Decision No. 250-C-A-2012

June 28, 2012

IN THE MATTER OF Decision No. LET-C-A-80-2011 issued in response to a complaint filed by Gábor Lukács against Air Canada.

File No.: 
M4120-3/09-07441

INTRODUCTION

[1] In Decision No. LET‑C‑A-80‑2011 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 Canada, among other matters, to show cause why certain actions should not be taken respecting its International Passenger Rules and Fares Tariff NTA(A) No. 458 (Tariff), in particular Rules 80, 89 and 91(B). The Agency provided Air Canada and Mr. Lukács with the opportunity to address these preliminary findings.

[2] In its submissions dated September 23, 2011, in response to the Show Cause Decision, Air Canada reiterated elements of its response submissions dated March 11, 2010 filed in relation to the complaint, and Air Canada presented additional submissions to outline its position and show cause with respect to the questions formulated by the Agency.

[3] Submissions were filed by Mr. Lukács in response to Air Canada’s arguments. For each question raised in the Show Cause Decision, Mr. Lukács indicated that he accepts the Agency’s preliminary findings. Although Air Canada was provided with an opportunity to respond to Mr. Lukács’ submissions, it did not file further submissions.

[4] In this Decision, the Agency will make its final findings. These will be based on the preliminary findings set out in the Show Cause Decision and on the submissions made by both parties on the complaint filed by Mr. Lukács and in response to the Show Cause Decision. Amongst other matters, the Agency will make a final determination on its preliminary opinion that a circumstance-focussed approach is a reasonable approach to addressing overbooking and cancellation when a passenger’s circumstances are made known to Air Canada.

[5] This Decision will address the following four main preliminary findings made in the Show Cause Decision:

  1. Overbooking and cancellation 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).
  2. Air Canada’s Tariff Rule 91(B) which precludes the possibility of reprotection on a flight with any carrier, except those for which an interline agreement has been established, is overly restrictive and such a provision is unreasonable.
  3. Air Canada’s Tariff Rule 91(B) is unreasonable as it only calls for a refund of the unused portion of a ticket.  Tariff Rule 91(B) is unreasonable as it leaves with Air Canada the choice of option for obtaining a refund.
  4. Air Canada’s existing Tariff Rule 91(B) is unreasonable as it does not state that passengers have rights and remedies outside those named in the Tariff. Existing Tariff Rules 80(C) and 89 are unreasonable as they refer to a sole remedy available to passengers as stated in the Tariff and they set a 30-day time limit for taking legal action.

[6] Mr. Lukács’ complaint has raised issues as to whether the impugned tariff provisions are reasonable. A carrier is required to ensure that with respect to international flights, its tariff is just and reasonable within the meaning of subsection 111(1) of the Air Transportation Regulations, SOR/88‑58, as amended (ATR).

[7] 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.

[8] 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 obligations 1.

[9] 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.

[10] 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.

PRELIMINARY FINDING 1: OVERBOOKING AND CANCELLATION CONSTITUTE DELAY FOR THE PURPOSE OF ARTICLE 19 OF THE CONVENTION.

Show Cause Decision

[11] Article 19 of the Convention states:

The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo. Nevertheless, the carrier shall not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures.

[12] By virtue of the Carriage by Air Act, R.S.C., 1985, c. C-26, the Convention has the force of law in Canada and governs, among other matters, the liability limitations for delay applicable to international carriage by air for travel to which the Convention applies. The Convention modernizes the liability regime governing international carriage.

[13] Under Article 26 of the Convention, an air carrier may not relieve itself from liability nor fix a lower limit to its liability than that prescribed in the Convention.

[14] A fundamental question raised by Mr. Lukács in this complaint is whether instances of cancellation and overbooking fall within the scope of “delay” as found in Article 19 of the Convention. Air Canada asserts both in response to the initial complaint and in response to the Show Cause Decision that its Tariff provision and Article 19 of the Convention serve two distinct purposes and therefore, Air Canada argues that the legal characterization of “delay” under the Convention is irrelevant.

[15] Mr. Lukács’ complaint, because it relates to the substance of Air Canada’s Tariff provisions on overbooking and cancellation, initiates an Agency review and determination as to whether the Tariff provisions are reasonable. The Agency must consider such complaints pursuant to subsection 111(1) of the ATR, and in so doing, must consider whether the Tariff is consistent with applicable provisions of the Convention.

[16] As the term “delay” is not defined and its meaning is not clear from the text of Article 19 or the Convention as a whole, the Agency, in the Show Cause Decision, considered supplementary sources as is set out in more detail at paragraphs 23 to 39 of that Decision.

[17] The Agency concluded that although there is contradiction and inconsistency in the meaning to be given the word “delay” as found in Article 19 of the Convention, what is clear is that the intent of Article 19 is to have the meaning of “delay” determined on a case-by-case basis. More particularly, whether a situation of cancellation or overbooking constitutes delay will depend on the particular circumstances of a case as well as the court’s interpretation of the questions of fact and law in issue. The Agency further recognized that some courts are setting out specific criteria for assessing whether a particular fact situation falls within the meaning of “delay “as found in Article 19 of the Convention.

[18] The Agency stated that at the core of overbooking and cancellation, the passenger is not in a position to proceed with their journey in the time frame originally established. Accordingly, the Agency expressed the preliminary opinion that overbooking and cancellation that are within the carrier’s control constitute delay for the purposes of Article 19 of the Convention.

[19] However, the Agency recognized that there are situations that may fall outside Article 19, namely cases where overbooking and cancellation would constitute non-performance, and that the Agency may provide further clarification in future complaints.

Positions of the parties

[20] Air Canada, in its response to the Show Cause Decision, rejected, on three main grounds, the Agency’s preliminary finding that situations of overbooking and cancellation that are within the control of Air Canada constitute delay for the purpose of Article 19 of the Convention.

The relevancy of whether overbooking and cancellation can be characterized as delay under Article 19 of the Convention when considering the validity of Air Canada’s Tariff Rule 91(B)

[21] Air Canada is of the view that the issue as to whether overbooking and cancellation constitute delay for the purposes of the Convention is not relevant when considering the validity of Rule 91(B) of Air Canada’s  Tariff, although the issue is relevant when determining if Article 19 of the Convention applies to a passenger’s claim for damages.

Analysis and findings

[22] The Agency agrees with Air Canada that Article 19 of the Convention addresses a carrier’s liability in an action in damages brought by a passenger in situations of delay and that Rule 91(B) of Air Canada’s Tariff addresses the issue of passenger reprotection in situations of overbooking and cancellation. The two provisions are different. Article 19 of the Convention is of general application to all carriers operating international services that are subject to the Convention and provides for, in appropriate circumstances, the awarding of damages by civil courts. Rule 91(B) sets out the specific terms and conditions of carriage that Air Canada applies in cases of overbooking and cancellation and may be the subject of a complaint concerning whether it has been properly applied and whether it is clear, reasonable or unjustly discriminatory. Further, the damages that might be awarded by a civil court pursuant to Article 19 of the Convention are different than the compensation that can be awarded by the Agency pursuant to the ATR.

[23] The Agency also agrees with Air Canada that Article 27 of the Convention provides that carriers may establish their terms and conditions of carriage as long as they are not in conflict with the Convention. In other words, the provisions of the Convention must be taken into consideration by Air Canada to ensure that there is no conflict between the Convention and Air Canada’s Tariff. However, Air Canada, in establishing its terms and conditions of carriage, must also take into consideration the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA) and the ATR and, with respect to this particular complaint, the Agency is considering the reasonableness of the impugned Tariff provisions pursuant to subsection 111(1) of the ATR. As part of this analysis, the Agency may consider the provisions of the Convention as a factor to be taken into consideration when addressing the issue of reasonableness. Past Agency decisions reflect the two distinct ways in which the Convention might be considered: by looking at whether a tariff is in direct contravention of the Convention, thereby rendering the provision null and void and unreasonable2 ; or by referring to the principles of the Convention when considering the reasonableness of a tariff provision.3

[24] Accordingly, the Agency is of the opinion that Article 19 of the Convention and Rule 91(B) of Air Canada’s Tariff do not exist in isolation of each other, but, rather, the Convention informs a carrier’s terms and conditions of carriage both in terms of ensuring no conflict between the Convention and the Tariff and, where appropriate, in terms of considering the issue of reasonableness.

