Decision No. 637-C-A-2002
November 25, 2002
IN THE MATTER of a complaint filed by Andy Ackerman against Air Canada concerning its airfares for travel within Canada which do not include a Saturday overnight stay or stays of less than two nights.
File No. M4370/A74/02-543
On April 25, 2002, Andy Ackerman filed with the Canadian Transportation Agency (hereinafter the Agency) the complaint set out in the title.
On May 6, 2002, Agency staff requested that Air Canada address the complaint within the context of subsection 67.2(1) of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA).
On June 6, 2002, Air Canada filed its answer to the complaint, and on June 26, 2002, Mr. Ackerman filed his reply to the answer. On July 8, 2002, Air Canada submitted comments on Mr. Ackerman's reply.
Pursuant to subsection 29(1) of the CTA, 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, the parties have agreed to an extension of the deadline until November 30, 2002.
Although Mr. Ackerman's reply was filed after the prescribed deadline, and Air Canada's comments of July 8, 2002 were filed after pleadings were closed, the Agency, pursuant to section 6 of the National Transportation Agency General Rules, SOR/88-23 (hereinafter the General Rules), accepts them as being relevant and necessary to its consideration of this matter.
The issues to be addressed are:
- whether Air Canada applied a term or condition of carriage applicable to the domestic services it offers that is unreasonable or unduly discriminatory within the meaning of subsection 67.2(1) of the CTA; and, if so,
- whether the Agency should suspend or disallow that term or condition and substitute another term or condition in its place.
JURISDICTION OF THE AGENCY
Air Canada, in its answer of June 6, 2002, initially questioned the Agency's investigation into this matter, stating, among other things, that the complaint does not comply with section 42 of the General Rules, which provides, in part, that an application to the Agency shall contain a clear and concise statement of the grounds for the application and the nature of the relief sought from the Agency.
The Agency has considered the matter and finds that the complaint did not strictly comply with section 42 of the General Rules. However, the Agency has the discretion, pursuant to section 6 of the General Rules, to dispense with or vary any of the provisions of the General Rules in any proceeding before it, and, in the present case, it accepts the complaint.
POSITIONS OF THE PARTIES
Mr. Ackerman alleges that some of the airfares charged by Air Canada are discriminatory toward the persons who are required to stay less than two nights in any one destination in Canada. Mr. Ackerman cites as an example a recent trip he made from Fort St. John, British Columbia to Victoria, British Columbia for which he was charged an additional $400 because he could only stay one night in Victoria. Mr. Ackerman also states that he received a fare quotation for a flight between Fort St. John, British Columbia and Yellowknife, Northwest Territories that was $700 higher for an itinerary that did not include a Saturday overnight stay in Yellowknife.
Mr. Ackerman alleges that Air Canada's requirement for a minimum stay to obtain certain lower airfares is very discriminatory toward the business traveller. Mr. Ackerman submits that, in order to meet the travel requirement associated with the lower fares, the business traveller must incur additional accommodation and meal costs, while the air carrier does not incur any additional cost to transport that traveller.
Mr. Ackerman asks that the Agency order all air carriers "to stop this practice and to give the travelling public reasonable airfares".
Air Canada submits that restrictive airfares are standard practice in the airline industry, and that, like many other carriers, Air Canada offers fares to which are attached differing restrictions, prices and terms and conditions. Air Canada advises that, without the imposition of restrictions, passengers who have purchased lower-priced fares would enjoy the same flexibility as passengers who have paid higher-priced fares. The carrier further advises that the Saturday overnight stay requirement is of key importance to air carriers, as, generally, it:
- supports the yield management and revenue management systems
- provides stability to booking patterns
- allows for more accurate demand forecasting
- allows for increased accuracy in fleet management, such as schedule and capacity planning processes
- reduces the volume of unused bookings
- reduces the occurrence of no-shows
- allows air carriers to cover common costs of operations
- allows air carriers to more accurately monitor sales and bookings and thereby minimize denied boarding situations
Air Canada lists some of the fares that it offers between Fort St. John, British Columbia and Victoria, British Columbia, and between Fort St. John, British Columbia and Yellowknife, Northwest Territories, and notes that, while a number of these fares do have restrictions, some of these fares have fewer or no restrictions. Air Canada adds that a business traveller can purchase a restricted fare if it corresponds to his/her needs.
