# Decision No. 666-C-A-2001

December 24, 2001

December 24, 2001

IN THE MATTER OF a complaint by Del Anderson against Air Canada concerning denied boarding policy applicable to transportation between points in Canada.

File No. M4370/A74/00-625

## COMPLAINT

On October 9, 2000, Del Anderson filed with the Air Travel Complaints Commissioner (hereinafter the ATCC) the complaint set out in the title. However, due to the regulatory nature of the complaint, it was referred to the Canadian Transportation Agency (hereinafter the Agency).

On December 29, 2000, 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).

By letter dated January 29, 2001, Air Canada requested an extension of time until February 5, 2001 to file its answer to the complaint, and by Decision No. LET-A-54-2001 dated February 8, 2001, the Agency granted this extension. On February 5, 2001, Air Canada filed its answer, and on February 14, 2001, Mr. Anderson filed his reply to Air Canada's answer.

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 indefinite extension of the deadline.

## ISSUE

The issue to be addressed is whether Air Canada's denied boarding policy applicable to transportation between points in Canada is unreasonable or unduly discriminatory within the meaning of subsection 67.2(1) of the CTA.

## POSITIONS OF THE PARTIES

Mr. Anderson submits that Air Canada's denied boarding policy is not equitable. He states that it is "clearly unfair" to compensate all passengers the same sum regardless of the fare paid, and that fewer cancellations would result if the denied boarding compensation were made fairer. Further, he maintains that Air Canada should develop a denied boarding policy that allows for the "displacement of the lowest fare travellers first".

In its October 24, 2000 answer to the ATCC's request for comments, Air Canada indicates that it maintains sophisticated computer systems that track "no-show" data and that the carrier's number of denied boardings is relatively small. Air Canada advises that overbooking standards are constantly reviewed and reservations systems are adjusted accordingly to allow for any new booking patterns.

In reply, Mr. Anderson alleges that there is a "gross inequity" in current Air Canada "bumping" procedures given that such procedures permit deep discount fare passengers to travel, while full fare passengers are "displaced". He states that Air Canada must develop a denied boarding policy that gives priority to full fare passengers, and that these passengers should be bumped only after the discounted passengers have been denied boarding. He further submits that the current flat compensation fee is "unfair".

By letter dated December 29, 2000, Agency staff requested the parties to the complaint to address the matter in the context of subsection 67.2(1) of the CTA.

In its answer, Air Canada states that its denied boarding policy is neither unreasonable nor unduly discriminatory within the meaning of subsection 67.2(1) of the CTA. Such policy provides that, in the event of insufficient volunteers, denied boarding proceeds according to an established boarding priority. First class and economy class passengers are accommodated prior to all other passengers, in the order in which they present themselves for check-in and boarding. Exceptions to this boarding priority are made in the case of passengers with a disability or unaccompanied children under the age of twelve.

Further, Air Canada argues that it offers equitable denied boarding compensation, as all passengers denied boarding are extended the same compensation of $100.00 cash or a$300.00 travel voucher. Air Canada submits it is "unreasonable and unworkable" to implement the complainant's request that the compensation be made proportionate to the fare paid. The carrier suggests that a "melee" would result if higher compensation were offered to full economy passengers than to deep discount passengers, as both types of passengers would not be equally rewarded for experiencing the same inconvenience.

With respect to whether its policy is "unduly discriminatory", Air Canada submits that, by treating Mr. Anderson the same as all other passengers that have been denied boarding, it has not shown "undue discrimination".

In his reply, Mr. Anderson states that Air Canada's denied boarding policy is contrary to subsection 67.2(1) of the CTA. He maintains his previous claim that Air Canada's boarding compensation policy is neither fair nor equitable, and that compensation based on a percentage of the fare price paid is "reasonable, realistic and workable". He further states that the current denied boarding policy is discriminatory, and that, as full fare passengers receive the same flat sum as deep discount passengers, the full fare passengers are"limited in the benefits available to others" and their compensation is not "fair and rational".

## ANALYSIS AND FINDINGS

In making its findings, the Agency has carefully reviewed and considered all of the evidence submitted by the parties. The Agency has also examined Air Canada's denied boarding policy, specifically its policies with respect to denied boarding priority and denied boarding compensation, set out in Rule 245 of Air Canada's domestic tariff.

