Decision No. 109-C-A-2017

December 13, 2017

APPLICATION by Edward Diogo, on behalf himself and Jacquelyn Diogo, Maria Diogo and Maria Pereira against Transportes Aéreos Portugueses, S.A (TAP) pursuant to subsection 111(1) of the Air Transportation Regulations, SOR/88-58, as amended (ATR).

Case number: 
16-05367

SUMMARY

[1] In Decision No. LET-C-A-31-2017, the Canadian Transportation Agency (Agency) directed TAP to show cause why the Agency should not find Rules 55(B)(3)(b) and (c) of its International Passenger Rules and Fares Tariff, NTA (A) No. 314 (Tariff) unclear and unreasonable, and why the Agency should not find its Tariff, by way of Fare Rule 9035, unreasonable.

[2] This Decision will address the show cause direction set out in Decision No. LET-C-A-31-2017.

[3] For the reasons set out below, the Agency finds that TAP’s Tariff is unreasonable and orders TAP to amend its Tariff to include a description of its policy with respect to “through check in” and to specify any limitations that may apply therein.

BACKGROUND

[4] On November 10, 2016, Edward Diogo filed an application with the Agency against TAP regarding a missed connecting flight that resulted in a two-day travel delay in Lisbon, Portugal.

[5] On January 5, 2017, TAP filed its answer to the application and on January 10, 2017, Mr. Diogo filed his reply.

[6] On June 16, 2017, the Agency issued Decision No. LET-C-A-31-2017, where it found that TAP failed to apply the terms and conditions of its Tariff relating to delay, and ordered TAP to compensate Mr. Diogo in the amount of CAN$2,163.46. The Agency also made the preliminary findings that:

  1. TAP’s Tariff Rules 55(B)(3)(b) and (c) relieve TAP from its liability in a manner that is contrary to the Convention for the Unification of Certain Rules for International Carriage by Air – Montreal Convention (Montreal Convention).
  2. TAP’s Tariff, by way of Fare Rule 9035, results in passengers not being able to receive, when they check in at the airport, all of the boarding passes necessary to complete their journey.

[7] On July 17, 2017, TAP responded to Decision No. LET-C-A-31-2017.

[8] On August 28, 2017, the Agency issued Decision No. LET-C-A-53-2017, in which questions were addressed to TAP, seeking clarification regarding its check-in procedures and policies.

[9] On September 12, 2017, TAP responded to the questions posed in Decision No. LET‑C‑A‑53‑2017.

PRELIMINARY MATTER

[10] On July 5, 2017, in response to Decision No. LET-C-A-31-2017, TAP filed with the Agency amendments to its Tariff Rules 55(B)(3)(b) and (c) as follows:

[…]

b. Damages occasioned by delay are subject to the terms, limitations and defenses set forth in the Warsaw Convention and the Montreal Convention, whichever may apply, in addition to any limitation or defense recognized by a Court with proper jurisdiction over a claim.

c. The Carrier reserves all defenses and limitations available under the Warsaw Convention or the Montreal Convention, whichever may apply to claims for damage occasioned by delay, including, but not limited to, the exoneration defense of Article 21 of the Warsaw Convention and Article 20 of the Montreal Convention. Under the Montreal Convention, the liability of the Carrier for damage caused by delay is limited to 4,694 Special Drawing Rights per passenger. The limits of liability shall not apply in cases described in Article 25 of the Warsaw Convention or Article 22(5) of the Montreal Convention, whichever may apply.

[…]

[11] Given that TAP amended its Tariff as directed, the Agency will no longer consider this matter.

THE LAW

[12] Subsection 111(1) of the ATR requires that a carrier’s terms and conditions of carriage be just and reasonable.

All tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just and 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.

[13] If the Agency finds that a carrier’s tariff is unjust or unreasonable, section 113 of the ATR empowers the Agency to:

  1. suspend any tariff or portion of a tariff that appears not to conform with subsections 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
  2. establish and substitute another tariff or portion thereof for any tariff or portion thereof disallowed under paragraph (a).

[14] TAP’s Tariff states that its fare rule provisions are to be considered part of the Tariff.

5(A)(8) Except as otherwise provided below, fare rule provisions, local or joint fares, including arbitraries contained in the On-line Tariff Database maintained by Airline Tariff Publishing Company, agent on behalf of [TAP], are considered to be part of this tariff.

[15] Fare rule 9035 is the applicable rule to the applicants’ travel; it permits the sale of an itinerary where two carriers operating a routing do not have a ticketing agreement.

POSITION OF TAP

[16] TAP states that the applicants’ flights consisted of a domestic flight operated by Serviços e Transportes Aéreos, S.A (SATA), and an international flight operated by Air Canada. TAP submits that passengers arriving into Lisbon from a domestic flight do not arrive in the secure international area of the Lisbon airport, but rather in its domestic area. TAP maintains that in order to access the secure international area, passengers have to check in again to be able to proceed through security and then onward to customs and immigration.

[17] TAP submits that, other than checking in at the Air Canada counter, there were alternative ways for the applicants to obtain their boarding passes for their Lisbon to Toronto flight. TAP argues that the applicants could have checked in and received their boarding passes online, at the self-service kiosks in the Lisbon Airport, or at TAP’s Lisbon transfer desk.

[18] With respect to SATA and Air Canada not having a ticketing agreement with each other, TAP submits that its code-share operations were authorized by the Agency, and maintains that operating carriers make their own decisions with respect to the interline agreements they enter into. TAP argues that marketing carriers are not in a position to force operating carriers to enter into such agreements, especially where there is no regulatory requirement to that effect.

[19] TAP argues that its Tariff does not require modification and that the “through check in” procedure contemplated in Decision No. LET-C-A-31-2017 would be a “cumbersome solution to a non-existing – or at least considerably overstated – problem”.

ANALYSIS AND DETERMINATIONS

[20] The Agency has stated in previous decisions that in order to determine whether a term or condition of carriage applied by an air carrier is “reasonable” within the meaning of subsection 111(1) of the ATR, a balance must be struck between the rights of passengers to be subject to reasonable terms and conditions of carriage, and the particular air carrier’s statutory, commercial, and operational obligations.

[21] In this case, the applicants were travelling from Ponta Delgada, Portugal to Toronto, Ontario, Canada, via Lisbon, on code-share flights marketed as TAP but operated by SATA and Air Canada. The applicants tried to obtain their onward boarding passes when checking in with SATA in Ponta Delgada; however, “through check in” was not available. “Through check in” enables passengers who are travelling on a single multi-segmented ticket to check in for all of their connecting flights, to their destination, in one transaction.

[22] The fare purchased by the applicants was governed by Fare Rule 9035. This Rule contains a combinability provision that permits TAP to construct routings under its code that utilize flights operated by SATA within Portugal, and flights operated by Air Canada for travel between Portugal and Canada. This can result in the issuance of a single ticket by TAP, despite the fact that TAP does not operate a portion of the routing and that the carriers that do operate the flights (i.e. SATA and Air Canada) do not share a ticketing agreement with one another.

[23] TAP argues that it cannot force its partners into ticketing agreements. The Agency agrees with this statement. However, the Agency notes that TAP does have control over its own operations, specifically, the fares that it sells and the conditions contained in their associated fare rules. In this case, Fare Rule 9035 permitted the issuance of a single ticket, when SATA and Air Canada do not have a ticketing agreement with each other. The Agency notes that the issuance of a single ticket would reasonably lead a person to conclude that “through check in” is available.

[24] Furthermore, the applicants were travelling on code-share flights. The underlying principle of code-share agreements is to provide consumers with a seamless travel experience. This position is supported in TAP’s response to Decision No. LET-C-A-53-2017 wherein it states that it applies Star Alliance’s seamless travel policy and makes available to its partners, specifically SATA and Air Canada, Inter Airline Through Check-In (IATCI). The Agency finds that these policies were not applied to the applicants’ return travel.

[25] The Agency notes that TAP is aware that SATA and Air Canada do not have a ticketing agreement with each other. TAP also does not dispute that passengers travelling on routings combining these carriers may encounter difficulties obtaining onward boarding passes when checking in. The Agency finds that selling such routings undermines the seamless travel principle of code-share transportation. In this case, if the applicants had full knowledge of all of the implications associated with purchasing such an itinerary in advance, they may have chosen to book alternate flights. TAP has an obligation to be transparent about its practices, and a duty to apprise consumers of limitations that may impede their travel.

[26] Therefore, based on the foregoing, the Agency finds that an imbalance exists between the interests of TAP and that of its customers. Itineraries that combine routings of code-share partners with no ticketing agreements, under TAP’s code and issued as a single ticket, create commercial advantage for TAP, and they can expose passengers to significant risk, as was experienced by the applicants in this case. Moreover, the Agency finds that TAP has not submitted any persuasive arguments to lead the Agency to conclude that its Tariff, by way of Fare Rule 9035, is not unreasonable.

[27] The Agency recognizes that if it were to order TAP to amend the combinability provision in Fare Rule 9035, to prohibit the construction of routings combining the services of both SATA and Air Canada under TAP’s code, this would create an undue hardship for the carrier. TAP would need to reprogram the combinability provision of its Rule in order to restrict the sale of such routings. It would also have to ensure that the global distribution systems, which distribute TAP’s fares to the computer reservation systems, update their systems to reflect the changes made to the Rule. In addition, customers around the world who currently hold tickets, or who are in the midst of travel on an itinerary that contains a routing combining flights operated by SATA and Air Canada under TAP’s code, would have to have their tickets re-issued with an alternate routing, as their ticket would be considered invalid. Therefore, the Agency finds that ordering TAP to amend the combinability provision in Fare Rule 9035 would be unreasonable. However, to protect the broader interests of consumers, as Fare Rule 9035 is fare specific, the Agency finds that TAP’s terms and conditions of carriage, as found in its Tariff, should set out the carrier’s “through check in policy” and any limitations that may apply therein. This will remove any uncertainty that may exist, as to the rights and obligations of the passenger and the carrier, in situations such as these.

CONCLUSION

[28] The Agency finds that TAP has not shown cause why its Tariff should not be found unreasonable pursuant to subsection 111(1) of the ATR.

ORDER

[29] The Agency orders TAP, pursuant to paragraph 113(b) of the ATR, to amend its Tariff to include its “through check in” policy and to set out any limitations that may apply therein. TAP is to file with the Agency a Tariff provision addressing this matter as soon as possible, and no later than January 29, 2018.

Member(s)

Stephen Campbell
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