[25] It is clear that Article 19 of the Convention imposes on a carrier liability for damage occasioned by delay in the carriage of, amongst other matters, passengers, but a carrier will not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or it was impossible for them to take such measures. As the Agency stated in the Show Cause Decision, 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 delay. In addition, Article 19 of the Convention provides a carrier with a defence to the liability if it can show that it took, or it was impossible to take, all reasonable measures to avoid the damage caused by the delay. Accordingly, a tariff provision that is drafted in such a way as to allow a carrier to do less than taking all reasonable measures necessary to avoid damage to its passengers could be inconsistent with the principles of Article 19 of the Convention and put into question the tariff’s reasonableness, an issue that has been identified by Mr. Lukács in this case. The question of whether overbooking and cancellation come within the scope of “delay” under Article 19 of the Convention will be a factor in the evaluation of the reasonableness of Air Canada’s Tariff.

[26] Even if, as Air Canada argues, the courts have applied Article 19 of the Convention in a separate and parallel manner to that of a carrier’s tariff provisions respecting reprotection, the Agency, as is set out above, has a mandate to consider the impugned Tariff provisions pursuant to the particular authority given to it in its enabling legislation. As illustrated by past Agency decisions, this often involves a consideration of how the Convention and tariff provisions interact.

[27] Air Canada distinguishes the present case from Agency decisions such as McCabe v. Air Canada, Decision No. 227‑C‑A‑2008, which it characterizes as addressing tariff issues that fall within the scope of the Convention. In fact, that case considered the Convention both from the perspective of whether the impugned tariff provisions were contrary to the Convention as well as whether they were just and reasonable. That case also illustrates the Agency’s mandate to consider tariff issues with reference to the Convention.

[28] Air Canada cites Primeau v. Air Canada, Decision No. 171-C-A-2007, in support of its position that the Agency has implicitly recognized the distinction as between Rule 91(B) and Article 19. That Decision of the Agency centered on whether the tariff provision in issue in that case had been properly applied by Air Canada and was just and reasonable. As regards reference to Air Canada’s liability pursuant to Article 19 of the Convention, the Agency simply stated that there was no evidence to support damage suffered by the complainant. Accordingly, the Agency does not agree that Primeau supports Air Canada’s position.

Whether Article 19 of the Convention imposes an obligation on carriers to reroute passengers in certain circumstances on the “fastest available route” where a delay occurs

[29] Air Canada argues against what it characterizes as the Agency’s position that the “all reasonable measures” wording found in Article 19 of the Convention creates a positive obligation on the carrier to reprotect passengers, in certain circumstances, by offering a seat on the “fastest available route” regardless of the carrier. Air Canada is of the view that the “all reasonable measures” wording can only be characterized as a defence mechanism that carriers may use in an action for damages in situations of delay. Air Canada refers to the fact that the courts have not evaluated a carrier’s tariff provisions by reason of the “all reasonable measures” defence mechanism under Article 19 of the Convention and that legislators from other jurisdictions have also viewed overbooking and cancellation situations separately from aircraft delay.

[30] Unlike a civil court, the Agency has a mandate to consider the impugned Tariff provisions in the context of the Agency’s enabling legislation. In the context of this complaint, this requires a consideration of the reasonableness of the subject Tariff provisions which might be quite different from a civil court’s consideration. As has been discussed above at paragraphs 18 to 21, the Agency has clearly been given the mandate to review the terms and conditions of carriage established by a carrier from a variety of perspectives, a mandate which may differ from the approach taken in foreign jurisdictions.

Not all incidents of overbooking and cancellation cause delay and damages

[31] In the Show Cause Decision, the Agency recognized that there may be limited situations where overbooking and cancellation do not constitute delay but, in fact, constitute non-performance of the contract and thus would not be subject to the limits of liability set out in the Convention. The Agency at paragraph 42 of the Show Cause Decision recognized that as further complaints, with different fact situations, are brought before the Agency, the Agency will be able to clarify the conditions that constitute non-performance. The Agency adds that there may be situations in which overbooking or cancellation will not cause a passenger any delay at all, for example where the passenger arrives at their destination within the intended timeframe.

[32] Air Canada emphasizes the fact that the drafters of the Convention were aware of the difficulty of defining what constitutes delay and that the courts themselves have had difficulties drawing the line between delay and non-performance of a contract of carriage. This points to the fact that cases where delay might be at issue must be assessed on a case-by-case basis and are dependent on the facts. Accordingly, Air Canada argues that it would be inconsistent for the Agency to assume that situations of overbooking and cancellation are presumed to be a delay and cause damages under the Convention. It is important to note that the Agency did not preliminarily find that Air Canada’s Tariff must always assume that overbooking and cancellation constitute delay. However, the Agency is of the opinion that situations of overbooking or cancellation may fall within the definition of delay in Article 19 of the Convention, and that in many cases such situations will constitute delay. Accordingly, Air Canada’s Tariff should allow for this where appropriate.

[33] The Agency is also of the opinion that there may be situations where, for example, overbooking does not necessarily constitute delay, such as when no delay occurs or when an event is characterized by non-performance.

Conclusion

[34] The Agency has determined that overbooking and cancellation that are within the carrier’s control may be characterized as delay. Accordingly, the Agency is of the opinion that in considering the reasonableness of the impugned Tariff provisions, reference may be made to Article 19 of the Convention.

PRELIMINARY FINDING 2: AIR CANADA’S TARIFF RULE 91(B) WHICH PRECLUDES THE POSSIBILITY OF REPROTECTION ON A FLIGHT WITH ANY CARRIER, EXCEPT THOSE FOR WHICH AN INTERLINE AGREEMENT HAS BEEN ESTABLISHED IS OVERLY RESTRICTIVE AND SUCH A PROVISION IS UNREASONABLE.

Show Cause Decision

[35] The Agency’s preliminary finding was that a circumstance-focussed approach is a reasonable approach to addressing overbooking and cancellation when a passenger’s circumstances are made known to Air Canada. 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.

[36] In the Show Cause Decision, the Agency stated that Air Canada’s approach of putting a passenger only on its own flights or on another carrier where an interline agreement exists is a carrier-focussed approach to remedying the situation of overbooking and cancellation. The Agency found that Air Canada provided limited evidence about its commercial or operational obligations to justify reprotection only on its own flights or those of a carrier for which an interline agreement exists.

[37] The Agency also stated that this complaint involves a consideration of the reasonableness of Air Canada’s Tariff provisions on overbooking and cancellation which, in turn, involves the Agency considering these provisions pursuant to subsection 111(1) of the ATR, while also taking into account Article 19 and ensuring that the Tariff is consistent with the articles of the Convention.

[38] The Agency found that Air Canada’s Rule 91(B) provides only a closed list of actions to be taken by Air Canada following overbooking or cancellation.

[39] The Agency therefore directed Air Canada to show cause why its existing Tariff Rule 91(B) should not be found unreasonable as per subsection 111(1) of the ATR.

Positions of the parties

[40] Air Canada submits that Tariff Rule 91(B) is reasonable as drafted, even though it does not provide for finding a flight on the fastest available route in certain circumstances. Air Canada contends that the Tariff provision is (1) clear and collectively applicable, and (2) reasonable considering Air Canada’s operations and commercial obligations.

The reprotection mechanism set out in Rule 91(B) is clear and collectively applicable.