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.

The Agency notes that Air Canada's denied boarding policy provides that, subject to certain exceptions, full fare passengers are to be given boarding priority over lower fare passengers, and that all passengers who are denied boarding are entitled to the same amount of compensation, regardless of the amount of the fare paid by a particular passenger. More specifically, Rules 245(C)(1) and (2) of Air Canada's domestic tariff state:

1. If a flight is oversold, no passenger may be involuntarily denied boarding until AC has first requested volunteers to relinquish their seats.

2. In the event there are not enough volunteers, other passengers may be involuntarily denied boarding in accordance with AC's boarding priority policy. Passengers with confirmed reservations who have not received a boarding pass, will be permitted to board in the following order until all available seats are occupied:

(A) Physically handicapped passengers, unaccompanied children under 12 years of age and others for whom, in AC's assessment, failure to carry would cause severe hardship.

(B) Passengers paying First (F), Executive (J) or Full Economy (Y) class fares.

(C) All other passengers, including tour conductors accompanying a group. These passengers will be accommodated in the order in which they present themselves for check-in and boarding.

Rule 245(E)(2) of Air Canada's domestic tariff provides, in part, that:

... AC will tender liquidated damages in the amount of $100.00 cash or a credit voucher (good for future travel on Air Canada) in the amount of$300.00. If accepted by the passenger, such tender will constitute full compensation for all actual or anticipatory damages, incurred or to be incurred.

### Is Air Canada's denied boarding policy applicable to transportation between points in Canada "unreasonable" within the meaning of subsection 67.2(1) of the CTA?

According to the principles of statutory interpretation, words of a statute are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme and object of the statute as well as the intention of Parliament. As stated by M. Justice Rouleau of the Federal Court Trial Division in ECG Canada Inc. v. M.N.R., [1987] 2 F.C. 415:

There is no question that the literal approach is a well established one in statutory interpretation. Nevertheless, it is always open to the Court to look to the object or purpose of a statute, not for the purpose of changing what was said by Parliament, but in order to understand and determine what was said. The object of a statute and its factual setting are always relevant considerations and are not to be taken into account only in cases of doubt.

The term "unreasonable" is not defined in either the CTA or the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR), and it has not been considered by the Agency in the context of an air carrier's domestic tariff. The Canadian Oxford Dictionary defines the word "unreasonable" as "going beyond the limits of what is reasonable or equitable; not guided by or listening to reason". Black's Law Dictionary defines "unreasonable" as meaning "irrational; foolish; unwise; absurd; silly; preposterous; senseless; stupid".

Although the scope of the word "unreasonable" as it relates to terms and conditions of carriage has not been judicially considered in Canada, the meaning of the word has repeatedly been examined by the courts in contexts such as judicial review1 or the review of a discretionary decision based on irrelevant consideration, improper purpose or bad faith2. While it is difficult to extrapolate distinct principles on the meaning of the word "unreasonable" from these cases, the courts have consistently held that:

1. The meaning of the word cannot be determined by recourse to a dictionary;
2. A contextual meaning must be given to the word; and
3. In general terms, the word means "without a rational basis".

Subsection 67.2(1) of the CTA appears under the heading entitled "Licence for Domestic Service" found in Part II of the CTA, "Air Transportation". This heading encompasses 10 statutory provisions which provide specific statutory remedies to the travelling public, while imposing obligations on domestic licensees as part of an effort to redress instances where a fare, rate, charge or term or condition of carriage unilaterally established by an air carrier is alleged to be unreasonable, unduly discriminatory or not applied by the carrier. In the Agency's opinion, the specific wording of subsection 67.2(1) of the CTA reflects a recognition by Parliament that regulation was needed in order to attain the stated objective of the national transportation policy found in section 5 of the CTA which provides, in part, that:

... each carrier or mode of transportation, as far as is practical, carries traffic to or from any point in Canada under fares, rates and conditions that do not constitute

(i) an unfair disadvantage in respect of any such traffic beyond the disadvantage inherent in the location or volume of the traffic, the scale of operation connected with the traffic or the type of traffic or service involved,

This position is also in harmony with section 12 of the Interpretation Act, R.S.C., 1985, c. I-21 which provides that:

Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.

