Decision No. 251-C-A-2012

June 28, 2012

COMPLAINT by Gábor Lukács against Air Canada with respect to its domestic Tariff.

File No.: 
M4120-3/09-03560

INTRODUCTION

[1] In Decision No. LET-C-A-129-2011 dated December 2, 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 Canadian Domestic General Rules Tariff No. CDGR-1 (domestic Tariff), in particular Rules 37(B)(2), 135(E), 240(B)(9), 240(C)(1) and 260. The Agency provided Air Canada and Gábor Lukács with the opportunity to address these preliminary findings.

[2] In its submissions dated January 30, 2012, in response to the Show Cause Decision, Air Canada reiterated elements of its response submissions dated July 20, September 15, and November 9, 2009 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. 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.

[3] 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 initial 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.

[4] Appendix A sets out Air Canada’s domestic Tariff provisions.

[5] This Decision will address the following five preliminary findings in the Show Cause Decision:

  1. The principles of Article 19 of the Convention for the Unification of Certain Rules for International Carriage by Air – Montreal Convention (Convention) are equally applicable to domestic carriage.
  2. Overbooking and cancellation constitute delay for the purpose of Article 19 of the Convention.
  3. Air Canada’s Tariff Rule 37(B)(2) 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. Air Canada’s Tariff Rules 37(B)(1) and 37(B)(2) are unreasonable as they leave the choice of option for reprotection solely to Air Canada.
  4. Air Canada’s Tariff Rules 37(B)(3), 240(C)(1) and 260 are unreasonable as they only call for a refund of the unused portion of a ticket.
  5. Air Canada’s existing Tariff Rule 37(B) is unreasonable as it does not state that passengers have rights and remedies outside those named in the domestic Tariff. It is unreasonable that existing Tariff Rules 135(E) and 240(B)(9) refer to a sole remedy available to passengers as stated in the domestic Tariff.

[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 domestic flights, its tariff is reasonable within the meaning of subsection 67.2(1) of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA).

[7] Subsection 67.2(1) of the CTA states:

If, on complaint in writing to the Agency by any person, the Agency finds that the holder of a domestic licence has applied terms or conditions of carriage applicable to the domestic service it offers that are unreasonable or unduly discriminatory, the Agency may suspend or disallow those terms and conditions and substitute other terms or conditions in their place.

[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 67.2(1) of the CTA, a balance must be struck between the rights of passengers to be subject to reasonable terms and conditions of carriage, and the particular air carrier’s statutory, commercial and operational obligations1.

[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: THE PRINCIPLES OF ARTICLE 19 OF THE CONVENTION ARE EQUALLY APPLICABLE TO DOMESTIC CARRIAGE

Show Cause Decision

[11] The Agency indicated that, in assessing whether the impugned domestic Tariff provisions are reasonable, the Agency, among other matters, will consider the principles of Article 19 of the Convention.

[12] The Agency stated that it determines on a case-by-case basis what constitutes reasonable terms and conditions of carriage, taking into account the submissions of the parties. The Agency noted that as part of its consideration of the issue of reasonableness, the Agency may consider the principles of the Convention.

[13] In addressing this issue, the Agency looked at doctrine and jurisprudence that supports the use of international law in interpreting domestic legislation, and cited Agency cases that looked to the principles of the Convention for guidance in assessing whether a tariff provision is reasonable.

[14] The Agency stated that it is, and has been, of the view that the Convention is a useful interpretive tool to which the Agency may refer when applying the reasonableness test and striking a balance between a passenger’s rights and the statutory, commercial and operational obligations of a carrier. In doing so, the Agency stated that it takes into account the principles of the Convention rather than applying the Convention itself.

[15] The Agency further stated that passengers should expect and be entitled to consistency in treatment irrespective of whether they are on a domestic or international flight. To that end, the principles set out in the Convention provide insight into what is reasonable to apply in the domestic context.

Positions of the parties

[16] In response to the Show Cause Decision, Air Canada submits that domestic carriage is not governed by either the Unification of Certain Rules for International Carriage by Air, signed at Warsaw on 12 October 1929 (Warsaw) or the Convention, and that the Agency should not order carriers to apply those Conventions where they should not apply. Air Canada indicates that, without admitting the applicability of the Convention to domestic air carriage, Air Canada will take into consideration the Agency’s position that the principles of Article 19 apply when assessing the reasonableness of the domestic Tariff Rules in the analysis outlined by the Agency.

[17] Mr. Lukács agrees with the Agency’s findings in the Show Cause Decision, and notes that the Agency never suggested that Air Canada would be ordered to apply the Convention to domestic carriage, therefore rendering Air Canada’s submissions on this point moot.

Analysis and findings

[18] In the Show Cause Decision, the Agency set out the reasons for which it looks to the principles of the Convention in evaluating the reasonableness of a tariff provision pursuant to subsection 67.2(1) of the CTA. The Agency finds that Air Canada has not submitted any persuasive arguments to lead the Agency to conclude that the principles of the Convention should not apply equally to domestic carriage.

[19] Accordingly, the Agency finds that the Convention is a useful interpretive tool to which the Agency may refer when applying the reasonableness test pursuant to subsection 67.2(1) of the CTA. This finding is consistent with the Agency’s decisions in Pinksen v. Air Canada, Decision No. 181-C-A-2007; Kipper v. WestJet, Decision No. 309-C-A-2010.

Conclusion

[20] In light of the foregoing, the Agency concludes that the principles of Article 19 of the Convention are equally applicable to domestic carriage.

PRELIMINARY FINDING 2: OVERBOOKING AND CANCELLATION CONSTITUTE DELAY FOR THE PURPOSE OF ARTICLE 19 OF THE CONVENTION.

Show Cause Decision

[21] The Agency was of the preliminary opinion 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.

[22] 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 in its response to the Show Cause Decision that its domestic Tariff provision and Article 19 of the Convention serve two distinct purposes and it therefore argues that the legal characterization of “delay” under the Convention is irrelevant.

[23] Mr. Lukács’ complaint, because it relates to the substance of Air Canada’s domestic Tariff provisions on overbooking and cancellation, initiates an Agency review and determination as to whether the domestic Tariff provisions are reasonable. The Agency must consider such complaints pursuant to subsection 67.2(1) of the CTA.

[24] The Agency concluded in its Show Cause Decision that a determination of whether overbooking and cancellation fall within the scope of “delay” under Article 19 of the Convention is relevant as it will assist and provide guidance in the Agency’s evaluation of the reasonableness of Air Canada’s domestic Tariff, because, as more fully set out in Preliminary Finding 1, the Agency will consider, among other matters, whether the domestic Tariff is consistent with the applicable principles of the Convention.

[25] 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.

[26] 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 its Show Cause Decision, considered supplementary sources as is set out in more detail at paragraphs 54 to 71 of that Decision.

[27] 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.

Positions of the parties

[28] Air Canada, in its response to the Show Cause Decision, rejected on two main grounds, the Agency’s preliminary opinion 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 the domestic Tariff Rules.

[29] 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 37(B) of Air Canada’s domestic Tariff, although the issue is relevant when determining if Article 19 of the Convention applies to a passenger’s claim for damages.

[30] Air Canada asserts that Article 19 of the Convention and the domestic Tariff Rules in question serve two distinct purposes and thus are not in conflict with one another. Article 19 of the Convention addresses the carrier’s liability in any action in damages in case of delay whereas Rule 37(B) provides the reprotection mechanism applicable under the contract of carriage in situations of overbooking and cancellation.