[41] Air Canada argues that a tariff should not need to be drafted to address exceptional circumstances. It cites past Agency decisions that recognize that in determining whether a term or condition of carriage is reasonable, the Agency must take into account the fact that air carriers are required to establish and apply terms and conditions designed to apply collectively to all passengers, as opposed to one particular passenger.4 Air Canada notes that this was specifically recognized in the case of Lloyd Alter v. Air Canada, Decision No. 426-C-A-2009, where the Agency found as follows:

[18] Air Canada's policy must apply to a broad range of similar objects and it is not unreasonable that the policy be applied uniformly to the class of objects, notwithstanding that any individual item in the class may have characteristics that differentiate it from the broader category. There may be merit in an employee applying judgment as to whether the exceptional characteristics should exempt the individual item from the treatment or conditions applied to the broad category in which it belongs. However, it is also not unreasonable that an air carrier insist that the policy be applied uniformly for operational reasons. The failure to do so may, in fact, engender unrealistic expectations on the part of a consumer with respect to their future travel.

[42] Air Canada submits that the circumstance-focussed approach is operationally impossible and would create confusion in the application of the Tariff Rule, as the carrier’s airport agents would have the responsibility to subjectively determine each affected individual’s needs.

[43] Air Canada concludes that the only objective measure to determine a passenger’s urgency to travel is to request volunteers, in the case of oversale, leaving all passengers the opportunity to determine the urgency of their travels.

[44] Mr. Lukács disagrees with Air Canada that implementing the Agency’s findings would create lack of clarity. He submits that the circumstance-focussed approach means a review of the available ways to reroute a stranded passenger, and consideration of the total delay each would inflict upon them.

[45] He goes on to argue that this analysis need not be subjective. Criteria could easily be established for circumstances that warrant reprotecting a passenger on non-interline airlines, including the following:

  1. The unavailability of seats on interline carriers on the same day, while seats on the same day are available elsewhere;
  2. If interline reprotection results in delay of more than 8 hours, whereas non‑interline reprotection results in shorter delay, then a non-interline carrier can be preferred

Analysis and findings

[46] The Agency has considered Air Canada’s arguments against drafting a tariff that reflects a circumstance-focussed approach, and has reviewed the Alter decision. That case concerned Air Canada’s handling fee applicable to all bicycles. The applicant argued that his bicycle folded and was contained in an ordinary bag, which was indistinguishable from any other form of baggage. While he requested that his bicycle receive treatment like any other checked baggage, the Agency found it was reasonable for Air Canada to apply its bicycle policy to all bicycles.

[47] The Agency is of the opinion that there is a distinction to be made between a tariff provision that is drafted to apply to only one passenger or exceptional situations, and a tariff that affords sufficient flexibility to comply with a passenger’s right to be subject to reasonable terms and conditions of carriage as well as with the principles set out in the Convention.

[48] In this case, Tariff Rule 91(B) is not dealing with a single rule applicable to a class of objects, as was the case in Alter. Rather, Rule 91(B) sets out a list of alternative measures to be taken in the event of overbooking or cancellation. This list of measures necessarily requires the use of discretion and judgment by Air Canada agents: namely, whether rerouting on an Air Canada flight is to be preferred over rerouting on the flight of an interline carrier.

[49] Air Canada explains that its agents exercise certain duties and responsibilities in the event of overbooking and cancellation, including how to adequately reprotect a passenger. The Tariff provision currently requires Air Canada’s agents to perform this exercise for each affected passenger’s itinerary. The Agency agrees with Mr. Lukács’ submission that Air Canada can establish criteria to guide its agents in determining whether to choose a carrier with which an interline agreement exists or not.

[50] Accordingly, the Agency finds that Air Canada has not demonstrated that the circumstance-focussed approach is operationally impossible, nor that in implementing a circumstance-focussed approach, its Tariff would create confusion and not be collectively applicable to all passengers.

Positions of the parties

The Tariff provision is reasonable considering Air Canada’s operations and commercial obligations

[51] In the Show Cause Decision, the Agency stated that Air Canada has provided limited proof of the commercial and operational obligations that justify reprotection only on its own flights or those of carriers for which an interline agreement exists.

[52] In response, Air Canada first makes general comments respecting the reasonableness of its Tariff provision. It then goes on to raise three arguments to be considered in the balancing exercise, in favour of the reasonableness of its Tariff provision: the extensiveness of its code share and interline network on international routes; the commercial and competitive disadvantages it would suffer in being required to reprotect passengers on the fastest available route; and, the operational disadvantages that passengers would experience in being reprotected on carriers with which Air Canada has no interline agreement. The Agency will deal with each of these arguments in turn.

(a) General comments concerning the reasonableness of Rule 91(B)

[53] Air Canada cites the cases of Wasserman v. Air Transat, Decision No. 681‑C‑A‑2004 and Primeau, and argues that the Agency determined in those cases that provisions similar to Air Canada’s Tariff Rule 91(B) are reasonable within the meaning of subsection 111(1) of ATR.

[54] Mr. Lukács argues that industry standards have changed since the issuance of Wasserman.

Analysis and findings

[55] The Agency is of the opinion that the cases of Wasserman and Primeau can be distinguished from the present case.

[56] With respect to Wasserman, Air Canada is correct in pointing out that the tariff provisions impugned in that Decision were similar to the ones under review now. However, the focus of that complaint differed as the Agency was asked to consider whether a carrier’s tariff should require it to reimburse additional expenses incurred by a passenger who makes alternate arrangements as a result of a flight cancellation occurring within 10 days of the scheduled departure date, or to provide a full refund if the passenger cancels their reservation more than 10 days before the scheduled departure date. In that context, the Agency found that a tariff provision that required Air Transat to offer alternate flights or to provide a refund, was reasonable.

[57] In Primeau, the Agency was called upon to address the issue of redirection of the flight following a mechanical breakdown of the aircraft. Mr. Primeau’s argument was that it was unreasonable for Air Canada’s tariff to allow it to divert a flight to an alternate destination for other than weather or mechanical reasons. Again, the issue in that Decision differed from the present complaint.

[58] What is more, in neither case were arguments of the nature of those raised by Mr. Lukács made concerning the applicability of the principles of the Convention.

[59] Air Canada further argues that in PIAC v. Air Canada, Decision No. 565-C-A-2008, the Agency concluded that it was reasonable and not discriminatory that Air Canada offer the On My Way product, which rebooks passengers on the next available flight at an additional cost.

[60] The Agency is of the opinion that the On My Way program may provide an added benefit to passengers who would want certainty in instances of flight delay without the requirement to justify a circumstance-focussed reason for transportation on the flights of another carrier with which Air Canada has no interline agreement. However, this additional fee service does not detract from the Agency’s preliminary opinion that it is unreasonable for Air Canada to take the restrictive approach to reprotection as set out in Tariff Rule 91(B) as a base level in dealing with overbooking and cancellation.

[61] Furthermore, even if the Agency had ruled on a similar issue in the past, the Supreme Court of Canada stated in IWA v.Consolidated-Bathurst Packaging Ltd.5 that members of administrative tribunals like the Agency are not bound by the principle of stare decisis. A useful explanation for this may be found in the textbook Administrative Law in Canada:

Tribunals may take into account their previous decisions but should not regard those decisions as binding precedent. The doctrine of stare decisis should not be applied because tribunals should be flexible to adapt to new situations and changing times.

[...]

This flexibility enables a tribunal to apply the public interest in a way that reflects the evolution of policy and effectively regulates dynamic and ongoing relationships between parties. A tribunal may permit re-litigation and may come to a different conclusion without risk of court interference. However, the importance of stability in an industry requires that a tribunal have good reason for reversing its decisions.

[...]

The principle of stare decisis does not apply to tribunals. A tribunal is not bound to follow its own previous decisions on similar issues. Its decisions may reflect changing circumstances and evolving policy in the field it governs.6

[62] Finally, Air Canada argues that the cases of Assaf v. Air Transat A.T. Inc., [2002] J.Q. no 8391, Quesnel v. Voyages Bernard Gendron inc., [1997] J.Q. no 5555 and Mohammad should not be used as an indication of the obligation to carry a passenger on the fastest available route as the courts were not called on to distinguish between interline and non-interline carriers or to analyze the appropriateness under the Convention of only having recourse to carriers with which an interline agreement exists.