In determining whether a term or condition of carriage applied by a carrier is "unreasonable" within the meaning of subsection 67.2(1) of the CTA, the Agency must, therefore, ensure that it does not interpret the provision in such a way that impairs or jeopardizes the ability of the travelling public to efficiently use the recourse put in place by Parliament to protect it against the unilateral setting of terms and conditions of carriage by air carriers.

Conversely, the Agency must also take into account:

1. the operational and commercial obligations of the particular air carrier which is the subject of the complaint;
2. the other consumer protection provisions found under Part II of the CTA which compel air carriers to publish, display or make available for public inspection tariffs that contain the information required by the ATR and only apply the terms and conditions of carriage set out in those tariffs; and
3. the fact that air carriers are required to establish and apply terms and conditions of carriage designed to apply collectively to all passengers as opposed to one particular passenger.

The Agency is, therefore, of the opinion that, in order to determine whether a term or condition of carriage applied by a domestic carrier is "unreasonable" within the meaning of subsection 67.2(1) of the CTA, a balance must be struck between the rights of the passengers to be subject to reasonable terms and conditions of carriage, and the particular air carrier's statutory, commercial and operational obligations.

Air Canada's policy with respect to denied boarding is designed and implemented to compensate passengers who have been denied boarding as a result of the overbooking of an aircraft. This type of provision is commonly found in various types of commercial contracts where compensation is predetermined and is not based on the actual amount of the contract or damage that one party suffers if the other party does not respect, partially or entirely, the terms and conditions of the contract. Contrary to an air carrier's policies on refunds for services purchased but not used, whereby the fare paid by a passenger is inherently linked to the design and implementation of the compensation, the fare paid by a passenger is unrelated to the amount of compensation that the passenger is entitled to receive upon being denied boarding. Further, any passenger who is denied boarding is entitled to compensation; evidence of specific damages suffered need not be provided.

In light of the foregoing, the Agency finds that, Rules 245(C)(1), (C)(2) and (E)(2) of Air Canada's domestic tariff are not, in this case, "unreasonable" within the meaning of subsection 67.2(1) of the CTA.

### Is Air Canada's denied boarding policy applicable to transportation between points in Canada "unduly discriminatory" within the meaning of subsection 67.2(1) of the CTA?

As with the word "unreasonable", the phrase "unduly discriminatory" is not defined in the CTA or the ATR, and it has not been considered by the Agency in the context of an air carrier's domestic tariff.

With respect to the meaning of the word "discriminatory", the Supreme Court of Canada, in Andrews v. Law Society (British Columbia), [1989] 1 S.C.R. 143, held that "discrimination may be described as a distinction, whether intentional or not but based on grounds relating to personal characteristics of the individual or group, which has the effect of imposing burden, obligation, or disadvantages on such individual or group not imposed on others, or which withholds or limits access to opportunities, benefits, and advantages, available to other members of society".

Further, in O'Connell v. Canadian Broadcasting Corp. (1988), 88 C.L.L.C. 17, 017, the Canadian Human Rights Tribunal held that: "a practice or rule may be found to be discriminatory, whether it involves ... "direct discrimination" (a practice or rule which is on the face of it discrimination) or "adverse impact" (a practice or rule which is on the face of it neutral, applying equally to all employees, but which has a discriminatory effect upon a discriminatory ground on an individual employee or group of employees).".

The above judicial interpretations of the word "discrimination" are well recognized in Canada and have been used by various courts and tribunals3 . The Agency notes, however, that, contrary to the human rights and labour relations contexts in which those decisions were rendered, where the overriding principle is that no discrimination is tolerated, the CTA provides that "discriminatory" terms or conditions of carriage may be tolerated provided that they are not "unduly discriminatory".

The determination of whether a term or condition of carriage applied by a carrier on a domestic route is "unduly discriminatory" is, therefore, a two step process. In the first place, the Agency must determine whether the term or condition of carriage applied is "discriminatory". In the absence of discrimination, the Agency need not pursue its investigation. If, however, the Agency finds that the term or condition of carriage applied by the domestic carrier is "discriminatory", the Agency must then determine whether such discrimination is "undue".