[31] Air Canada refers to Article 27 of the Convention which states that carriers are entitled to lay down the terms and conditions of carriage so long as they do not conflict with the Convention.

[32] Air Canada states that it recognizes that there are situations in which a cancellation or overbooking that are within Air Canada’s control will cause a delay to a passenger. However, a tariff is intended to be of general application setting out a carrier’s policy, while the Convention addresses a carrier’s liability in specific situations, such as an action for damages.

[33] Air Canada argues that when interpreted as a whole, its domestic Tariff sets out that Air Canada’s failure to abide by Rule 37(B) would allow a passenger to file a complaint with the Agency, which has the jurisdiction to determine if the domestic Tariff Rules were properly applied, separate and apart from the passenger’s right to seek compensation if the same situation has caused damages under Article 19 of the Convention. Air Canada asserts that the Agency’s jurisdiction is limited to what is set out under section 67.1 of the CTA.

[34] Air Canada points out that the Convention is not intended to deal with all issues related to air carriage and that Air Canada’s domestic Tariff does not preclude a passenger’s right to claim damages for delay and thus does not conflict with or attempt to eliminate the effects of Article 19 of the Convention.

[35] This, Air Canada argues, is distinguishable from a case where a tariff provision falls within the scope of the Convention, such as when provisions affecting passenger claims and rights to damages are put into question which was a situation reflected in McCabe v. Air Canada, Decision No. 227‑C‑A‑2008.

[36] Air Canada goes on to state that legislators around the world have legislated overbooking and cancellation situations in the aviation industry separately from situations of aircraft delay.

[37] Air Canada further asserts that courts have also maintained the application of Article 19 of the Convention in a separate and parallel manner to the application of the terms regarding reprotection in a carrier’s contract of carriage. Air Canada argues that the Agency has implicitly recognized this distinction by adopting a two-step approach in cases that deal with passenger complaints regarding the application of tariff provisions, namely whether the tariff rule has been applied correctly and whether there was any damage caused by delay pursuant to the Convention.

[38] Air Canada, in summary, states that it does not consider it appropriate to interpret Tariff Rule 37(B) respecting passenger reprotection with the provisions of Article 19 of the Convention, which, in turn, concerns liability of the carrier and the extent of compensation for damage in the case of delay for which the Agency’s jurisdiction is limited.

[39] Mr. Lukács responds that he accepts the Agency’s findings that overbooking and cancellation that are within Air Canada’s control constitute delay for the purpose of Article 19 of the Convention and that in limited situations there may be clear facts and circumstances that would evidence the alternative of non-performance of the contract of carriage.

[40] Mr. Lukács also refers to a submission made by Air Canada with respect to Lukács v. United Airlines, 2009 MBQB 29 (leave to appeal denied; 2009 MBCA 111).  Mr. Lukács maintains that Air Canada misstates that case in that it does not provide authority to Air Canada’s proposition that the liability under Article 19 of the Convention is separate and independent from the the obligation to reprotect passengers.

[41] Mr. Lukács points out that Air Canada appears to be challenging the Agency’s jurisdiction to adjudicate the present matter through reference to the Agency’s Decision in Yehia v. Air Canada, Decision No. 185-C-A-2003.

[42] Mr. Lukács challenges this position by referring to the nature of the Agency as a regulatory quasi-judicial body and the clear intent of Parliament to establish a regulatory scheme for carriage by air rather than leave it to individuals to “battle” with air carriers. He asserts that this legislative intent is clearly set out in subsection 67.2(1) of the CTA which provides the Agency with powers to suspend, disallow or substitute a tariff provision that is unreasonable or unduly discriminatory which is independent from the Agency’s powers under section 67.1 of the CTA to enforce the tariffs. Mr. Lukács further argues that subsection 67.2(1) gives to the Agency the power to intervene before travel while section 67.1 allows the Agency to adjudicate a post facto complaint to enforce an air carrier’s tariffs.

[43] On this issue, Mr. Lukács concludes that Parliament chose to grant far broader powers to the Agency than superior courts would usually exercise, as courts will only enforce the tariffs and the Convention while the Agency has the power to disallow or substitute a tariff provision that fails to be just and reasonable as a measure directed at protecting the travelling public from unreasonable contractual terms.

[44] In respect of Yehia, Mr. Lukács argues that this case concerned a concrete complaint about the failure of the carrier to comply with its published tariffs and fell within the scope of section 113.1 of the ATR which is distinguishable from the case presently before the Agency which concerns the reasonableness of certain tariff provisions and thus falls under subsection 67.2(1) of the CTA. Mr. Lukács concludes that the Yehia case is irrelevant as the Agency, in this case, is looking at the issue of the reasonableness of Rule 37(B) within the meaning of subsection 67.2(1) of the CTA.

[45] On the issue of the relevance of Article 19 to the reasonableness of Rule 37(B), Mr. Lukács argues that Air Canada seems to suggest that tariff provisions that cause or are likely to cause damage to passengers and trigger statutory liability can be reasonable within the meaning of the CTA. Mr. Lukács disagrees with this position and refers to paragraphs 125-126 of the Agency’s Show Cause Decision with which he agrees whereby the Agency stated that Article 19 imposes on a carrier an obligation, namely, to transport a passenger as contracted without delay, failing which there will be a presumption of liability arising from any such delay. Mr. Lukács goes on to cite Canadian jurisprudence which he argues is consistent with the Agency’s findings.

[46] Mr. Lukács asserts that the principles of Article 19 do impose the legal obligation on Air Canada to take all “reasonable measures” necessary to avoid delay and damage to passengers and that alternatively, a tariff provision that permits a carrier to do less than taking “all reasonable measures” necessary to avoid damage to passengers is unreasonable because it would legitimize conduct that was intended to be sanctioned and discouraged by the drafters of the Convention.

[47] Mr. Lukács, in summary, states that the crux of the present case is whether Air Canada’s Rule 37(B) is reasonable and in particular whether the procedures that it describes is consistent with a carrier taking “all reasonable measures” necessary to avoid damage to its passengers, as prescribed by the principles of Article 19. Accordingly, the question of whether overbooking and cancellation constitute delay for the purpose of Article 19 of the Convention is relevant to the reasonableness of Rule 37(B).

Analysis and findings

[48] 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 37(B) of Air Canada’s domestic Tariff addresses the issue of passenger reprotection in situations of overbooking and cancellation. The two provisions are different in that 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, while Rule 37(B) specifically sets out the 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 a tariff has been properly applied, whether it is clear, reasonable or unduly 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 CTA. As Air Canada has pointed out by reference to Yehia, the Agency has acknowledged the limits of its jurisdiction to award compensation.

[49] However, although Article 19 and Rule 37(B) may have some differences in application, the sole issue before the Agency with respect to this particular complaint is the reasonableness of the impugned domestic Tariff provisions pursuant to subsection 67.2(1) of the CTA. As discussed in Preliminary Finding 1 above, as part of that analysis the Agency may consider the principles of the Convention as a factor to be taken into consideration when addressing the issue of reasonableness. It should be noted that past Agency decisions reflect 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 unreasonable; or, by referring to the principles of the Convention when considering the reasonableness of a tariff provision.