[63] Although the Agency did not cite the case of Quesnel in its reasoning, the case of Assaf was cited as an example of the circumstance-focussed approach adopted by Courts in relation to claims arising from Article 19 of the Convention. The Agency finds this latter case to be relevant to its argument in favour of a circumstance-focussed approach.

[64] The principle emerging from the case of Mohammad is that courts will look at whether a flight on another carrier was offered. In fact, the Court referred to the applicable tariff provision as calling for providing carriage on “another carrier” in case of involuntary revised reroutings. The tariff provision was not limited to finding a seat on a carrier with which an interline agreement exists.

[65] In both Mohammad and McMurry v. Capitol Intern. Airways, 102 Misc. 2d 720 at 722, which was also cited by the Agency in the Show Cause Decision, passengers made alternative arrangements themselves and the carrier was found liable to pay for those arrangements. In other words, the Court considered the passenger’s own ability to find a flight on another carrier to be a determining factor as to whether or not the carrier had taken all reasonable measures to avoid delay pursuant to Article 19 of the Convention. The Agency finds this aspect of the cases to be relevant to the issue of reprotection.

Positions of the parties

(b) Reasonableness: the balancing test

(i) The extensiveness of Air Canada’s international network

[66] In response to the Show Cause Decision, Air Canada elaborated on earlier submissions by providing information on the extent of its interline network on international routes. Air Canada states that it has 90 interline agreements with other international carriers, which represents 55 percent of carriers departing from Canada on international routes. Air Canada further submits that if one were to exclude non-IATA carriers and carriers that do not operate parallel services to those offered by Air Canada, then it can be said to have interline agreements with 84 percent of carriers.

[67] In addition, Air Canada provides examples of the reprotection options available to passengers through its existing agreements on a variety of international routes.

[68] Air Canada also raises safety and security concerns in reprotecting on non-IATA carriers.

Analysis and findings

[69] The Agency finds that Air Canada’s submissions reveal an extensive network of international carriers with which it has interline agreements. This suggests that it is only in rare circumstances that Air Canada may have to consider reprotection on a carrier with which it does not have an interline agreement. The Agency finds that this would mitigate the impact of including such a provision in Air Canada’s Tariff.

[70] Air Canada’s submissions also reveal that, in the event of delay, its network would allow for numerous reprotection options for passengers. However, Air Canada has not provided a complete explanation of how these options are weighed. In the event of overbooking or cancellation, Air Canada states that a passenger would be placed on one of the following carriers:

  1. an Air Canada flight;
  2. a flight operated by a code share partner;
  3. a flight operated by a STAR Alliance carrier;
  4. a flight operated by a carrier with which Air Canada has an interline agreement.

[71] Despite providing numerous examples of reprotection options for international flights, Air Canada has not offered an explanation of how it comes to choose which reprotection option it will pursue. In particular, Air Canada has not explained whether its choice will be based exclusively on the first available flight or the fastest route from among the carriers in its network, or whether other factors will also be considered. Accordingly, the evidence provided by Air Canada does not demonstrate why limiting itself to reprotection on one of its own flights or those of a carrier with which it has an interline agreement is reasonable.

[72] Finally, Air Canada has raised safety and security concerns. In promoting a circumstance-focussed approach, the Agency does not in any way intend that Air Canada should be forced to enter into contracts or engage in practices that are unsafe or that pose a threat to security.

Positions of the parties

(ii) The commercial and competitive disadvantages for Air Canada

[73] Air Canada submits that it would be unreasonable, and financially and operationally onerous, to be obligated to purchase a ticket on an airline with which no interline agreement exists, and thus pay a competitor full fare. In such cases, Air Canada points out that it would not be able to rely on an existing negotiated settlement.

[74] Air Canada further submits that it would be at a significant competitive disadvantage, as it is not an industry practice to purchase a seat on a carrier with which no interline agreement exists. Air Canada argues that should the Agency transform Article 19 of the Convention into a positive obligation to reprotect passengers on the fastest available route in certain circumstances, this obligation would be restricted to Air Canada or to carriers subject to the CTA.

[75] Mr. Lukács states that he accepts that reprotection on non-interline carriers would result in additional expenses for Air Canada, but he maintains that this alone does not justify the reasonableness of Air Canada’s existing Tariff provisions. He states that this expense must be weighed against passengers’ right to receive transportation services as contracted, as well as the extra profit generated to Air Canada.

[76] Mr. Lukács further submits that in light of Air Canada’s evidence of how rare these incidents are and the extreme hardship they cause to passengers, Air Canada’s commercial obligations do not justify precluding the possibility of reprotecting passengers on a non-interline carrier in certain circumstances.

[77] With respect to the competitive disadvantage Air Canada would face, Mr. Lukács points out that both WestJet and Air Transat have recently agreed to amend their tariffs to include the possibility of reprotecting passengers on carriers with which they do not have interline agreements.

Analysis and findings

[78] The Agency notes that in response to the Show Cause Decision, Air Canada has provided little additional evidence to further its position concerning the competitive disadvantage it would suffer and the commercial obligations that should be considered by the Agency in assessing the reasonableness of Tariff Rule 91(B). The arguments raised by Air Canada are largely a reiteration of its earlier submissions.

[79] Accordingly, the Agency considers that, in practice, the commercial impact of implementing a circumstance-focussed approach in Air Canada’s Tariff would be limited, given the extensiveness of its international interline network. By extension, the competitive disadvantage suffered by Air Canada, if any, would be minimal.

Positions of the parties

(iii) The operational disadvantages to passengers

[80] In support of this argument, Air Canada submits that reprotection is not simple and that it would be operationally unfeasible for Air Canada to buy a seat on the fastest available route, regardless of the carrier.

[81] Air Canada points out that its airport agents do not have the capacity to contract or purchase tickets on other carriers with which it does not have an interline agreement, considering safety and security concerns. In fact, Air Canada points out that agents only handle small amounts of cash (approximately $200) and they do not carry credit cards for which such purchases could be made.

[82] Air Canada further points out that agents would be forced to make a determination as to whether reprotection on the fastest available route would cost more than the capped limit of the Convention, which amounts to approximately $6,500.

[83] Air Canada goes on to argue that interline agreements allow for the orderly transfer of checked baggage and other special handling requirements between the two airlines, and allow a system of tracking and settlement should baggage be delayed.

[84] Further, Air Canada points out that its interline agreements include provisions allowing Air Canada to directly book a passenger on its interline partner’s flight. They also allow the settlement of revenue through an IATA set-up, so that a ticket can be issued without immediate concern over payment methods and transfer of funds. In the event of problems with the replacement carrier, it allows for an easier transfer back to another participating airline or the original carrier, whereas if reprotection is made on another carrier with no interline agreement, that airline will be the passenger’s sole option.

[85] Mr. Lukács argues that nothing prevents Air Canada from providing credit cards to some airport agents—for example, managers—to purchase tickets on airlines with which Air Canada has no interline agreement.

Analysis and findings

[86] The Agency is of the opinion that in response to the Show Cause Decision, Air Canada has merely repeated arguments that it presented in earlier submissions. These concern the advantages that reprotection on interline carriers offer to passengers with respect to ticket and baggage transfers.

[87] Additional submissions were provided respecting the limited discretion and resources of agents to perform the reprotection services suggested by the Agency.

[88] The Agency is not convinced that, in balancing the rights of passengers against the operational challenges raised by Air Canada, it would be unreasonable to require Air Canada in certain circumstances to consider reprotection on a carrier with which no interline agreement exists. Passengers are able to re-book their own tickets on other carriers at the last minute, and the Agency considers that it is not unreasonable or operationally unfeasible for Air Canada to do the same in the appropriate circumstances.

