Decision No. 320-A-2013

August 20, 2013

APPLICATION by British Airways Plc carrying on business as British Airways for a review of a warning of alleged violation of subsections 135.8(2), 135.8(3) and section 135.91 of the Air Transportation Regulations, SOR/88-58, as amended.

File No.: 
L4352/13-03152

INTRODUCTION

[1] British Airways Plc carrying on business as British Airways (British Airways) is licensed to operate a non-scheduled international service to transport traffic between the United Kingdom and Canada. British Airways is also licensed to operate a scheduled international service between member states of the European Community and Canada in accordance with the Agreement on Air Transport between Canada and the European Community and its Member States signed on December 18, 2009.

[2] In 2012, amendments to the Air Transportation Regulations (ATR) came into effect which govern the regulation of air services price advertising. These provisions are set out in Part V.1 of the ATR.

[3] A compliance verification was conducted on April 8, 2013 by an enforcement officer designated by the Canadian Transportation Agency (Agency), pursuant to paragraph 178(1)(a) of the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA). The designated enforcement officer (DEO) found that British Airways contravened subsections 135.8(2), 135.8(3) and section 135.91 of the ATR with respect to its online booking system found at www.britishairways.com (Canadian edition).

[4] In particular, the DEO found that the headings used by British Airways on its online booking system are not in compliance with subsections 135.8(2) and (3) of the ATR. In addition, the DEO found that an amount for fuel surcharges on British Airways’ online booking system is set out as if it were a third party charge contrary to section 135.91 of the ATR.

[5] Accordingly, on April 10, 2013, the DEO issued a formal warning that British Airways had contravened subsections 135.8(2), 135.8(3) and section 135.91 of the ATR.

[6] On May 10, 2013, British Airways filed an application for a review of the warning. On June 10, 2013, the DEO filed comments on British Airways’ request for review. On June 20, 2013, British Airways filed a reply to the DEO’s comments.

PRELIMINARY MATTER

[7] In its application for review of the warning of alleged violation, British Airways has also requested an exemption pursuant to section 80 of the CTA from the application of subsections 135.8(2), 135.8(3) and section 135.91 of the ATR. The application for an exemption from various provisions of the ATR has been assigned to a separate panel of the Agency and will not be dealt with in this Decision.

ISSUE

[8] Was the warning of alleged violations of subsections 135.8(2), 135.8(3) and section 135.91 of the ATR warranted?

POSITIONS OF THE PARTIES

Position of British Airways

[9] British Airways submits that its online booking system (Canadian edition) sets out a breakdown of charges, accessible at various points, that is entitled “Taxes, fees and carrier charges” with a further breakdown into two categories, “Government, authority and airport charges” and “European fuel surcharge/US carrier charges.”

[10] British Airways points out that the “third party charges” are set out on the British Airways online booking system in a subsection described as “Government, authority and airport charges.” According to British Airways, the presentation of the breakdown of charges, although not using the specific wording set out in the ATR, is clear and easily understood, avoids confusion or deception and fully complies with the substance of the ATR, but not the form.

[11] British Airways claims that the amount of the “fuel surcharge” is not set out as if it were a third party charge. It is described in a separate subsection “European fuel surcharge/US carrier charges,” not in the third party charge subsection entitled “Government, authority and airport charges.”

[12] Finally, British Airways maintains that the substantive content fully complies with the all-inclusive fare advertising requirements of the European Union, the home jurisdiction of British Airways and with the full-fare advertising rule of the Department of Transport of the United States of America. British Airways submits that because of the old system which supports British Airways’ Web site, it is virtually impossible to provide an online presentation that supports the Canadian regulatory requirements, which are very specific, when that format differentiates from the template format used elsewhere in the world. As a result, British Airways submits that the absence of Canadian designated headings is a technical breach that is impractical to remedy.

Position of the DEO

[13] The DEO submits that the current presentation of British Airways’ online booking system does not comply with the Canadian regulations. When the consumer is presented with the first breakdown of charges, one amount for “Fare” and another amount for “Taxes, fees and carrier charges per person,” the carrier charge (fuel surcharge) is not included in the “Fare.” This is misleading to the consumer as the fuel surcharge presented under the heading “Taxes, fees and carrier charges” appears not to be a part of the carrier cost. Only when the actual breakdown is provided, does the fuel surcharge appear under the heading “British Airways fees and carrier charges, indicating that it is a carrier cost.” The DEO states that the interpretation note on Air Service Price Advertising specifies that Canadian navigation (NavCan) surcharges, fuel surcharges and travel agent fees are considered to be air transportation charges and must not appear under third party charges.

[14] The DEO adds that by including the amount for the fuel surcharge in the amount presented under the heading “Taxes, fees and carrier charges per person,” it leads the consumer to believe that it is a third party charge rather than a carrier charge.

[15] The DEO states that British Airways’ current heading reads “Fare” instead of the required “Air Transportation Charges,” and its current heading reads either “Government, authority and airport charges” or “Taxes, fees or carrier charges per person” instead of the required “Taxes, Fees and Charges.” The DEO submits that the heading “Taxes, fees and carrier charges per person” is not an acceptable heading as it includes the carrier charge. The DEO states that it is a requirement that the correct headings are to appear in the Canadian edition of British Airways’ online booking system.

[16] Finally, the DEO states that the Canadian all-inclusive fare advertising regulations require that all advertisers of an air service originating from or within Canada comply with the requirements set out in the regulations and currently British Airways’ Web site does not comply with all of the Canadian requirements.