Air Canada concludes that the fares that it offers that have a Saturday overnight stay requirement are applied equally to all passengers purchasing those fares, and, thus, they are not discriminatory.
Mr. Ackerman questions why a Saturday night or shorter stay is required for certain fares, and why Air Canada should have an interest in the length of time a person stays at a location. Mr. Ackerman also notes that passengers who purchase lower-priced fares cannot change reservations without incurring an exorbitant charge, and he rejects Air Canada's arguments justifying the minimum stay requirements.
In its comments on Mr. Ackerman's reply, Air Canada submits that, in conducting its business, it must take into account its commercial and operational requirements, including the objective of recovering fixed, sunk and common costs, and reiterates that the minimum Saturday overnight stay requirement that is applied to certain fares is neither "unreasonable" nor "unduly discriminatory".
ANALYSIS AND FINDINGS
In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings.
The Agency's jurisdiction over complaints concerning domestic tariffs is set out in sections 67, 67.1 and 67.2 of the CTA. Pursuant to subsection 67.2(1) of the CTA, the Agency may take certain remedial action following receipt of a complaint where 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. More particularly, subsection 67.2(1) states that:
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 or conditions and substitute other terms or conditions in their place.
With respect to the issue of whether Air Canada has applied terms and conditions of carriage that are unreasonable or unduly discriminatory, the Agency makes the following findings.
The Agency notes that Air Canada and other air carriers apply certain restrictions to their various discounted fares in order to differentiate such fares. While full fares normally have few or no travel restrictions, it is common for air carriers to add minimum stay restrictions to fares that are discounted. The Agency is of the opinion that these restrictions assist air carriers to differentially price into various market segments, and administer yield and revenue management systems, allowing carriers to predict, with a certain degree of reliability, the level of occupancy of their flights, thereby maximizing yield. Accordingly, the Agency is of the opinion that the application of these restrictions are not "unreasonable" within the meaning of subsection 67.2(1) of the CTA.
The Agency is also of the opinion that, in determining whether a term or condition of carriage applied by a domestic carrier is "unduly discriminatory" within the meaning of subsection 67.2(1) of the CTA, it must adopt a contextual approach which balances the rights of the travelling public not to be subject to terms and conditions of carriage that are discriminatory, with the statutory, operational and commercial obligations of air carriers operating in Canada.
The first question for the Agency to consider, then, in determining whether a term or condition of carriage applied by an air carrier is "unduly discriminatory" within the meaning of subsection 67.2(1) of the CTA is whether the term or condition of carriage is discriminatory.
While the Agency notes that Air Canada applies minimum stay restrictions only to certain airfares in any one market, and not to the other fares offered in that market, the Agency finds that these restrictions apply to every person purchasing such fares. While the Agency acknowledges that discrimination may result from a term or condition of carriage that applies equally to all passengers, the Agency is of the view that an applicant must demonstrate that a burden, obligation or disadvantage has been imposed on him or her or a group that is not imposed on others. In the present case, the Agency is of the view, however, that the minimum stay restrictions are not connected to any burden or disadvantage imposed on Mr. Ackerman or upon others in the same market. Therefore, the Agency is of the opinion that the application of these restrictions is not discriminatory within the meaning of subsection 67.2(1) of the CTA. Having concluded that the terms are not discriminatory, there is no need for the Agency to consider whether the terms are "unduly discriminatory".
Based on the above findings, the Agency hereby dismisses the complaint.