[89] What is more, the Agency repeats that Article 19 of the Convention refers to taking all measures that could reasonably be required for a carrier to avoid the damage caused by delay. It is therefore not in all circumstances that reprotection on the fastest available route will be reasonably required. For example, as the task of reprotecting a passenger requires some time and effort to complete, it is possible that time constraints may make it difficult or impossible to ensure reprotection on the fastest available flight. The Agency acknowledges Air Canada’s need for flexibility and discretion in this regard, but also emphasizes that this flexibility and discretion must nevertheless respect the principles of Article 19 of the Convention and the ATR.

Conclusion

[90] The evidence provided by Air Canada suggests that the commercial and operational impediments to allowing for the possibility of reprotection on a carrier with which it has no interline agreement, in the appropriate circumstances, would arise only in limited cases. When balanced against the rights of passengers to be subject to reasonable terms and conditions of carriage, as well as their rights under the Convention, the Agency considers that it is unreasonable for Air Canada to outright preclude this possibility in its Tariff.

[91] The Agency finds that Air Canada has not shown cause why Tariff Rule 91(B)(2) should not be found unreasonable as per subsection 111(1) of the ATR for being too restrictive in dealing with issues of overbooking and cancellation and be drafted in a more open manner that allows for reprotection, in certain circumstances, on carriers with which there is no interline agreement. The Agency therefore finds that Rule 91(B)(2) is unreasonable.

PRELIMINARY FINDING 3: AIR CANADA’S TARIFF RULE 91(B) IS UNREASONABLE AS IT ONLY CALLS FOR A REFUND OF THE UNUSED PORTION OF A TICKET. TARIFF RULE 91(B) IS UNREASONABLE AS IT LEAVES WITH AIR CANADA THE CHOICE OF OPTION FOR OBTAINING A REFUND.

(a)Refunding the unused portion of a ticket

Show Cause Decision

[92] In the Show Cause Decision, the Agency stated that in cases where a delay or cancellation occurs at a connecting point during a trip, with the result that the passenger’s travel no longer serves their purpose, that passenger could be required to absorb some of the costs directly associated with their delayed travel if they were only entitled to a partial refund.

[93] In the Show Cause Decision, the Agency stated that Air Canada has not demonstrated why, given its commercial and operational obligations, it cannot refund the entire ticket cost.

[94] Furthermore, the Agency stated that Air Canada 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 original purpose.

[95] The Agency, in the Show Cause Decision, directed Air Canada to demonstrate why that part of Air Canada’s existing Tariff Rule 91(B) that allows for a refund of the unused portion of a passenger’s ticket only should not be found unreasonable as per subsection 111(1) of the ATR.

Positions of the parties

[96] Air Canada maintains that the consequence of the Agency asserting that it is unreasonable to refund only the unused portion of a ticket, even in situations within Air Canada’s control is to make Air Canada responsible for the purpose of a passenger’s trip, and results in Air Canada incurring additional costs to refund payment for services already rendered.

[97] Air Canada adds that refunding the unused portion of a ticket is a wide-spread practice throughout the industry, and that it would be at a significant competitive disadvantage if it had to refund more than the unused portion of a ticket, while its competitors continue to refund only the unused portion.

[98] Air Canada indicates that where a passenger’s journey is interrupted, whether for a reason beyond or within Air Canada’s control, and the passenger elects to continue to their destination by other transportation not arranged by Air Canada, the passenger would only be entitled to the refund of the unused portion of the ticket. Air Canada further indicates that, in practice, where a passenger’s journey is interrupted, for reasons within Air Canada’s control, by a cancellation or overbooking occurring on an outbound itinerary for an Air Canada operated flight, the passenger will likely receive a full refund when requested. Air Canada provides the following example: if a passenger travelling from Vancouver to London via Toronto experiences a flight interruption in Toronto that is within Air Canada’s control, and the passenger opts to receive a refund and return to their point of origin, Air Canada will return the passenger to Vancouver and provide a full refund, including for the Vancouver-Toronto flights. Air Canada claims these situations are rare and constitute less than 1 percent of refund requests.

[99] Air Canada goes on to argue that it cannot modify its Tariff to address situations that would apply in such limited circumstances, and which depend on a case-by-case analysis, considering the complexity of the passenger’s itinerary, the carriers involved on the itinerary, and the country in which the cancellation or overbooking occurred. Air Canada states that including any provision to this effect would cause confusion for the travelling public regarding their rights and would therefore be unclear.

[100] Mr. Lukács claims that Air Canada has made misleading statements concerning industry practice relating to refunds, stating that this is only correct to the extent that it has been a practice of the 20th century. He submits that practices relating to refunding of tickets in situations of overbooking and cancellation have radically changed in the 21st century, by virtue of Article 8(1)(a) of Regulation (EC) No 261/2004 of the European Union and Article 11 of Decision No. 619 of the Andean Community. Mr. Lukács asserts that both of these documents establish the right of passengers to a full refund, including for the parts of the journey that no longer serve any purpose in relation to the passenger’s original travel plan, as well as the right to a return flight to the first point of departure.

[101] Mr. Lukács refers to Air Canada’s description of its current practice, as described in its example of a flight interruption on a Vancouver to London flight via Toronto. He states that Air Canada’s existing practice is consistent with his position and the current industry practice established by the European Union and Andean Community.

[102] Mr. Lukács further states that Air Canada’s admission on this point demonstrates that issuing a full refund where travelled segments no longer serve the passenger’s purpose, and transporting the passenger to their point of origin, does not create hardship for Air Canada to comply with its statutory, operational and commercial obligations. Indeed, as Mr. Lukács points out, Air Canada admits that these situations are rare.

[103] Mr. Lukács states that he is seeking the Agency to direct Air Canada to incorporate this existing practice into its Tariff.

[104] Mr. Lukács further argues that incorporating this practice into  Air Canada’s Tariff would not cause confusion, as Air Canada suggests. He points to Article 8(1)(a) of Regulation (EC) No 261/2004 as an example of a clear and transparent method of incorporating such a practice into  Air Canada’s Tariff.

[105] Mr. Lukács submits that Air Canada’s Canadian competitors, WestJet and Air Transat, have recently accepted the principles set out by the Agency, and agreed to amend their tariffs to reflect a full refund and transportation to the point of origin, in certain cases. Mr. Lukács also submits that a significant portion of Air Canada’s international competitors are subject to at least one of Regulation (EC) No. 261/2004 and Decision No. 619.

[106] Mr. Lukács maintains that Air Canada has not demonstrated any competitive disadvantage. Alternatively, if such disadvantage exists, it is, by Air Canada’s own admission, negligible.

Analysis and findings

[107] In response to the Show Cause Decision, Air Canada has raised arguments concerning situations of delay that are both inside and outside its control. The Agency emphasizes, as it did in the Show Cause Decision, that the present complaint is not concerned with delay that is beyond Air Canada’s control, but rather with situations that are within the control of Air Canada.

[108] Air Canada has indicated that in practice, in cases where a passenger’s trip is interrupted due to delay and the passenger elects to return to their point of origin, Air Canada will return the passenger to their point of origin and provide them, upon request, with a full refund.

[109] The Agency notes that this practice reflects the Agency’s preliminary findings in the Show Cause Decision. In particular, the Agency was of the preliminary opinion that in cases where a delay occurs at a connecting point during a trip, with the result that the passenger’s travel no longer serves their purpose, payment of only a partial refund might force the passenger to absorb some of the costs directly associated with their delayed travel. Accordingly, the Agency expressed the preliminary opinion that in such cases, providing only a partial refund would be unreasonable.

[110] The Agency agrees with Air Canada’s argument that where a delay occurs during travel but a passenger elects to continue on their journey by means of transportation other than with Air Canada, the passenger would not be entitled to a refund of the entire ticket cost if part of their trip served a purpose. For example, if on a trip from Vancouver to London via Toronto, a delay occurred in Toronto and the passenger chose to complete their trip with another carrier, the passenger would not be entitled to a refund of the cost of the Vancouver-Toronto ticket. Indeed, the Agency notes that Mr. Lukács has stated that segments already flown by a passenger that do serve some purpose for the passenger’s original travel plan should not be refunded.

