Decision No. 555-C-A-2002
October 9, 2002
IN THE MATTER OF a complaint by Harvey Wei Zeng against Air Canada concerning the application of Air Canada's Aeroplan Program to international travel.
File No. M4370/A74/02-53
On January 10, 2002, Harvey Wei Zeng, on behalf of his parents, filed with the Air Travel Complaints Commissioner the complaint set out in the title.
On June 17, 2002, Agency staff requested clarification from Mr. Zeng with respect to his complaint. On July 2, 2002, Mr. Zeng provided the clarification needed for Agency staff to proceed with the complaint.
On July 3, 2002, Agency staff requested that Air Canada address the complaint within the context of sections 111 and 113 of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR).
On July 25, 2002, Air Canada filed its answer to the complaint, and on August 8, 2002, Mr. Zeng filed his reply to the carrier's answer.
Pursuant to subsection 29(1) of the Canada Transportation Act, S.C., 1996, c. 10, the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, Air Canada has agreed to an indefinite extension of the deadline and Mr. Zeng has agreed to an extension of 120 days, until October 10, 2002.
The issue to be addressed is whether the enrollment conditions applicable to Air Canada's Aeroplan Program for carriage between Canada and China are just and reasonable within the meaning of section 111 of the ATR.
POSITIONS OF THE PARTIES
Mr. Zeng's parents travelled between Beijing, China and Toronto, Ontario, Canada in July and August 2001 with Air Canada. Following their trip, Mr. Zeng's parents enrolled to become members of Air Canada's Aeroplan Program, and claimed the mileage applicable to their travel between China and Canada in July and August 2001. Aeroplan denied the Zengs' request to obtain mileage for travel that occurred prior to enrollment, advising that Air Canada does not offer mileage retroactively for new members.
In his complaint to the Agency, Mr. Zeng submits that he is strongly against the carrier's current Aeroplan policy. According to Mr. Zeng, the existing policy is not consistent with industry practice. Mr. Zeng adds that, in the past, he has received from Air Canada, as well as other carriers, including Northwest Airlines, Inc., Delta Air Lines, Inc., and United Air Lines, Inc., mileage for travel that occurred after he became a member of the respective carriers' promotional programs. Mr. Zeng submits that his parents were not aware of the existence of Air Canada's Aeroplan Program at the time they purchased their tickets.
In its answer, Air Canada submits that certain conditions of the Aeroplan Program and its enrollment conditions cannot be considered "terms and conditions of carriage" under sections 111 and 113 of the ATR. The carrier maintains that section 107 of the ATR provides guidance as to the nature of a term and condition of carriage. Air Canada submits that, in light of the nature of the items set out in section 107 of the ATR, the enrollment conditions of the Aeroplan Program should not be considered a term and condition of carriage. Air Canada further submits that dictionary definitions of the term "carriage" restrict the use of the term to the actual transportation of persons or cargo and that terms and conditions relating to the enrollment of the Aeroplan Program are not terms or conditions of "carriage".
Air Canada submits that, in its consideration of this matter, the Agency should be guided by the terms of the applicable bilateral air transport agreement, namely the Civil Air Transport Agreement between the Government of Canada and the Government of the People's Republic of China signed on June 11, 1973 (hereinafter the Canada - China Agreement). Air Canada maintains that the Agency can intervene in this matter if the Agency determines that: i) the enrollment conditions of the Aeroplan Program applied by Air Canada are not just and reasonable, taking into consideration such factors as other carriers' tariffs and commercial considerations in the marketplace; ii) there has been unjust discrimination in the application of the Aeroplan Program; iii) there has been undue or unreasonable preference or advantage in the application of the Aeroplan Program; or iv) there has been undue or unreasonable prejudice or disadvantage in the application of the Aeroplan Program.
Air Canada further submits that according to the Aeroplan Program, Aeroplan members are entitled to accumulate mileage from the date their membership is processed by the Aeroplan Customer Service Centre. The carrier advises that this policy is clearly outlined in the members' guide, which has been in place since July 1, 1996. Air Canada recognizes that prior to that date, new members were allowed to claim mileage for flights taken one month before their enrollment date, but it points out that this policy was changed once systems were in place to provide members of the public with instant Aeroplan membership numbers prior to or at the time of travel. The carrier advises that the enrollment process is also outlined on its Web site.
Air Canada notes that, like many other major loyalty programs, the Aeroplan Program does not offer mileage retroactively for new members, and transactions dated prior to enrollment are not eligible for mileage accumulation. Air Canada submits that the enrollment conditions of the Aeroplan Program are applied equally to all new Aeroplan members, that they are just and reasonable and not unjustly discriminatory or unreasonably high or restrictive, and that they do not represent an undue or unreasonable prejudice or disadvantage. The carrier further submits that requiring customers to become members before enjoying the benefits of its program is not unreasonable, unduly or unreasonably preferential or prejudicial.
In his reply, Mr. Zeng submits that taking into consideration all relevant factors, the enrollment conditions applied by Air Canada with respect to its Aeroplan Program are unjust and unreasonable. Mr. Zeng states that most new passengers, especially first time international travellers, are not aware of Air Canada's promotional programs, but usually learn of these through the carrier's staff or through relatives and friends who are already program members.
Mr. Zeng states that because Air Canada is a monopoly in the industry, it does not mean that the existing policy is right and fair, and he is challenging the carrier's policy on behalf of many other passengers who may not have the persistence and courage to do so. According to Mr. Zeng, Air Canada's one-sided emphasis on how correct the carrier is fully demonstrates that the existing enrollment policy is to protect the carrier's own interest, rather than the consumer's interests. Mr. Zeng states that many carriers have a "backtracking period" policy to take into consideration the fact that most new passengers are not aware of the existence of the carriers' promotional programs. Mr. Zeng is of the opinion that, in not offering this grace period, Air Canada is taking advantage of customers' initial unawareness, which is an unfair business practice.
ANALYSIS AND FINDINGS
In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings. The Agency has also examined Air Canada's tariff provisions with respect to the Aeroplan Program, appearing in the carrier's Passenger Tariff containing Rules and Regulations, Rates and Charges applicable to the Aeroplan Frequent Flyer Program for Transportation of Passengers and Baggage between Points in Canada and Points Outside Canada and also between Points Wholly Within Canada, NTA(A) No. 486, which states, in part, that:
You can begin earning Aeroplan miles as of the date your membership is processed by Aeroplan. Transactions dated prior to your enrollment are not eligible for mileage accumulation.
Air Canada has argued that enrollment conditions cannot be considered terms and conditions of carriage, in light of section 107 of the ATR. The Agency notes that section 107 of the ATR applies to domestic carriage, whereas the carriage at issue is international. More particularly, paragraph 122(c) of the ATR identifies some of the terms and conditions that must be contained in tariffs applicable to international carriage. It is not an exhaustive list.
The Agency is of the opinion that air traveller loyalty programs, such as Aeroplan, are subject to the requirements of the ATR, as such programs are considered terms and conditions of carriage. In making this determination, the Agency considers whether the program affects the cost of travel to the consumer and whether the program involves air travel. In the case of air traveller loyalty programs, they may lead to air transportation at reduced or no cost. As enrollment conditions are an integral part of these programs, the Agency is of the view that the enrollment conditions of Air Canada's Aeroplan Program constitute terms and conditions of carriage.
The Agency's jurisdiction over complaints concerning terms and conditions of carriage applicable to transportation to and from Canada is set out in sections 111 and 113 of the ATR.
Section 111 of the ATR provides that:
- All tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just an reasonable and shall, under substantially similar circumstances and conditions and with respect to all traffic of the same description, be applied equally to all that traffic.
No air carrier shall, in respect of tolls or the terms and conditions of carriage,
- make any unjust discrimination against any person or other air carrier;
- give any undue or unreasonable preference or advantage to or in favour of any person or other air carrier in any respect whatever; or
- subject any person or other air carrier or any description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatever.
- The Agency may determine whether traffic is to be, is or has been carried under substantially similar circumstances and conditions and whether, in any case, there is or has been unjust discrimination or undue or unreasonable preference or advantage, or prejudice or disadvantage, within the meaning of this section, or whether in any case the air carrier has complied with the provisions of this section or section 110.
Further, if the Agency finds that the air carrier has contravened section 111 of the ATR, the Agency may, pursuant to section 113 of the ATR:
- suspend any tariff or portion of a tariff that appears not to conform with subsection 110(3) to (5) or section 111 or 112, or disallow any tariff or portion of a tariff that does not conform with any of those provisions; and
- establish and substitute another tariff or portion thereof for any tariff or portion thereof disallowed under paragraph (a).
The Agency has reviewed the tariff provisions of the Canada - China Agreement, and finds that these provisions do not impede consideration of the matter under section 111 of the ATR.
Accordingly, the Agency may intervene in this matter if it determines that the enrollment conditions of Air Canada's Aeroplan Program are contrary to section 111 of the ATR.
Mr. Zeng alleged that the enrollment conditions are unjust and unreasonable because most new passengers, like his parents, are not aware of the existence of Air Canada's Aeroplan Program when they purchase their tickets. Mr. Zeng also alleged that the enrollment conditions are not consistent with industry practice.
The Agency's investigation into Mr. Zeng's complaint has revealed that it is a common practice among carriers, including Northwest Airlines, Inc., US Airways, Inc. carrying on business as US Air, US Airways or US Airways Shuttle, United Air Lines, Inc., American Airlines, Inc., Société Air France carrying on business as Air France and Qantas Airways Limited, to not permit mileage accumulation prior to enrollment in frequent flyer programs.
The Agency is, therefore, of the opinion that the enrollment conditions of Air Canada's Aeroplan Program, as set out in the carrier's Passenger Tariff containing Rules and Regulations, Rates and Charges applicable to the Aeroplan Frequent Flyer Program for Transportation of Passengers and Baggage between Points in Canada and Points Outside Canada and also between Points Wholly Within Canada, NTA(A) No. 486, are just and reasonable and not contrary to section 111 of the ATR.
Based on the above findings, the Agency hereby dismisses the complaint.