Decision No. 45-C-A-2018

June 15, 2018

APPLICATION by Ivetta Gvozdetckaia against Korean Air Lines Co. Ltd. (Korean Air).

Case number: 
18-00442

SUMMARY

[1] Ivetta Gvozdetckaia filed an application with the Canadian Transportation Agency (Agency) against Korean Air regarding the amount of the refund due to her after she cancelled the return portion of her round-trip travel from Vladivostok, Russia to Vancouver.

[2] Ms. Gvozdetckaia is seeking a refund of the return fare value and taxes for the unused portion of her air fare.

[3] The Agency will address the following issue:

Did Korean Air properly apply the terms and conditions set out in Rules 65(B)(1)(a) and 90(E)(2) of its International Passenger Rules and Fares Tariff, NTA(A) No. 353 (Tariff), with regard to voluntary refunds, as required by subsection 110(4) of the Air Transportation Regulations, SOR/88-58, as amended (ATR)? If not, what remedy, if any, is available to Ms. Gvozdetckaia?

[4] For the reasons set out below, the Agency finds that Korean Air properly applied the terms and conditions set out in its Tariff, and therefore, dismisses the application.

BACKGROUND

[5] Ms. Gvozdetckaia purchased a round-trip ticket to travel with Korean Air from Vladivostok to Vancouver, departing on November 6, 2015 and returning on September 28, 2016, at a cost of RUB$87150. She travelled on the outgoing segment of the ticket, however, as she could not use the return portion of the ticket on her scheduled return date, she requested that Korean Air provide her with a refund. Korean Air calculated the refund due to her as only the tax amount levied on her ticket.

THE LAW

[6] Subsection 110(4) of the ATR states:

Where a tariff is filed containing the date of publication and the effective date and is consistent with these Regulations and any orders of the Agency, the tolls and terms and conditions of carriage in the tariff shall, unless they are rejected, disallowed or suspended by the Agency or unless they are replaced by a new tariff, take effect on the date stated in the tariff, and the air carrier shall on and after that date charge the tolls and apply the terms and conditions of carriage specified in the tariff.

[7] Subsection 113.1 of the ATR provides:

If an air carrier that offers an international service fails to apply the fares, rates, charges or terms and conditions of carriage set out in the tariff that applies to that service, the Agency may direct it to

  1. take the corrective measures that the Agency considers appropriate; and
  2. pay compensation for any expense incurred by a person adversely affected by its failure to apply the fares, rates, charges or terms and conditions set out in the tariff.

[8] Rule 65(B)(1)(a) of Korean Air’s Tariff provides as follows:

(B) VALIDITY FOR CARRIAGE

(1) GENERAL

(a) When validated the ticket is good for carriage from the airport at the place of departure to the airport at the place of destination via the route shown therein and for all the applicable class of service and is valid for one year from the date of commencement of flight except as otherwise specified in Carrier’s tariffs.

[9] Rule 90(E)(2) states as follows:

(E) VOLUNTARY REFUNDS

[10] For the purpose of this paragraph, the term “Voluntary Refund” shall mean any refund of a ticket or portion thereof other than an involuntary refund, as described in paragraph (D) of this rule. Voluntary refunds shall be computed as follows:

  1. If no portion of a ticket has been used, refund will be the full amount of the fare paid, less any applicable service charges or cancellation fees. (See Rule Nos. 65 (TICKETS) and 60 (RESERVATIONS); or
  2. If a portion of the ticket has been used, refund will be made in an amount equal to the difference, if any, between the fare paid and the applicable fare between the points between which the ticket has been used, less any applicable service charge and or cancellation fee. (See Rule Nos. 65 (TICKETS) and 60 (RESERVATIONS). […]

POSITIONS OF THE PARTIES

Position of Ms. Gvozdetckaia

[11] Ms. Gvozdetckaia submits that she purchased a fully refundable ticket and travelled the first leg of her trip on November 6, 2015. She states that as she could not use the remaining portion on the scheduled departure date of September 28, 2016, she wished to reschedule the existing reservation to November 28, 2016. Ms. Gvozdetckaia states that Korean Air advised her that the terms and conditions of her ticket did not allow her to reschedule her travel to a date later than the ticket expiry date of November 6, 2016, and suggested that she instead consider a flight cancellation. According to Ms. Gvozdetckaia, Korean Air’s suggestion implied that she was eligible for a refund, and she was transferred to the Refund department to initiate the cancellation and refund process.

[12] Ms. Gvozdetckaia states that she subsequently submitted a refund authorization letter as per guidance from the Refund department, following which she was sent the calculations explaining the methodology that Korean Air intended to apply. According to Ms. Gvozdetckaia, Korean Air only agreed to refund the tax amounts levied on the air fare, an amount of refund that Ms. Gvozdetckaia refused to accept.

[13] Ms. Gvozdetckaia submits that at no time during her communications with either Korean Air’s customer service representative or the Refund department was it mentioned that if she initiated a refund request, her return trip would automatically be essentially forfeited, and the value of the return portion of her ticket annulled. She argues that, in answering her direct question, Korean Air confirmed that only a refund penalty, as specified in the ticket, would be applied to her cancellation request.