[111] Air Canada goes on to state that situations in which a passenger opts to receive a refund and return to their point of origin are rare, constituting less than 1 percent of refund requests. As such, Air Canada argues that it should not be required to modify its Tariff to account for situations that arise in very limited circumstances that depend on a case-by-case analysis, as it may cause confusion for the travelling public.

[112] The Agency does not accept Air Canada’s position on this point. Air Canada has admitted in its response to the Show Cause Decision that it is in the practice of providing a full refund in  cases where a flight is interrupted and the passenger chooses to return to their point of origin. Nevertheless, Air Canada’s Tariff does not reflect this practice. The Agency notes that pursuant to subsection 110(4) of the ATR, a carrier must apply the terms and conditions of carriage as specified in the tariff. The Agency is of the opinion that if Air Canada is engaging in a practice of refunding and returning passengers to their point of origin, this must be reflected in its Tariff. Furthermore, the Agency is of the opinion that Air Canada has not shown why this practice could not be clearly expressed in its Tariff.

[113] The Agency finds that Air Canada has provided no evidence to support its claim that it would be at a competitive disadvantage if it were held to refund more than the unused portion of a ticket while its competitors refund only the unused portion. Air Canada has stated that it already engages in this practice. Moreover, Air Canada has admitted that providing full refunds and returning passengers to their point of origin where travelled segments no longer serve any purpose accounts for less than 1 percent of refund requests. However, the Agency notes that Air Canada has not shown cause why it cannot return passengers to their point of origin “within a reasonable time”, as addressed at paragraph 105 of the Show Cause Decision. Accordingly, the Agency has determined that Air Canada has not shown that stating this practice in its Tariff would put it at a significant competitive disadvantage relative to its competitors.

[114] The Agency has determined that Air Canada has not shown cause why existing Tariff Rule 91(B)(3) that allows for a refund of the unused portion of a passenger’s ticket only should not be found unreasonable as per subsection 111(1) of the ATR. The Agency therefore finds that Tariff provision is unreasonable.

(b)The passenger’s choice of option to obtain a refund

Show Cause Decision

[115] In the Show Cause Decision, the Agency’s preliminary finding was that by retaining discretion over the selection of the choice of option in its Tariff provision, Air Canada would retain discretion over whether the passenger will continue travelling or receive a refund, regardless of what works best for the passenger. By retaining such discretion, the Agency stated that Air Canada may be limiting or avoiding the actual damage incurred by a passenger as a result of delay. The Agency was of the preliminary opinion that Air Canada has not demonstrated to the satisfaction of the Agency why, from an operational and commercial perspective, the choice of option could not lie exclusively with the passenger.

[116] Air Canada’s Tariff Rule 91(B) sets out the measures it will take in case of flight overbooking or cancellation, and sets out who, as between the carrier and passenger, has discretion to choose between these measures. Currently, Air Canada’s Tariff indicates that either Air Canada can choose to provide a refund, or the passenger may request it.

[117] The Agency asked Air Canada to show cause why that part of Air Canada’s existing Tariff Rule 91(B) that leaves with Air Canada the choice of option for compensation dealing with an overbooking or cancellation situation should not be found unreasonable as per subsection 111(1) of the ATR.

Positions of the parties

[118] In response to the Show Cause Decision, Air Canada proposes to amend its Tariff provision to delete any reference to its discretion with respect to refunds. In other words, the choice to obtain a refund would be at the sole discretion of the passenger.

[119] Air Canada further proposes to amend Tariff Rule 91(B) in such a manner as to not limit or reduce the passenger’s right to claim damages, if any, under the  Convention.

[120] Mr. Lukács submits that he agrees with the Agency’s findings on this issue, and that while he opposes the existing and proposed forms of Tariff Rule 91(B) for other reasons, he is in agreement with Air Canada’s proposed deletion of its own discretion to provide a refund from Rule 91(B).

Analysis and findings

[121] In response to the Agency’s Show Cause Decision, Air Canada has not provided any submissions in support of the reasonableness of the choice of option portion of its Tariff provision. Instead, Air Canada proposes to amend its Tariff to reflect the Agency’s preliminary findings.

[122] The Agency takes note of Air Canada’s proposal to amend Tariff Rule 91(B) in order to give the passenger sole discretion to choose to obtain a refund and that Mr. Lukács has agreed to this proposal.

Conclusion

[123] Accordingly, as Air Canada has provided no arguments in favour of the reasonableness of its Tariff, the Agency finds that Tariff Rule 91(B)(3), as currently drafted, is unreasonable for failing to give the passenger sole discretion to choose to obtain a refund.

[124] The Agency also determines that Air Canada’s proposal to leave the choice of option with the passenger is reasonable.

PRELIMINARY FINDING 4: AIR CANADA’S EXISTING TARIFF RULE 91(B) IS UNREASONABLE AS IT DOES NOT STATE THAT PASSENGERS HAVE RIGHTS AND REMEDIES OUTSIDE THOSE NAMED IN THE TARIFF. EXISTING TARIFF RULES 80(C) AND 89 ARE UNREASONABLE AS THEY REFER TO A SOLE REMEDY AVAILABLE TO PASSENGERS AS STATED IN THE TARIFF AND THEY SET A 30-DAY TIME LIMIT FOR TAKING LEGAL ACTION.

Show Cause Decision

[125] The Agency’s preliminary finding was that Rule 91(B) of Air Canada’s Tariff is unreasonable for failing to indicate the rights a passenger has, both under and outside the Convention.

[126] The Agency was also of the preliminary opinion that Rules 80(C) and 89 are inconsistent with Articles 19 and 22 of the Convention for limiting the carrier’s liability to cash or credit voucher amounts, relieving Air Canada of liability in the event such compensation is paid and imposing a 30-day limitation period on legal action. The Agency stated that it was of the preliminary opinion that these provisions are unreasonable.

[127] The Agency, in the Show Cause Decision, affirmed that a passenger should be able to fully understand their rights and remedies in law simply by reading a tariff and without reviewing specific articles of treaties to discern the terms and conditions that apply to that tariff. The Agency also affirmed that tariff language must clearly and plainly set out the rights and remedies of passengers.

[128] The Agency then considered Air Canada’s Tariff Rules 91(B), 80(C) and 89 taking into consideration the principles set out in the Show Cause Decision.

Positions of the parties

[129] Air Canada in its response to the Show Cause Decision proposed revised wording for its international Tariff Rules 91(B), 80(C) and 89.

[130] With respect to Rule 91(B) Air Canada made some modifications to address the issue of Air Canada retaining the right to provide a refund and added the following wording: “nothing in the subject Rules shall limit or reduce the passenger’s right, if any, to claim damages, if any, under the Convention”. Mr. Lukács does not oppose this proposed wording.

[131] The Agency, in the Show Cause Decision, stated that the existing Rule 91(B) does not give any indication of which rights and remedies a passenger might have under the applicable provisions of the Convention and the Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed in Warsaw on 12 October 1929 – Warsaw Convention (Warsaw) in the event of overbooking or cancellation. Nor does it indicate that passengers may have rights and remedies at law outside the Convention and Warsaw. The revised wording still does not state that a passenger might have other rights and remedies outside those of the Convention and Warsaw, while the additional wording referring to the Convention might misrepresent to passengers that their rights and remedies are only determined within the context of the Convention and Warsaw, a concern that was expressed by the Agency at paragraph 115 of the Show Cause Decision. The Agency is of the opinion that Air Canada’s Tariff should inform passengers that they have rights under the Convention or under the law, when neither the Convention or Warsaw applies. Accordingly, the Agency, with respect to this issue, continues to be of the opinion that Rule 91(B) of Air Canada’s Tariff is unreasonable.

[132] Air Canada proposed to revise Tariff Rules 80(C)(1) and 80(C)(2) by eliminating the wording referring to the “passenger’s sole remedy” and further clarify the Rules by adding the following wording: “nothing in the subject Rules shall limit or reduce the passenger’s right, if any, to claim damages, if any, under the Convention”.

[133] The Agency in the Show Cause Decision was of the opinion that these Rules were inconsistent with the liability provisions set out in Articles 19 and 22(1) of the Convention.

[134] Mr. Lukács in his reply states that he agrees with the changes proposed to these Rules.

Analysis and findings

[135] However, the Agency considers that the proposed changes to Rules 80(C)(1) and 80(C)(2), much like Air Canada’s proposed changes to Rule 91(B), still fail to inform passengers that they may have rights either under the Convention or Warsaw or under the law, when the Convention or Warsaw does not apply. Accordingly, the Agency, with respect to this issue, also continues to be of the opinion that the changes proposed to Rules 80(C)(1) and 80(C)(2) are unreasonable.

[136] With respect to Rule 89, Air Canada revised the wording of the Rule, including adding the following wording: “nothing in this Part shall limit or reduce the passenger’s right, if any, to claim damages, if any, under the Convention”. The Agency, in the Show Cause Decision, made a preliminary finding that the Tariff provision which limited Air Canada’s liability to the cash or credit voucher amounts stated therein, relieved Air Canada of liability in the event such compensation is paid and imposed a 30-day limitation period on legal action, all of which was not reasonable.

[137] Mr. Lukács opposes the revised wording and the existing wording for a number of reasons including that the revised Rule still makes reference to 30 days, is unclear, ambiguous, unreasonable and self-contradictory. Mr. Lukács asks that the Agency disallow those portions that refer to “passenger options” as being unreasonable and require Air Canada to pay compensation for denied boarding unconditionally and irrespective of the passenger’s right to make a claim under the Convention or other cause of action.

[138] Air Canada’s proposed revised Tariff provision in essence states that if a passenger is denied boarding as a result of overbooking they will have the option of accepting compensation offered by Air Canada which will relieve the carrier from further liability, subject to the Convention. As discussed in more detail below, this revised Tariff provision is contradictory. Alternatively, the passenger can decline the compensation and seek redress in some other forum, including under the Convention.

[139] With respect to Mr. Lukács’ submission that the reference to 30 days in which to accept the compensation offered by Air Canada is significantly shorter than Article 35 of the Convention which states that the right to damages shall be extinguished if an action is not brought within a period of two years, the Agency notes that Air Canada did not revise this part of the Rule or provide any argument contrary to the Agency’s preliminary finding in this regard.

[140] In addition, the Agency agrees with Mr. Lukács that the proposed revised wording of Rule 89 is contradictory in parts. The provision would provide that acceptance of denied boarding compensation relieves Air Canada from any further liability for not transporting the passenger as per its ticket reservations and yet it goes on to state that a passenger may have a right to claim damages under the Convention. The Agency is of the opinion that this contradictory and ambiguous wording is unreasonable and contrary to subsection 111(1) of the ATR.

Conclusion

[141] The Agency has determined that Air Canada’s proposed revisions to Tariff Rules 80(C)(1), 80(C)(2) and 91(B) are unreasonable as they fail to inform passengers that they may have rights either under the Convention or Warsaw, or under the law, when neither Convention applies.

[142] With respect to Tariff Rule 89, the Agency has determined that:

  1. Air Canada has failed to show cause as to why parts of existing Tariff Rule 89 that limit the passenger’s recourses, and set a 30-day time limit for taking legal action in the event of denied boarding, should not be found unreasonable as per subsection 111(1) of the ATR. The Agency therefore finds that Tariff provision unreasonable; and,
  2. the contradictory and ambiguous wording of Tariff Rule 89 renders that Rule unreasonable as per subsection 111(1) of the ATR.

SUMMARY OF CONCLUSIONS

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

1. With respect to preliminary finding 1: 

The Agency has determined that overbooking and cancellation that are within Air Canada’s control may be characterized as delay. Accordingly, the Agency is of the opinion that in considering the reasonableness of the impugned Tariff provisions, reference may be made to Article 19 of the Convention.

2. With respect to preliminary finding 2: 

The Agency has determined that Air Canada has not shown cause why part of Tariff Rule 91(B) should not be found unreasonable as per subsection 111(1) of the ATR for being too restrictive in dealing with issues of overbooking and cancellation and be drafted in a more open manner that allows for reprotection, in certain circumstances, on carriers with which there is no interline agreement. The Agency therefore finds that Rule 91(B)(2) is unreasonable.

3. With respect to preliminary finding 3: 

(a)  Refunding the unused portion of a ticket

The Agency has determined that Air Canada has not shown cause why that part of its existing Tariff Rule 91(B)(3) that allows for a refund of the unused portion of a passenger’s ticket only should not be found unreasonable as per subsection 111(1) of the ATR. The Agency therefore finds that Tariff provision is unreasonable.

(b)  The passenger’s choice of option to obtain a refund

As Air Canada has provided no arguments in favour of the reasonableness of its Tariff, the Agency has determined that Tariff Rule 91(B)(3), as currently drafted, is unreasonable for failing to give the passenger sole discretion to choose to obtain a refund.

The Agency has also determined that Air Canada’s proposal to leave the choice of option with the passenger is reasonable.

4. With respect to preliminary finding 4: 

The Agency has determined that Air Canada’s proposed revisions to Tariff Rules 80(C)(1), (C)(2) and 91(B) are unreasonable as they fail to inform passengers that they may have rights either under the Convention  or Warsaw, or under the law, when neither Convention applies.

With respect to Tariff Rule 89, the Agency has determined that:

  1. Air Canada has failed to show cause as to why parts of existing Tariff Rule 89 that limit the passenger’s recourses, and set a 30-day time limit for taking legal action in the event of denied boarding, should not be found unreasonable as per subsection 111(1) of the ATR. The Agency therefore finds that Tariff provision is unreasonable; and,
  2. the contradictory and ambiguous wording of Tariff Rule 89 renders that Rule unreasonable as per subsection 111(1) of the ATR.

ORDER

[144] In this Decision, the Agency has made findings based on the parties’ submissions concerning the reasonableness of Air Canada’s international Tariff Rules 91(B), 80(C)(1) and (C)(2) and 89. In accordance with those findings, the Agency disallows these Tariff Rules pursuant to paragraph 113(a) of the ATR for being unreasonable within the meaning of subsection 111(1) of the ATR.

[145] The Agency orders Air Canada, within 45 days from the date of this Decision, to amend existing Tariff Rules 91(B), 80(C)(1) and 80(C)(2) and 89 to conform with the findings set out in this Decision and to file its amended international Tariff with the Agency.

[146] In making amendments to its international Tariff, the Agency refers Air Canada to the findings and orders set out in Decision Nos. 248-C-A-2012 and 249-C-A-2012 relating to Air Transat’s and WestJet’s international tariffs.

[147] Finally, Air Canada is ordered, within 45 days from the date of this Decision, to make and file any consequential amendments to its international Tariff that need to be made to respond to the amended new Tariff Rules 91(B), 80(C)(1) and 80(C)(2) and 89.

[148] Pursuant to paragraph 28(1)(b) of the CTA, this Order shall come into force when Air Canada complies with the above or in 45 days from the date of this Decision, whichever is sooner.