[50] Accordingly, it is the Agency’s opinion that Article 19 of the Convention and Rule 37(B) of Air Canada’s domestic Tariff do not exist in isolation of each other, but rather, the principles of the Convention, where appropriate, may inform a carrier’s terms and conditions of carriage in terms of considering the issue of reasonableness.

[51] The Agency is of the opinion that a consideration of the meaning to be given the term “delay” as found in Article 19 of the Convention is reasonable both in the domestic and the international context. Accordingly, 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 domestic Tariff.

[52] Air Canada distinguishes the present case from Agency decisions such as McCabe 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.

[53] In summary, the Agency is of the opinion that the principles set out in Article 19 of the Convention are relevant to a consideration of reasonableness pursuant to section 67.2 of the CTA. In particular, it is appropriate for the Agency to take into consideration, as a factor when assessing reasonableness, whether the procedures that Air Canada sets out are consistent with a carrier taking “all reasonable measures” necessary to avoid damages to the passenger.

Positions of the parties

Not all incidents of overbooking and cancellation cause delay and damages

[54] Air Canada points out that the Agency, at paragraph 58 of the Show Cause Decision, made the preliminary determination that overbooking and cancellation within a carrier’s control do not always constitute a delay and that such a determination must be done on a case-by-case basis. Air Canada refers to case law which has concluded that in certain circumstances, a situation of overbooking or cancellation constitutes non-performance of the contract and not delay.

[55] Air Canada refers to the case of Weiss v. El Al Airlines which Air Canada argues sets out that cases of overbooking which cause a passenger to be denied boarding constitutes non‑performance redressable under local law and therefore not a delay for which the exclusive remedy of the Convention applies.

[56] Air Canada states that a passenger could decide not to travel following an overbooking or cancellation, which, depending on the circumstances, could constitute non performance of the contract and thus the passenger’s claim would not be subject to the limits of liability imposed by the Convention.

[57] Air Canada further points to American legislation where no compensation is offered in a denied boarding situation where the passenger is offered alternate transportation that would allow them to arrive at their final destination or first stopover no later than 1 hour after the planned arrival time of the original flight which legislation is similar to provisions found in European Regulation [(EC) 261/2004].

[58] Air Canada refers to the Agency’s Show Cause Decision and the cases cited at paragraphs 58 to 70 to underline that national courts have not drawn a clear line between delay and non‑performance under contracts for air carriage. This, Air Canada argues, proves that not all cases of oversale or flight cancellation with a carrier’s control necessarily entail a delay or damages and that no general assumptions can be made as all cases must be assessed on a case-by-case basis, depending upon the facts at issue.

[59] Air Canada argues that should the Agency apply a presumption that overbooking and cancellation within Air Canada’s control constitute a delay and entail damages, the Agency would not only be effectively removing Canadian national courts jurisdiction from the determination of delay versus non-performance, the assessment of damages, and the consideration of carrier’s defence, but would be giving such decision-making powers to the airport agents via the application of the Agency’s circumstance-focussed approach. Air Canada asserts that this consideration ties into the reason why the drafters of the Convention made the conscious decision to not define “delay” in the Convention in order for it to be determined on a case-by-case basis by the relevant national court.

[60] Air Canada concludes that it would be inconsistent with the underlying principles of the Convention for the Agency to recognize that situations of oversale and cancellation, even, within Air Canada’s control, are presumed to be delay and cause damages under the Convention.

[61] Mr. Lukács points out that contrary to Air Canada’s submissions, the Agency never held that all overbookings and cancellations constitute a “delay” and fall within the scope of Article 19 of the Convention, but rather that the Convention creates a strong presumption in favour of delay and against non-performance which occurs only in limited and exceptional situations.

[62] Mr. Lukács argues that it is not the case, as asserted by Air Canada, that by creating a strong presumption in favour of delay and against non-performance, the Agency encroaches on the jurisdiction of courts to determine this question on a case-by-case basis as the presumption of a delay does not deprive a carrier from the ability to displace this presumption in an action for damages.

[63] Mr. Lukács further argues that the Agency correctly concluded that due to the intentions of the drafters to make the Convention pre-emptive, there is a strong presumption in favour of delay. Mr. Lukács asserts that as conceded by Air Canada, a tariff is intended to be of general application. Therefore the Agency correctly concluded that it would be unreasonable to permit a carrier to do less than taking all reasonable measures necessary to avoid damage to its passengers. Mr. Lukács summarizes that the essence of the Agency’s finding is that a carrier must take “all reasonable measures” necessary to avoid situations that, in most cases, would trigger statutory liability under the Convention.

[64] Mr. Lukács refers to Air Canada’s references to American and European legislation which do not require a carrier to pay a lump sum compensation to passengers in cases of short delays. Mr. Lukács states that the legislation does not pre-empt or exclude passengers’ rights of action under the Convention or other statutes or laws.

[65] Mr. Lukács concludes that the Agency in past decisions respecting both domestic and international itineraries that are not subject to the Convention has looked to the principles of the Convention for guidance in assessing whether a particular tariff provision was reasonable. Mr. Lukács concludes that for those few and exceptional cases where an overbooking or a cancellation does not fall within the scope of the Convention, the obligation of taking all reasonable measures necessary to avoid damage to passengers nevertheless applies to Air Canada.

Analysis and findings

[66] 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 72 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.

[67] 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 domestic 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 domestic Tariff provision should allow for this where appropriate.

[68] Air Canada also refers to American and European legislation where no compensation is offered in a denied boarding situation if the passenger arrives within an established time frame after their planned arrival time. The Agency acknowledges that  the time difference between actual arrival at a destination in situations of delay compared to the planned arrival time is a factor that Air Canada should take into account in determining what alternatives are made available to a passenger. The Agency’s circumstance-focussed approach provides for this.

[69] Contrary to Air Canada’s assertions that the Agency’s findings in its Show Cause Decision would effectively remove the jurisdiction of Canadian courts to determine the issue of delay versus non-performance, the Agency’s decision, to apply a case-by-case approach, in no way removes that potential court jurisdiction, nor any court jurisdiction over the assessment of damages and the consideration of a carrier’s defence. The Agency’s findings in the Show Cause Decision simply assess the reasonableness of Air Canada’s impugned domestic Tariff.

Conclusion

[70] The Agency has determined that overbooking and cancellation that are within the carrier’s control can be characterized as delay. Accordingly, the Agency is of the opinion that in considering the reasonableness of the impugned domestic Tariff provisions, reference may be had to the principles of Article 19 of the Convention which is a valid and relevant consideration.

PRELIMINARY FINDING 3: AIR CANADA’S TARIFF RULE 37(B)(2) 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. AIR CANADA’S TARIFF RULES 37(B)(1) AND 37(B)(2) ARE UNREASONABLE AS THEY LEAVE THE CHOICE OF OPTION FOR REPROTECTION SOLELY TO AIR CANADA.

(A) REPROTECTION ON CARRIERS WITH WHICH AIR CANADA HAS AN INTERLINE AGREEMENT

Show Cause Decision

[71] In the Show Cause Decision, the Agency stated that this complaint involves a consideration of the reasonableness of Air Canada’s domestic Tariff provisions on overbooking and cancellation. This involves the Agency considering these provisions pursuant to subsection 67.2(1) of the CTA, while also taking into account the principles of Article 19 of the Convention and ensuring that the domestic Tariff is consistent with those principles.