[14] Included with Ms. Gvozdetckaia’s application are e-mail communications between herself and Korean Air. In one e-mail dated September 12, 2016, Korean Air states that Ms. Gvozdetckaia purchased a special promotional air fare and that once ticketed, Ms. Gvozdetckaia was contracted, in essence, to travel in accordance with the itinerary on the e-ticket/itinerary. Korean Air further states that in breaking her journey, Ms. Gvozdetckaia was no longer eligible for the special air fare, and that her refund was therefore calculated based on the actual price of the travelled one‑way segment. Korean Air concludes that “this created a higher level of fare (one way fare), and, coupled with a refund penalty of EUR150, left the only portion of the ticket that can legally be refunded: the tax that was assessed from Vancouver, Canada to Vladivostok, Russia”.

[15] Ms. Gvozdetckaia argues that she was effectively misled and referred to terms and conditions of the ticket that were not presented to her either at the time she purchased the ticket, or when she initiated her request to reschedule or cancel the trip.

[16] Ms. Gvozdetckaia provided a copy of her ticket, and submits that the ticket did not contain any reference to additional “special” fare conditions, for example, restrictions on ticket rescheduling or cancellation. Ms. Gvozdetckaia therefore requests a refund covering the unused portion of her airfare.

Findings of fact

[17] Korean Air was provided with a copy of Ms. Gvozdetckaia’s application, however it did not file an answer to the application.

Ticket validity

[18] Ms. Gvozdetckaia commenced her travel with Korean Air on the scheduled departure date of November 6, 2016. Her return travel was scheduled for departure on September 28, 2016; however, she sought to reschedule that trip to November 28, 2016.

[19] Rule 61(B)(1)(a) of Korean Air’s Tariff states that “a ticket is valid for one year the date of commencement of flight, unless otherwise specified in the carrier’s Tariff.” The “Ticket Restriction” section of Ms. Gvozdetckaia’s e-ticket/itinerary states “Ticket validity 06 November 2016”.

[20] Based on the above, the Agency finds that Ms. Gvozdetckaia’s ticket expired on November 6, 2016 and consequently, she could not reschedule the return segment of her travel to November 28, 2016. The Tariff provision applicable to this matter is Rule 90(E)(2), which governs involuntary refunds.

Type of ticket purchased

[21] Ms. Gvozdetckaia argues that she purchased a fully refundable ticket, and that Korean Air confirmed that only a refund penalty specified in the e-ticket/itinerary would apply to her request for a refund. The Agency however notes that the “Ticket Restriction” section of Ms. Gvozdetckaia’s e-ticket/itinerary provides that if a fare regulation does not permit reissuance of a ticket, the passenger would need to purchase a new ticket, after getting a refund for the original ticket. That section further states that penalties or service charges may apply to such a transaction.

[22] The Agency also notes that in its September 12, 2016 communication with Ms. Gvozdetckaia, Korean Air states that Ms. Gvozdetckaia purchased a special promotional air fare, and that in breaking the journey, Ms. Gvozdetckaia was no longer eligible for the special air fare.

[23] Based on the above, the Agency finds that Ms. Gvozdetckaia purchased a ticket with restrictions.

ANALYSIS AND DETERMINATION

[24] In accordance with a well-established principle on which the Agency relies when considering such applications, the onus is on the applicant to prove, on a balance of probabilities, that the carrier has failed to properly apply, or has inconsistently applied, the terms and conditions of carriage set out in its tariff.

[25] Rule 90(E)(2) of Korean Air’s tariff states that if a portion of the ticket has been used, a refund will be made in an amount equal to the difference, if any, between the fare paid and the applicable fare between the points between which the ticket has been used, less any applicable service charge or cancellation fee.

[26] In Decision No. 72-C-A-2017 (a passenger complaint against Alitalia regarding a situation similar to the current case), the Agency stated that it is a common industry practice that if a passenger voluntarily changes a restricted economy ticket, they may be subject to a change penalty plus any difference in fare, as the original fare may no longer be available or applicable with the new date of travel.

[27] In this case, Ms. Gvozdetckaia voluntarily cancelled the return portion of a ticket that was sold on a round-trip basis. Consequently, her ticket was recalculated based on the cost of the one-way segment that she travelled, which, coupled with the refund penalty, left no residual value. The Agency, however, notes that Korean Air stated, in an e-mail to Ms. Gvozdetckaia dated October 27, 2016, that it has sent her a cheque in the amount of CAN$197. This amount represents the taxes assessed for the cancelled portion of Ms. Gvozdetckaia’s ticket.

[28] Based on the above, the Agency finds that Korean Air properly applied the terms and conditions set out in Rules 65(B)(1)(a) and 90(E)(2) of its Tariff.

[29] The Agency therefore dismisses the application.

Member(s)

P. Paul Fitzgerald
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