APPENDIX A TO DECISION NO. 250-C-A-2012

RULE 80(C) SCHEDULE IRREGULARITY

(1)   In the event carrier cancels a flight, fails to operate according to schedule, fails to stop at a point to which the passenger is destined or is ticketed to stopover, substitutes a different type of equipment or class of service, is unable to provide previously confirmed space, causes a passenger to miss a connecting flight on which he holds a reservation, or the passenger is refused passage or removed in accordance with Rule 25(A) carrier will at its option and as passenger’s sole remedy either:

  1. carry the passenger on another of its passenger aircraft on which space is available without additional charge regardless of the class of service; or at carrier’s option;
  2. endorse to another air carrier with which Air Canada has an agreement for such transportation, the unused portion of the ticket for purposes or rerouting; or at carrier’s option;
  3. reroute the passenger to the destination named on the ticket or applicable portion thereof by its own or other transportation services; and if the fare for the revised routing or class of service is higher than the refund value of the ticket or applicable portion thereof as determined from Rule 90(D), carrier will require no additional payment from the passenger but will refund the difference if it is lower or;
  4. at passenger’s option or if carrier is unable to perform the option stated in (A), (B) or (C) above within a reasonable amount of time, make involuntary refund in accordance with Rule 90(D).

(2)   In the event carrier is a codeshare carrier and the operating carrier cancels a flight, fails to operate according to schedule, fails to stop at a point to which the passenger is destined or is ticketed to stopover, substitutes a different type of equipment or class of service, is unable to provide previously confirmed space, causes a passenger to miss a connecting flight on which he holds a reservation, or the passenger is refused passage or removed in accordance with Rule 25(A) carrier will, as the passenger’s sole remedy, if the operating carrier fails to do so:

  1. carry the passenger on another of its passenger aircraft on which space is available without additional charge regardless of the class of service; or at carrier’s option
  2. endorse to another carrier or other transportation service, the unused portion of the ticket for purposes of rerouting; or at carrier’s option
  3. reroute the passenger to the destination named on the ticket or applicable portion thereof by its own or other transportation services; and if the fare for the revised routing or class of service is higher than the refund value of the ticket or applicable portion thereof as determined from Rule 90(D), carrier will require no additional payment from the passenger but will refund the difference if it is lower at carrier’s option.
  4. or, at carrier’s option or if carrier is unable to perform the option stated in (A) (B) or (C) above within a reasonable amount of time, make involuntary refund in accordance with Rule 90(D).

RULE 89-DENIED BOARDING COMPENSATION

PART 1

Applicable between Canada and points in the Caribbean/Bermuda/Mexico/South America/Central America and North Pacific, from CA to all points in Area 2 and from Argentina to Chile. When AC is unable to provide previously confirmed space due to there being more passengers holding confirmed reservations and tickets than for which there are available seats on a flight, AC shall implement the provisions of this rule.

RULE 89(PART I)(F) NOTICE PROVIDED TO PASSENGERS

The following written notice shall be provided to all passengers who are involuntarily denied boarding on flights for which they hold confirmed reservations.

[...]

AMOUNT OF DENIED BOARDING COMPENSATION

If you are eligible for denied boarding compensation, you must be offered a cash payment of $200.00 (Canadian currency) or a Credit Voucher good for future travel on AC in the amount of $500.00 (Canadian currency).

EXCEPTION: If you have been denied boarding for flights destined to/from Mexico and are eligible for denied boarding compensation, you must be offered a cash payment of $100 (Canadian currency) or a Credit Voucher good for future travel on Air Canada in the amount of $200 (Canadian currency). Refer to section (E), paragraph (2) of Air Canada General Rule No. 89 for a complete list of exceptions.

[...]

PASSENGER’S OPTIONS

Acceptance of the compensation (by endorsing the check or draft or not returning Credit Voucher to AC within 30 days) relieves AC from any further liability caused by our failure to honour your confirmed and ticketed reservations. However, you may decline the payment and seek to recover damages in a court of law or in some other manner within thirty (30) days from the date on which the denied boarding occurred.

PART 2

(Applicable from points in the United States served by AC to points in Canada and points in Areas 2/3 served by AC.)

RULE 89(PART 2)(E)(2) AMOUNT OF COMPENSATION PAYABLE

(a)    Subject to the provisions of paragraph (E)(1) of this rule, carrier will tender liquidated damages in the amount of 200 percent of the sum of the values of the passenger’s remaining flight coupons of the ticket to the passenger’s next stopover (see Rule 135), or if none, to his destination, but not more than USD 400.00 or CAD 484.00, if the carrier arranges for comparable air transportation, or for other transportation accepted, i.e. used by the passenger which, at the time, either such arrangement is made, is planned to arrive at the airport of the passenger’s next stopover, or if none, at the airport of the passenger’s destination not later than four hours after the planned arrival at the airport of the passenger’s next point of stopover, or if there is no next point of stopover, at the airport of the passenger’s destination, of the flight on which the passenger holds a confirmed reservation. If the offer of compensation is made by the carrier and accepted by the passenger, such payment shall constitute full compensation for all actual or anticipatory damages incurred or to be incurred by the passenger as a result of the carrier’s failure to provide passenger with confirmed reserved space.

NOTE: Subject to the passenger’s approval carrier will compensate the passenger with credit valid for the purchase of transportation in lieu of monetary compensation. The credit issued will be for a value equal to or greater than the monetary compensation. Such credit will be non-transferrable, non-refundable and valid for one year from the date of issue.

RULE 89(PART 2)(F)

Carrier shall furnish all passengers who are denied boarding involuntarily from flights on which they hold confirmed reserved space a copy of the following written statement:

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AMOUNT OF DENIED BOARDING COMPENSATION

Passengers who are eligible for denied boarding compensation must be offered a payment equal to the sum of the face values of their ticket coupons, with a USD 200.00 maximum. However, if the airline cannot arrange “alternate transportation” (see below) for the passenger, the compensation is doubled (USD 400.00 one way maximum). The “value” of a ticket coupon is the one way fare for the flight shown on the coupon, including any surcharge and air transportation tax, minus any applicable discount. All flight coupons, including connecting flights, to the passenger’s destination or first 4-hour stopover are used to compute the compensation.

“Alternate transportation” is air transportation provided an airline licensed by the C.A.B. or other transportation used by the passenger which, at the time the arrangement is made, is planned to arrive at the passenger’s next scheduled stopover (of 4 hours or longer) or destination no later than 4 hours after the passenger’s originally scheduled arrival time.

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PASSENGER’S OPTIONS

Acceptance of the compensation (by endorsing the check or draft within 30 days) relieves AC from any further liability to the passenger caused by its failure to honor the confirmed reservation. However, the passenger may decline the payment and seek to recover damages in a court of law or in some other manner.

RULE 91 - ADDITIONAL SERVICE STANDARD COMMITMENTS

Rules 80 and 90, shall be interpreted in accordance with the principles set out below, and adjusted in accordance thereto.

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(B) Given that passengers have a right to take the flight they paid for, if the plane is over-booked  or cancelled, Air Canada will:

  1. Find the passenger a seat on another flight operated by Air Canada; or at AC’s option
  2. Buy the passenger a seat on another carrier with whom it has a mutual interline traffic agreement; or at passenger’s choosing or,
  3. If AC is unable to perform the option stated in (1) or (2) above within a reasonable amount of time, AC will refund the unused portion of the passenger’s ticket.

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  1. Lukács v. Air Canada, Decision No. 291-C-A-2011.

  2. See for example: Balakrishnan v. Aeroflot, Decision No. 328-C-A-2007 at para. 20 and Lukács v. WestJet, Decision No. 477-C-A-2010 at paras. 39-40 (Leave to appeal to Federal Court of Appeal denied, FCA 10-A-41).

  3. See for example: Lukács v. WestJet, Decision No. 313-C-A-2010 and Decision No. LET‑C‑A‑51‑2010 .

  4. Air Canada cites Del Anderson v. Air Canada, Decision No. 666-C-A-2001; Burwash v. Air Canada, Decision No. 333 C-A-2006 at para. 20; Wasserman v. Air Transat, Decision No. 681-C-A-2004 at para. 28.

  5. [1990] 1 S.C.R. 282 at 333.

  6. Administrative Law in Canada, 5th Edition LexisNexis Butterworths 2011 at 103 and 139-141.

Member(s)

J. Mark MacKeigan
John Scott
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