British Airways’ reply to the DEO’s comments

[17] British Airways submits that the consumer of air services making an inquiry or a booking on British Airways’ Web site does not have a preconceived understanding of the definitions used by the Canadian regulations and can easily understand that “carrier charges” are not “taxes and fees” after he/she has read the explanatory disclosure on the Web site. Therefore, British Airways submits that it has complied with the substance of the Canadian regulations.

[18] British Airways claims that the amount of the “fuel surcharge” is not set out as if it were a third party charge. It is described in a separate subsection entitled “European fuel surcharge/US carrier charges,” not in the third party charge subsection “Government, authority and airport charges,” and if the consumer reads the information provided on the breakdown of all charges of every nature, the fact that the fuel surcharge is a carrier charge and not a third party charge is clear.

[19] British Airways reiterates that it has complied with the Canadian regulations in substance, although not in form, due to the computer programming limitations described in its initial submission. The changes in headings required by the Agency are of a technical nature and do not enhance the understanding of a potential purchaser of air travel services on the British Airways’ Web site (Canadian edition).

ANALYSIS AND FINDINGS

Legislation

[20] Pursuant to subsections 135.8(2) and 135.8(3) and section 135.91 of the ATR:

135.8(2) A person who advertises the price of an air service must set out all third party charges under the heading “Taxes, Fees and Charges” unless that information is only provided orally.

135.8(3) A person who mentions an air transportation charge in the advertisement must set it out under the heading “Air Transportation Charges” unless that information is only provided orally.

135.91 A person must not set out an air transportation charge in an advertisement as if it were a third party charge or use the term “tax” in an advertisement to describe an air transportation charge.

Analysis and findings

[21] Subsections 135.8(2) and 135.8(3) of the ATR clearly set out the requirements that all third party charges are to be listed under the heading “Taxes, Fees and Charges” and all air transportation charges are to be set out under the heading “Air Transportation Charges.” Neither heading is used by British Airways as required by the ATR.

[22] Rather, at the first breakdown of charges, British Airways uses the headings “Fare” and “Taxes, fees and carrier charges per person.” The fare is an air transportation charge, as is the fuel surcharge, yet the two charges are not grouped together on British Airways’ Web site. Further, these two charges are not grouped together under the heading “Air Transportation Charges” as required by the ATR. These regulations clearly set out that the appropriate headings are to be used and that the relevant charges are to be found under the appropriate headings.

[23] The Agency therefore finds that British Airways has not met the requirements of subsections 135.8(2) and 135.8(3) of the ATR.

[24] Section 135.91 of the ATR states that a person must not set out an air transportation charge in an advertisement as if it were a third party charge or use the term “tax” in an advertisement to describe an air transportation charge.

[25] British Airways submits that the amount of the fuel surcharge is not set out as if it were a third party charge because it is described in a separate subsection entitled “Government, authority and airport charges.” However, British Airways’ fuel surcharge, which is considered an air transportation charge under the ATR, is included under the broader heading “Taxes, fees and carrier charges per person” and not under the heading “Air Transportation Charges” (“Fare” on British Airways’ Web site) as required by subsection 135.8(3) of the ATR.

[26] It is not until a breakdown is performed that it becomes clear as to the nature of the fuel surcharge. The fuel surcharge is presented as a third party charge until further breakdown is performed.

[27] The Agency’s Air Transportation RegulationsAir Services Price Advertising: Interpretation Note (which was developed to assist any person who advertises prices of air services within, or originating in, Canada in any media) states that “Canadian navigation surcharges, fuel surcharges and travel agent fees are considered to be air transportation charges and must not appear under third party charges.”

[28] The Agency finds that by setting out the amount for fuel surcharges under the heading “Taxes, fees and carrier charges per person,” British Airways has contravened section 135.91 of the ATR.

[29] It should be noted that Part V.1 of the ATR supports two key objectives: (1) to enable consumers to readily determine the total price of an advertised air service; and (2) to promote fair competition between all advertisers in the air travel industry.

[30] In the evidence collected during the compliance verification, the amount for fuel surcharge represents approximately two thirds of the total amount under the heading “Taxes, fees and carrier charges per person” when, in fact, the amount for the fuel surcharge should be listed under “Air Transportation Charges” (the heading which currently appears “Fare” on British Airways’ Web site).

[31] Further, the Agency finds that advertising a “fare” exclusive of the fuel surcharge does not promote fair competition between all advertisers in the air travel industry.

[32] As a result, the Agency finds that British Airways has failed to comply with the requirements set out in the ATR.

[33] Given the Agency’s findings as set out above, the concerns raised by British Airways with respect to the technical difficulties it faces in complying with the Canadian regulations need not be considered. British Airways’ request for an exemption in this regard will be assessed by another Agency panel.

CONCLUSION

[34] In light of the above, the Agency finds that British Airways did contravene subsections 135.8(2) and 135.8(3) and section 135.91 of the ATR and dismisses British Airways’ application for review.

[35] The Agency shall retain a record of British Airways’ violation, bearing the date of the original warning. If British Airways contravenes subsection 135.8(2), subsection 135.8(3) or section 135.91 of the ATR within four (4) years of the date of the original warning, the record of the original warning shall constitute evidence of a first violation, and a designated enforcement officer may then issue an administrative monetary penalty.

Member(s)

J. Mark MacKeigan
Sam Barone
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