[72] The Agency found that Air Canada’s Rule 37(B) does not provide for the possibility that a passenger might, in the appropriate circumstances, be reprotected on the flight of any other carrier regardless of whether Air Canada has an interline agreement with that carrier. Instead, it provides a closed list of actions to be taken by Air Canada following overbooking and cancellation.

[73] After reviewing case law on Article 19 of the Convention, the Agency set forth a circumstance-focussed approach, as courts look to the particular circumstances of a situation to determine whether the carrier took all measures that could reasonably be required to avoid the damage caused by delay. The Agency was of the preliminary opinion that, in applying those principles in the domestic context, a circumstance-focussed approach is a reasonable approach to addressing overbooking and cancellation when a passenger’s circumstances are made known to Air Canada. For example, the time-sensitive nature of a passenger’s purpose of travel is a consideration in applying this approach.

[74] The Agency concluded that in applying the balancing test to evaluate the reasonableness of Rule 37(B)(2), it would be too restrictive to require Air Canada to reprotect passengers on the fastest available route in every case. However, the Agency was also of the preliminary view that as a result of Air Canada’s extensive network and mutual interline agreements, a provision that allows for, in appropriate circumstances, reprotection on the flight of a carrier with which Air Canada does not have an interline agreement, will have minimal impact operationally and commercially on Air Canada. The Agency stated that, in all likelihood, Air Canada’s network will address many situations of overbooking and flight cancellation within its control.

[75] The Agency, while noting Air Canada’s argument that interline agreements are an industry practice and that these agreements may simplify the rebooking process, indicated that an industry practice does not, in itself, mean that the practice is reasonable. The Agency stated that it is not concerned with the practice on flights of carriers with which an interline agreement exists but rather with those particular circumstances in which reprotection on the fastest available route may be a reasonable measure to avoid damage to passengers.

[76] The Agency also noted Air Canada’s argument that its On My Way program is an additional benefit to passengers who want to ensure that they have the opportunity to take advantage of transportation on any air carrier in a situation where there is a disruption in service both within and outside the control of the carrier. The Agency was of the view that this 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 above, namely that it is unreasonable to take the restrictive approach to reprotection as currently set out in Rule 37(B).

[77] The Agency directed Air Canada to show cause why its existing Tariff Rule 37(B)(2) should not be found unreasonable as per subsection 67.2(1) of the CTA.

Positions of the parties

[78] In its response, Air Canada states that it appreciates that the Agency has determined that it would be too restrictive and onerous to require Air Canada to reprotect all passengers subject to a delay because of overbooking or cancellation on the “fastest available route”.

[79] However, Air Canada submits that Tariff Rule 37(B)(2) is reasonable as drafted, even though it does not call for passenger reprotection, in certain circumstances, on the “fastest available route”.

[80] Air Canada rejects the Agency’s opinion on this issue for three reasons: (1) Article 19 of the Convention does not impose an obligation on carriers to reprotect on the fastest available route in certain circumstances; (2) the reprotection mechanism set out in Rule 37(B)(2) is clear and collectively applicable; and (3), Rule 37(B)(2) is reasonable considering Air Canada’s operations and commercial obligations.

1. Article 19 of the Convention does not impose an obligation on carriers to reroute passengers, in certain circumstances, on the fastest available route where a delay occurs.

[81] Air Canada submits that the “all reasonable measures” defense in Article 19 of the Convention should not be read as a positive obligation imposed on carriers to reprotect passengers on the “fastest available route”. Article 19 of the Convention addresses liability for carriers in an action for damages in case of delay. It creates a presumption of liability to facilitate passenger claims, while capping the carrier’s liability.

[82] 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. Air Canada therefore claims that the Agency should not impose on Air Canada an obligation to mitigate liability before damage occurs, as the issue of mitigation is solely a defense that can be used on a case-by-case basis.

[83] Air Canada argues that should the Agency transform the necessary measures defense of Article 19 into a positive obligation to reprotect, in certain circumstances, on the “fastest available route”, such an obligation would be restricted to Air Canada or, at best, carriers subject to the Agency’s jurisdiction.

Analysis and findings

[84] Unlike a civil court, the Agency has a mandate to consider the impugned domestic Tariff provisions in the context of the Agency’s enabling legislation which, in the context of this complaint, requires a consideration of the reasonableness of the subject domestic Tariff provisions which might be quite different from a civil court’s consideration of a case. As has been discussed above, 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 by courts in evaluating damage claims.

2. The reprotection mechanism set out in Rule 37(B)(2) is clear and collectively applicable

Positions of the parties

[85] 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 passenger2. 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.

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

[87] 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.

[88] 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

[89] 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 luggage. While he requested that his bicycle receive treatment like any other checked luggage, the Agency found it was reasonable for Air Canada to apply its bicycle policy to all bicycles.

[90] 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.

[91] In this case, Tariff Rule 37(B) is not dealing with a single rule applicable to a class of objects, as was the case in Alter. Rather, Rule 37(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.

[92] Air Canada states that its agents exercise particular duties and responsibilities in the event of overbooking and cancellation, including how to adequately reprotect a passenger. The domestic 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.

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

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

Positions of the parties

[94] In response to the Show Cause Decision, Air Canada first makes general comments respecting the reasonableness of its domestic Tariff provision. It then goes on to raise three arguments to be considered in the balancing exercise, in favour of the reasonableness of its domestic 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 37(B)(2)

[95] Air Canada cites the cases of Wasserman v. Air Transat, Decision No. 681-C-A-2004 and Primeau v. Air Canada, Decision No. 171-C-A-2007, and argues that the Agency determined in those cases that provisions similar to Air Canada’s Tariff Rule 37(B) are reasonable.

[96] Mr. Lukács argues that industry standards have changed since the issuing of Wasserman.

Analysis and findings

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

[98] 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 from what is now before the Agency. In that case, 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 requires Air Transat to offer alternate flights or to provide a refund, is reasonable. The current case goes to the nature of the offered alternate flight and refund.

[99] 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.

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

[101] 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.3 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 governs4

[102] Finally, Air Canada argues that the cases 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 v. Air Canada, 2010 QCCQ 6858, 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.

[103] 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.

[104] The principle emerging from the case of Mohammad is that courts have looked 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.

[105] 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, and to its analysis of whether Rule 37(B)(2) is reasonable and consistent with the principles of the Convention.

(b) Reasonableness: the balancing test

(i)  The extensiveness of Air Canada’s domestic network
Positions of the parties

[106] In response to the Show Cause Decision, Air Canada submits that the reprotection mechanism currently offered is extensive within its domestic flight network primarily due to the sheer number of frequencies with which Air Canada operates domestic routes.

[107] Air Canada submits that where a passenger is denied boarding or where their flight is cancelled for reasons within Air Canada’s control, they will likely be placed on a subsequent Air Canada flight and arrive at their destination within a few hours of their originally scheduled arrival time. In support of this submission, Air Canada provides statistics and projections respecting operations on its domestic routes indicating that it has more than the majority of the total domestic market capacity.

[108] Air Canada concludes that its wide-reaching network renders the reprotection mechanism set out in Rule 37(B) reasonable as a passenger will be minimally impacted should overbooking or cancellation occur.

Analysis and findings

[109] The Agency accepts that Air Canada’s submissions reveal the extensiveness of its domestic flight network. 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 domestic Tariff.

[110] The Agency notes that despite providing numerous examples of reprotection options for domestic 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.

(ii) The commercial and competitive disadvantages for Air Canada
Positions of the parties

[111] Air Canada submits that the widespread practice of interlining is a key factor in determining the reasonableness of the practice. According to Air Canada, using an example of a last minute ticket purchase from Montréal to Val D’Or, 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.

[112] Air Canada argues that imposing an obligation to reprotect on another carrier would require that contractual negotiations ensue with domestic carriers. Air Canada maintains that it would have very little negotiation leeway, and that it is important for Air Canada to have discretion to select partners while considering safety and security standards, as well as the commercial viability of domestic partners.

[113] Air Canada therefore rejects the Agency’s preliminary position that reprotection on a non-interline carrier will entail minimal impact operationally and commercially. Air Canada argues that it invests significant amounts to avoid cancellations within its control and to attenuate the effect of an oversold flight. With respect to overbooking and cancellation, Air Canada has teams that review oversold flights in advance to find solutions for customers, and implements a gold standard aircraft maintenance program. Given the significant amounts of money Air Canada dedicates to prevent passenger inconvenience in cases of overbooking and cancellation, Air Canada maintains that it would be unreasonable to also require it to purchase full fare tickets on its competitors.

[114] As a subsidiary point, Air Canada insists that to maintain a level playing field with other carriers in the Canadian market, the requirement to reprotect on any carrier in certain circumstances should not be imposed on Air Canada alone. Air Canada argues that forcing a carrier to offer its competitor’s product is out of sync with commercial realities and that no other industry would be required to do so. Accordingly, Air Canada argues that all carriers in the domestic market should be required to reprotect on any carrier if the Agency orders Air Canada to do so.

[115] Mr. Lukács argues that the size of Air Canada’s network is irrelevant in determining whether it is reasonable for Air Canada to exclude reprotecting passengers on other carriers with which it does not have an interline agreement in certain circumstances. He argues that the size of Air Canada’s network does not help passengers experiencing overbooking or cancellation on the last Air Canada flight on a given day who could be reprotected on another carrier’s flight that day. It also does not help passengers who experience overbooking or cancellation during peak seasons, when most flights are fully booked. These situations, according to Mr. Lukács, are precisely the ones in which Air Canada should not be allowed to exclude the possibility of reprotection on another, non-interline carrier.

[116] 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 domestic 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.

[117] Mr. Lukács argues that requiring Air Canada to purchase seats at fair market value would only require Air Canada to spend as much as the actual damage that its overselling or cancellation has caused to the travelling public.

[118] 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.

[119] 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

[120] 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 37(B).

[121] The Agency reiterates its finding in the Show Cause Decision that the existence of an industry practice does not, in itself, ensure that a tariff provision will be found reasonable.

[122] Air Canada has provided a single example of how its interline settlement system would allow it to save significant sums of money on a last minute ticket between Montréal and Val d’Or. The Agency considers that this example alone is not sufficient to displace the Agency’s preliminary finding that a circumstance-focussed approach may require Air Canada to consider, in certain circumstances, reprotecting passengers on a carrier with which it does not have an interline agreement.

[123] As set out above, Air Canada contends that its domestic network is extensive and dominates the Canadian market. It also argues that it invests significant amounts of money and energy towards preventing or mitigating the impact of overbooking and cancellation. The Agency finds that together, these arguments would limit the commercial impact of allowing for the reprotection of passengers, in certain circumstances, on non-interline carriers.

[124] Air Canada has also 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.

[125] Accordingly, the Agency considers that, in practice, the commercial impact of implementing a circumstance-focussed approach in Air Canada’s domestic Tariff would be limited, given the extensiveness of its domestic network and the preventive and mitigating measures it has put in place respecting overbooking and cancellation. By extension, the competitive disadvantage suffered by Air Canada, if any, would be minimal.

(iii) The operational disadvantages to passengers
Positions of the parties

[126] 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.

[127] Air Canada argues that if it were required to reprotect on non-interline carriers in certain circumstances, Air Canada’s systems would not be able to “talk” to competitor carrier’s systems. According to Air Canada, this would entail consumer irritation. Air Canada states that in such circumstances, a passenger’s booking might not go through or the passenger might experience another overbooking situation.

[128] Air Canada further points out that its airport agents do not have the capacity to contract with or purchase tickets on other carriers with which it does not have an interline agreement. In fact, Air Canada points out that agents only handle small amounts of cash and they do not carry credit cards for which such purchases could be made. Air Canada adds that its airport agents would have to do an on-the-spot determination of a passenger’s urgency to travel.

[129] Air Canada submits that reprotection on Air Canada or Jazz flights allows for the orderly transfer of checked luggage, and for a tracking system when baggage gets delayed. With respect to the matter of interlining, Air Canada asserts that interline agreements include provisions that allow Air Canada to directly book a passenger on Air Canada’s interline partner’s flight. Air Canada adds that these agreements allow for the settlement of revenue though a set-up mechanism, so that a ticket can be issued without immediate concern over payment methods and transfer of funds.

[130] Mr. Lukács does not find Air Canada’s submissions on the capacity of its airport agents to contract with or purchase tickets on non-interline carriers to be credible. He argues that WestJet and Air Transat have agreed to amend their tariffs to allow for such a reprotection mechanism. He further claims 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

[131] 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.

[132] What is more, the Agency repeats that the principle as set out in Article 19 of the Convention is that a carrier must take reasonable measures to avoid damage caused by delay. It is not in all circumstances that reprotection on the fastest available route will be considered reasonable. 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 the Convention.

Conclusion on whether it is reasonable for Tariff Rules 37(B)(1) and 37(B)(2) to provide for reprotection on Air Canada’s own aircraft or with other carriers with which it has an interline agreement

[133] 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 the principles of the Convention, the Agency considers that it is unreasonable for Air Canada to outright preclude this possibility in its domestic Tariff.

[134] The Agency has determined that Air Canada has not shown cause as to why Tariff Rule 37(B)(2) should not be found unreasonable as per subsection 67.2(1) of the CTA 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 Tariff Rule 37(B)(2) is unreasonable.

(B)  THE  CHOICE OF OPTION FOR REPROTECTION OF PASSENGERS

Show Cause Decision

[135] The Agency was of the preliminary opinion that in applying the circumstance-focussed approach, Tariff Rule 37(B) was unreasonable, as a passenger must have some discretion to choose between the options of taking a seat on an Air Canada flight or that of another carrier. Otherwise, the Agency found that Air Canada would have sole discretion to choose or reject the option of reprotecting a passenger on the timeliest flight for that passenger.

[136] The Agency stated that this preliminary finding was intended to give effect to its preliminary finding under heading (A), namely that it is unreasonable for Air Canada to limit itself to finding a seat on the flight of a carrier with which it has an interline agreement.

Positions of the parties

[137] Air Canada reiterates submissions pre-dating the Show Cause Decision to the effect that it has systems in place to avoid passenger inconvenience in the case of oversale. It maintains that under Tariff Rules 37(B)(1) and 37(B)(2), as currently drafted, both reprotection options remain available to passengers, without the need for Air Canada to determine the urgency of a passenger’s travel plans. Air Canada asserts that Tariff Rule 37(B) is designed to allow Air Canada to be attentive to its passengers’ needs, and that Air Canada works with passengers on a case-by-case basis in an effort to find a solution which adequately responds to those needs. Air Canada states that the reprotection option exercised by Air Canada is adapted to each customer upon request. Air Canada therefore maintains that the tariff provision is reasonable.

Analysis and findings

[138] The Agency finds that in response to the Show Cause Decision, Air Canada has not provided new evidence to support the reasonableness of Air Canada retaining the choice of option as to whether it will reprotect passengers on its own flights or those of another carrier. In fact, Air Canada states that in practice, it will work with customers on a case-by-case basis to find a solution that responds to the passengers’ needs. This suggests that passengers have some say in which reprotection option will be pursued.

[139] However, Rule 37(B)(1) and 37(B)(2) currently state that it is Air Canada that will either find the passenger a seat on another Air Canada flight or, at Air Canada’s option, reprotect the passenger on an interline carrier. These provisions do not indicate that the passenger has any discretion or say in determining which reprotection option would be preferable to them.

Conclusion on whether it is reasonable for Air Canada to retain the choice of option for reprotection under Tariff Rules 37(B)(1) and 37(B)(2)

[140] The Agency finds that it is unreasonable for Air Canada’s domestic Tariff to give sole discretion to Air Canada to determine what may be best for the passenger in respect of this particular matter and,  applying the circumstance-focussed approach, that the passenger should be able to exercise his or her discretion to choose between the options available under Tariff Rules 37(B)(1) and 37(B)(2).

PRELIMINARY FINDING 4: AIR CANADA’S TARIFF RULES 37(B)(3), 240(C)(1) AND 260 ARE UNREASONABLE AS THEY ONLY CALL FOR A REFUND OF THE UNUSED PORTION OF A TICKET.

(A) REFUNDING THE UNUSED PORTION OF A TICKET

Show Cause Decision

[141] 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.

[142] The Agency noted Air Canada’s argument that it would be at a significant commercial and operational disadvantage compared with its competitors if it were required to provide full refunds on domestic routes. However, the Agency stated that Air Canada offered no evidence of this significant commercial and operational disadvantage.

[143] The Agency also indicated that Air Canada had 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.

[144] The Agency  asked Air Canada to show cause why those parts of Air Canada’s domestic Tariff that allow for a refund of the unused portion of a passenger’s ticket only should not be found unreasonable as per subsection 67.2(1) of the CTA.

Positions of the parties

[145] In response to the Show Cause Decision, 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.

[146] Air Canada adds that refunding the unused portion of a ticket is a widespread 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.

[147] 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 Halifax 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 one percent of refund requests.

[148] Air Canada goes on to argue that it cannot modify its domestic Tariff to address situations that would apply in such limited circumstances, and which depend on a case-by-case analysis and require consideration of the complexity of the passenger’s itinerary. 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.

[149] 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.

[150] 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.

[151] 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.

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

[153] Mr. Lukács further argues that incorporating this practice into its Air Canada’s domestic 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 domestic Tariff.

[154] 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.

[155] 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

[156] 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.

[157] 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.

[158] 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.

[159] 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 Halifax 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 travelled by a passenger that do serve some purpose for the passenger’s original travel plans should not be refunded.

[160] 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 one percent of refund requests. As such, Air Canada argues that it should not be made to modify its domestic 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.

[161] 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 the case where a flight is interrupted and the passenger chooses to return to their point of origin. Nevertheless, Air Canada’s domestic Tariff does not reflect this practice. The Agency notes that pursuant to section 67.1 of the CTA, 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 refunding practice, this must be reflected in its domestic Tariff. Furthermore, the Agency is of the opinion that Air Canada has not shown why this practice could not be clearly expressed in its domestic Tariff.

[162] The Agency finds that Air Canada has provided no evidence to support its claim that it would be at a competitive disadvantage if Air Canada was required 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 one percent of refund requests. In addition, 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 202 of the Show Cause Decision. Accordingly, the Agency has determined that Air Canada has not shown that stating this in its domestic Tariff would put it at a significant competitive disadvantage relative to its competitors.

Conclusion

[163] The Agency has determined that those parts of Air Canada’s existing Tariff Rules 37(B)(3), 240(C)(1) and 260 that provide for only a refund of the unused portion of a passenger’s ticket are unreasonable as per subsection 67.2(1) of the CTA.

(B) THE PASSENGER’S CHOICE OF OPTION TO OBTAIN A REFUND

Show Cause Decision

[164] In the Show Cause Decision, the Agency was of the preliminary opinion that by retaining some discretion over the selection of the choice of option in its domestic Tariff, Air Canada would retain some 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 expressed the preliminary opinion 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 had 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.

[165] Air Canada’s Tariff Rule 37(B)(3) 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, the Rule indicates that either Air Canada can choose to provide a refund, or the passenger may request it. A similar provision is found at Tariff Rule 240(C)(1) with respect to schedule irregularities, except that in that case, Rule 240(C)(1)(d) indicates that Air Canada will refund the unused ticket or portions thereof in the event Air Canada is unable to arrange alternate transportation acceptable to the passenger.

[166] The Agency directed Air Canada to show cause why those parts of Air Canada’s existing domestic Tariff Rules that leave with Air Canada the choice of option for compensation dealing with an overbooking or cancellation situation should not be found unreasonable as per subsection 67.2(1) of the CTA.

Positions of the parties

[167] In response to the Show Cause Decision, Air Canada proposes to amend its Tariff Rules 37(B)(2) and (3) to delete any reference to its discretion with respect to refunds. In other words, the choice to obtain a refund would remain within the sole discretion of the passenger. Air Canada also proposes to amend Tariff Rule 37(B) to provide that nothing in that Rule “shall limit or reduce the passenger’s right, if any, to claim damages”.

[168] Mr. Lukács submits that he agrees with the  findings on this issue, and that while he opposes the existing and proposed forms of Tariff Rule 37(B) for other reasons, he is in agreement with Air Canada’s proposed deletion of the provision under which Air Canada retains the discretion to provide a refund.

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

Analysis and findings

[170] The Agency takes note of Air Canada’s proposal to amend Tariff Rule 37(B) in order to give the passenger sole discretion to choose to obtain a refund and that Mr. Lukács has agreed to this proposal.

[171] However, the Agency notes that Air Canada has made no similar proposal with respect to Tariff Rule 240(C)(1)(d).

Conclusion

[172] Accordingly, as Air Canada has provided no arguments in favour of the reasonableness of its domestic Tariff, the Agency has determined that Tariff Rules 37(B)(3) and 240(C)(1)(d), as currently drafted, are unreasonable for failing to give the passenger sole discretion to choose to obtain a refund.

[173] The Agency has also determined that Air Canada’s proposal to leave the choice of option with the passenger in Rule 37(B)(2) and (3) is reasonable. The Agency is also of the opinion that Air Canada must make a similar change to Tariff Rule 240(C)(1)(d).

PRELIMINARY FINDING 5: AIR CANADA’S EXISTING TARIFF RULE 37(B) IS UNREASONABLE AS IT DOES NOT STATE THAT PASSENGERS HAVE RIGHTS AND REMEDIES OUTSIDE THOSE NAMED IN THE DOMESTIC TARIFF AND  EXISTING TARIFF RULES 135(E) AND 240(B)(9) ARE UNREASONABLE AS THEY REFER TO A SOLE REMEDY AVAILABLE TO PASSENGERS.

Show Cause Decision

[174] The Agency was of the preliminary opinion that Rule 37(B) of Air Canada’s domestic Tariff is unreasonable for failing to accurately and fully set out a passenger’s right to seek further compensation and other remedies against carriers.

[175] The Agency was also of the preliminary opinion that the “sole remedy” provisions contained in Rules 135(E) and 240(B)(9) are unreasonable.

[176] 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 the domestic Tariff and without having recourse to external texts or legal principles. In addition, the Agency stated that the impugned domestic Tariff does not acknowledge that other types of damages might arise from schedule irregularities and overbooking.

[177] The Agency considered Air Canada’s Tariff Rules 37(B), 135(E) and 240(B)(9) taking into account the principles set out  in the Show Cause Decision.

Positions of the parties

[178] Air Canada, in its response to the Show Cause Decision and to “reflect the concerns of the Agency”, proposed revised wording for its domestic Tariff Rules 37(B), 135(E) and 240(B)(9). Air Canada filed revised wording in response to Preliminary Finding 5.

[179] With respect to Rule 37(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 above shall limit or reduce the passenger’s right, if any, to claim damages”.

[180] Mr. Lukács submits that, while he opposes the existing and proposed form of Rule 37(B) for previously stated reasons, he agrees with Air Canada’s addition to the proposed domestic Tariff revision.

Analysis and findings

[181] The Agency finds that the added wording as proposed by Air Canada is reasonable as it indicates to a passenger that they have rights and remedies at law beyond those contained in Tariff Rule 37(B).

[182] Air Canada also proposes to revise Tariff Rules 135(E) and 240(B)(9) by eliminating the wording referring to the “passenger’s sole remedy”.

[183] Mr. Lukács submits that he agrees with the changes proposed by Air Canada to Rules 135(E) and 240(B)(9).

[184] However, the Agency considers that the proposed changes to Rules 135(E) and 240(B)(9), much like Air Canada’s proposed changes to Rule 37(B), still fail to inform passengers that they may have rights under the law.

[185] Further, the Agency, in the Show Cause Decision, was of the preliminary opinion that the domestic Tariff provision which does not acknowledge that other types of damages might arise from schedule irregularities and overbooking is inconsistent with the principles contained in Article 19 of the Convention and not reasonable.

[186] This revised domestic 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 but a passenger would still likely not know that other rights or recourses are available to them.

[187] Accordingly, the Agency, with respect to this issue, continues to be of the opinion that the changes proposed by Air Canada to Rules 135(E) and 240(B)(9) are unreasonable.

Conclusion

[188] The Agency has determined that Air Canada’s proposed revisions to Tariff Rule 37(B) are reasonable.

[189] With respect to Tariff Rules 135(E) and 240(B)(9) the Agency has determined that the proposed revisions are unreasonable as they fail to inform passengers that they may have rights under the law.

SUMMARY OF CONCLUSIONS

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

With respect to Preliminary Finding 1: the principles of Article 19 of the Convention  are equally applicable to domestic carriage.

The Agency concludes that the principles of Article 19 of the Convention are equally applicable to domestic carriage.

With respect to Preliminary Finding 2: overbooking and cancellation constitute delay for the purpose of Article 19 of the Convention.

The Agency has determined that overbooking and cancellation that are within the carrier’s control can be characterized as delay. Accordingly, the Agency is of the opinion that in considering the reasonableness of the impugned domestic Tariff provisions, reference may be had to the principles of Article 19 of the Convention which is a valid and relevant consideration.

With respect to Preliminary Finding 3: Air Canada’s Tariff Rule 37(B)(2) 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. Air Canada’s Tariff Rules 37(B)(1) and 37(B)(2) are unreasonable as they leave the choice of option for reprotection solely to Air Canada.

(A) reprotection on carriers with which Air Canada has an interline agreement

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 the principles of the Convention, the Agency considers that it is unreasonable for Air Canada to outright preclude this possibility in its domestic Tariff.

The Agency has determined that Air Canada has not shown cause as to why Tariff Rule 37(B)(2) should not be found unreasonable as per subsection 67.2(1) of the CTA for being too restrictive in dealing with issues of overbooking and cancellation and be drafted in a manner that allows for reprotection, in certain circumstances, on carriers with which there is no interline agreement. The Agency therefore finds that Tariff Rule 37(B)(2) is unreasonable.

(B)  the choice of option for reprotection of passengers

The Agency finds that it is unreasonable for Air Canada’s domestic Tariff to give sole discretion to Air Canada to determine what may be best for the passenger in respect of this particular matter and,  applying the circumstance-focussed approach, that the passenger should be able to exercise his or her discretion to choose between the options available under Tariff Rules 37(B)(1) and 37(B)(2).

With respect to Preliminary Finding 4: Air Canada’s Tariff Rules 37(B)(3), 240(C)(1) and 260 are unreasonable as they only call for a refund of the unused portion of a ticket.

(A)  refunding the unused portion of a ticket

The Agency has determined that Air Canada’s existing Tariff Rules 37(B)(3), 240(C)(1) and 260 that provide for only a refund of the unused portion of a passenger’s ticket are unreasonable as per subsection 67.2(1) of the CTA.

(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 domestic Tariff, the Agency has determined that Tariff Rules 37(B)(3) and 240(C)(1)(d), as currently drafted, are 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 in Rule 37(B)(2) and (3) is reasonable. The Agency directs Air Canada to make a similar change to Tariff Rule 240(C)(1)(d).

With respect to Preliminary Finding 5: Air Canada’s existing Tariff Rule 37(B) is unreasonable as it does not state that passengers have rights and remedies outside those named in the domestic Tariff and existing Tariff Rules 135(E) and 240(B)(9) are unreasonable as they refer to a sole remedy available to passengers.

The Agency has determined that Air Canada’s proposed added wording to Tariff Rule 37(B) is reasonable.

With respect to Tariff Rules 135(E) and 240(B)(9) the Agency has determined that the proposed revisions are unreasonable as they fail to inform passengers that they may have rights under the law.

ORDER

[191] In this Decision, the Agency has made findings based on the parties’ submissions concerning the reasonableness of domestic Tariff Rules 37(B), 135(E), 240(B)(9), 240(C)(1)(d) and 260. The Agency disallows these Tariff Rules pursuant to subsection 67.2(1) of the CTA.

[192] The Agency orders Air Canada, within 45 days from the date of this Decision, to amend existing Tariff Rules 37(B), 135(E), 240(B)(9), 240(C)(1)(d) and 260 and, in amending those domestic Tariff Rules, Air Canada is to conform to the findings set out in this Decision and to publish its amended domestic Tariff.

[193] In making amendments to its domestic 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 tariff.

[194] 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. 251-C-A-2012

Air Canada - Canadian Domestic General Rules Tariff No. CDGR-1

Rule 37 - AC ADDITIONAL SERVICE STANDARD COMMITMENTS

Rules 240, 245, and 250 shall be interpreted in accordance with the principles set out below, and adjusted in accordance thereto.