The meaning of the word "undue" was the subject of a detailed analysis by the Federal Court of Appeal in Via Rail Canada Inc. v. National Transportation Agency and Jean Lemonde, [2001] 2 F.C. 25. In that case, the Court stated that:

While "undue" is a word of common usage which does not have a precise technical meaning the Supreme Court has variously defined "undue" to mean "improper, inordinate, excessive or oppressive" or to express "a notion of seriousness or significance". To this list of synonyms, the Concise Oxford Dictionary adds "disproportionate".

What is clear from all of these terms is that undue-ness is a relative concept. I agree with the position expressed by Cartwright J., as he then was:

"Undue" and "unduly" are not absolute terms whose meaning is self-evident. Their use presupposes the existence of a rule or standard defining what is "due". Their interpretation does not appear to me to be assisted by substituting the adjectives "improper", "inordinate", excessive", "oppressive" or "wrong", or the corresponding adverbs, in the absence of a statement as to what, in this connection, is proper, ordinate, permissible or right.

The proper approach to determine if something is "undue", then, is a contextual one. Undue-ness must be defined in light of the aim of the relevant enactment. It can be useful to assess the consequences or effect if the undue thing is allowed to remain in place.

The Supreme Court has also recognized that the term implies a requirement to balance the interests of the various parties. In a case dealing with whether an employer had accommodated an employee's right to exercise his religion beliefs up to the point of undue hardship, Wilson J., writing for the majority, found it helpful to list some of the factors relevant to such an appraisal. She concluded by stating: "This list is not intended be exhaustive and the result which will obtain from a balancing of these factors against the right of the employee to be free of discrimination will necessarily vary from case to case".

The Agency is, therefore, 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. This position is also in harmony with the national transportation policy found in section 5 of the CTA.

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.

After careful consideration of the complainant's submissions and examination of Rules 245 (C)(1), (C)(2) and (E)(2) of Air Canada's domestic tariff, the Agency finds that Air Canada's policy with respect to denied boarding is not, in this case, "discriminatory" within the meaning of subsection 67.2(1) of the CTA for the following reasons. Firstly, the Agency notes that Rules 245(C)(1), (C)(2) and (E)(2) of Air Canada's domestic tariff apply equally to all passengers. While the Agency acknowledges that discrimination may result from a term or condition of carriage which applies equally to all passengers, in order to constitute discrimination, it must be demonstrated that a burden, obligation, or disadvantage has been imposed on one person or group which is not imposed on others. Accordingly, it could be argued that Air Canada's denied boarding policy discriminates against passengers paying higher fares as such passengers are entitled to the same amount of compensation for denied boarding as passengers paying lower fares for the same service. The Agency is of the opinion, however, that the fare paid by a passenger is in no way connected to any burden or disadvantage that may be imposed on that passenger as a result of being denied boarding. The Agency is, therefore, of the opinion that applying denied boarding compensation equally to all passengers in no way discriminates against passengers paying higher fares.

Given that the Agency has determined that Rules 245(C)(1), (C)(2) and (E)(2) of Air Canada's domestic tariff are not, in this case, "discriminatory" within the meaning of subsection 67.2(1) of the CTA, the Agency need not examine the question of whether Air Canada's policy with respect to denied boarding set out in those tariff provisions is "unduly" discriminatory.

## CONCLUSION

Based on the above findings, the Agency hereby dismisses the complaint.

1. C.U.P.E. v. New Brunswick Liquor Corporation, [1979] 2 R.C.S. 227
2. Associated Provincial Picture Houses v. Wednesbury Corporation, [1948] 1 K.B. 233; City of Montréal v. Beauvais, (1909) 42 S.C.R. 211; Canadian Transportation Agency Decision No. 445-R-2000 dated June 30, 2000
3. Brooks v. Canada Safeway Ltd., [1989] 4 W.W.R. 193; Canada (Attorney General) v. George, [1991] 1 F.C. 344; Headley v. Canada (Public Service Commission), [1987] 2 F.C. 235.
Date modified: