigan
John Scott
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