  1. Given that passengers have a right to information on flight times and schedule changes, Air Canada will make reasonable efforts to inform passengers of delays and schedule changes and to the extent possible, the reason for the delay or change.
  2. Given that passenger 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 set 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 if Air Canada is unable to perform the option stated in (1) or (2) above within a reasonable amount of time
    3. refund the unused portion of the passenger’s ticket.
  3. Given that passengers have a right to punctuality, Air Canada undertakes to do the following:
    1. If a flight is delayed and the delay between the scheduled departure of the flight and the actual departure of the flight exceeds 4 hours, Air Canada will provided the passenger with a meal voucher.
    2. If a flight is delayed by more than 8 hours and the delay involves an overnight stay, Air Canada will pay for overnight hotel stay and airport transfers for passenger, who did not start their travel at that airport.
    3. If the passenger is already on the aircraft when a delay occurs, Air Canada will offer drinks and snacks if it is safe, practical and timely to do so.  If the delay exceeds 90 minutes and circumstances permit, Air Canada will offer passengers the option of disembarking from the aircraft until it is time to depart.
  4. Given that passengers have a right to retrieve their luggage quickly, if the luggage does not arrive on the same flight as the passenger, Air Canada will take steps to deliver the luggage to the passenger’s residence/hotel as soon as possible.  Air Canada will take steps to inform the passenger on the status of the luggage and will provide the passenger with an over-night kit as required.  Compensation will be provided as per the provisions of this tariff.
  5. Given that nothing in this present tariff would make Air Canada responsible for acts of nature or the acts of third parties, the principles set out in this rule cannot have the effect of holding Air Canada responsible for inclement weather or the actions of third parties such as acts of government or air traffic control, airport authorities, security agencies, law enforcement or Customs and Immigration officials.

Rule 135 - AC CANCELLATION OF RESERVATIONS

(E) In the even carrier is a codeshare carrier and the operating carrier cancels a flight, is unable to provide previously confirmed space, causes a passenger to miss a connecting flight on which he holds a reservation, carrier will as the passengers 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 class of service; or at carrier’s option
  2. endorse to another carrier or transportation service, the unused portion of the ticket for purposes of re-routing; 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 air 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 260 (Refunds, Involuntary), carrier will require no additional payment from the passenger but will refund the difference if it is lower.
  4. At passenger’s option or if carrier is unable to perform the option stated in (1), (2) or (3) above within a reasonable amount of time, make involuntary refund in accordance with Rule 260 (Refunds, Involuntary).

Rule 240 - AC FAILURE TO OPERATE ON SCHEDULE OR FAILURE TO CARRY

Definitions

(B)(9) In the event carrier is a codeshare carrier and the operating carrier 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 or 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 or removed in accordance with Rule 35 (Refusal to Transport) 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 transportation service, the unused portion of the ticket for purposes of re-routing; 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 air 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 260 (Refunds, Involuntary), carrier will require no additional payment from the passenger but will refund the difference if it is lower; or at passenger’s option or if carrier is unable to perform the option stated in (a) or (b) above within a reasonable amount of time;
  4. Make involuntary refund in accordance with Rule 260 (Refunds, Involuntary).
Schedule Irregularity

(C)(1) When a passenger will be delayed due to a schedule irregularity involving an AC flight, or the invocation of the provisions of Rule 35 (Refusal to Transport-paragraphs (1)(A), (B), (E)(ii), (H)(ii), (iii) & (iv), (J), (K) and (M) and/or Rule 135 (CANCELLATION OF RESERVATIONS – paragraph (A) with the exception of labour disturbances and/or strikes;

(a) AC will transport the passenger without stopover on its next available flight and in the same class of service as his original flight.

EXCEPTION 1:A passenger holding an Executive (J cabin) or full Economy (Y cabin) fare ticket may be upgraded, at no additional cost, to Executive (J cabin) class on the first available flight.

EXCEPTION 2:A passenger holding a discount type ticket will be upgraded to the next higher class of service, at no additional cost, only if the flight provides an earlier arrival at his destination, stopover or transfer point than the next flight on which space is available in the original class of service.

(b) If AC is unable to provide reasonable alternate air transportation on its own services, AC will, at its option but, subject to the passenger’s concurrence, try to arrange transportation on the services of another air carrier or combination of air carriers with which AC has agreements for such transportation.  In such cases, the passenger will be transported without stopover and at no additional cost to himself, in the same class of service as applied to his original outbound flight on AC.

(c) In the event space on AC is only available and used in a lower class of service than applied to the passenger’s original flight(s), the difference in fares will be refunded in accordance with Rule 260 (REFUNDS-INVOLUNTARY).

(d) At passenger’s option or in the event AC is unable to arrange alternate air transportation acceptable to the passenger, AC will refund the unused ticket or portions thereof in accordance with Rule 260 (REFUNDS-INVOLUNTARY).

(D) Schedule Change In the event an AC schedule change requires the rerouting of a ticketed passenger, AC will:

(3) at the request of the passenger, refund the ticket or unused coupon(s) in accordance with Rule 260 (REFUNDS - INVOLUNTARY).

RULE 260 - AC REFUNDS – INVOLUNTARY

(A) The amount AC will refund to the original form of payment upon surrender of the unused portion of the passenger’s ticket, pursuant to Rule 35 (Refusal to Transport), subject to any restrictions contained in applicable fare rules, Rule 50 (Acceptance of Children) or Rule 240 (Failure to Operate on Schedule or Failure to Carry, will be:

(1) If no portion of the ticket has been used, AC will refund an amount equal to the fare and charges paid applicable to the ticket issued to passenger.  The amount of the refund shall not be greater than the amount paid for the ticket.

(2) If no portion of the ticket has been used:

(a) One-way fares-an amount equal to the lowest comparable one way selling fare applicable to the booking class(es) on the ticket from the point of termination to the destination named on the ticket or the point from which transportation is to be resumed;

NOTE: Point of Termination shall also include any ticketed point at which AC is unable to provide service.

(b) Round, circle and open jaw trip fares – an amount equal to 50% of the round trip fare, calculated at the same level of discount used for the original fare(s) on the ticket, from the point of termination to the destination or the point from which transportation is to be resumed; via,

(i) the routing specified on the ticket, if the point of termination was part of that routing; or,

(ii) the direct routing of any carrier operating between the point of termination and the destination named on the ticket or the point from which transportation is to be resumed, if the point of termination was not part of the original routing.

(c) If no fare of the type paid is published between the point of termination and the destination or the point from which transportation is to be resumed, the refund shall be the same proportion of the normal Economy (Y cabin) fare published between the point of termination and destination or the point from which transportation is to be resumed, as was applicable to the original fare.

(d)Cancellation Penalties:  In the event of the death see Rule 272.

NOTE: For the purpose of this rule, immediate family shall be defined as: spouse, parents, children (including adopted), brothers, sisters, daughters and sons-in-law, mothers and fathers-in-law, grandparents and grandchildren.

(B) Substitution of Aircraft

When a substitution of aircraft results in the necessity to accommodate a passenger holding (X) or Executive (J cabin) class ticketed reservations in other than the applicable compartment, the refund shall be the difference, if any, between:

(1) the amount equal to the involuntary refund value calculated in accordance with (A) above, and,

(2) (i) the applicable Executive (J cabin) or Economy (Y cabin) class fare between the point of termination and the destination named on the ticket or the point from which transportation is to be resumed provided the carrier operated the affected sector(s) or,

(ii) 75% of the lowest direct one way (X) or “Business” (J cabin) class published fares where the carrier does not operate the affected sectors.

 EXCEPTION: No refund will be made when the amount calculated in (2) above exceeds the amount calculated in (1) above.


  1. Lukács v. WestJet, Decision No. 418-C-A-2011
  2. 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.
  3. [1990] 1 S.C.R. 282 at 333.
  4. Administrative Law in Canada, 5th Edition LexisNexis Butterworths 2011 at 103 and 139-141.

Member(s)

J. Mark MacKeigan
John Scott
Date modified: