Decision No. 249-C-A-2012

INTRODUCTION

[1] In Decision No. LET-C-A-79-2011 dated August 8, 2011 (Show Cause Decision), the Canadian Transportation Agency (Agency) made preliminary findings with respect to the reasonableness of certain tariff provisions and directed WestJet, among other matters, to show cause why certain actions should not be taken respecting its current Scheduled International Passenger Rules Tariff No. CTA(A) No. 4 (Tariff) and in particular Rules 15.2(a), (b), (c) and 15.3. The Agency provided WestJet and Mr. Lukács with the opportunity to address these preliminary findings.

[2] In its submissions dated September 6, 2011, in response to the Show Cause Decision, WestJet advised that it does not contest the principles set out in that Decision and, in “an attempt to respect and implement the spirit” of that decision, WestJet provided proposed tariff amendments for Rule 15.

[3] Submissions were filed by Mr. Lukács in response to the proposed tariff amendments and WestJet was provided with an opportunity to respond.

[4] As a result of the submissions filed, WestJet made further revisions to its proposed revised tariff.

[5] The Agency, in Decision No. LET-C-A-133-2011 dated December 13, 2011, determined that as WestJet does not contest the principles set out in the Show Cause Decision, it would turn its attention to WestJet’s proposed tariff provisions. Accordingly, pleadings were reopened and both parties were given the opportunity to comment on WestJet’s revised tariff provisions.

[6] In order to ensure that the parties’ submissions were focussed on the appropriate tariff provisions, the Agency required WestJet to file a complete copy of the entire tariff provisions which WestJet proposes to implement pursuant to the Show Cause Decision, which it did on December 19, 2011. Mr. Lukács was then given the opportunity to file a submission on these proposed tariff rules (Proposed Tariff Rules), which he filed on December 26, 2011. WestJet filed a response on January 10, 2012.

[7] The Agency’s findings on the clarity and reasonableness of the Proposed Tariff Rules will be in relation to those filed by WestJet on December 19, 2011 which are set out in Appendix A.

[8] In this Decision, the Agency will first provide its determination on the preliminary findings set out in the Show Cause Decision based on the submissions made by both parties on the complaint filed by Mr. Lukács and in response to the Show Cause Decision.

[9] The Agency will then consider whether the Proposed Tariff Rules are clear and reasonable.

FINAL DECISION ON THE SHOW CAUSE DECISION

The Agency’s preliminary findings

[10] The Agency made the following preliminary findings in the Show Cause Decision:

• Overbooking and cancellation that are within WestJet’s control constitute delay for the purpose of Article 19 of the Convention for the Unification of Certain Rules for International Carriage by Air – Montreal Convention (Convention)¹.
• With a presumption of liability for delay against a carrier, there is a concomitant obligation for a carrier to mitigate such liability and address the damage which has or may be suffered by a passenger as a result of the delay.
• A circumstance-focussed approach is a reasonable approach to addressing the issue of overbooking and cancellation when the circumstances are made known to WestJet. The Agency stated that the jurisprudence dealing with overbooking or cancellation takes a circumstance-focussed approach by generally looking to the particular circumstances of a situation to determine whether a carrier took all reasonable measures to avoid the damage caused by delay. For example, the time-sensitive nature of a passenger’s purpose of travel is a consideration in applying this approach.
• Tariff Rule 15.2(c) is unreasonable as WestJet has not demonstrated why, given its commercial and operational obligations, it cannot refund the entire ticket cost and has not addressed the question of returning a passenger to their point of origin, within a reasonable time and at no extra cost, in cases where delay or cancellation occurs at a connecting point during travel with the result that a passenger’s travel no longer serves the passenger’s purpose.
• Tariff Rule 15.2(c)’s indication that WestJet will make “all reasonable efforts” to provide a refund to passengers is unreasonable.
• Tariff Rule 15.2 is unreasonable as it gives to WestJet the choice of option as to whether the passenger will receive a refund of the unused portion of their ticket or whether the passenger will continue on their journey on another flight.
• Tariff Rule 15.2 is unreasonable as it does not give any indication of which rights and remedies a passenger might have under the applicable provisions of the Convention in the event of overbooking or cancellation and it does not indicate that passengers may have rights and remedies at law outside the Conventions.
• Tariff Rule 15.3 is unreasonable as the choice of option as to whether a passenger will obtain a refund or credit is at WestJet’s discretion.
• Tariff Rule 15.3 is unreasonable as it limits WestJet’s liability in the event of a refund by stating that the carrier shall not be liable to any passenger if it provides, at its discretion, the credit or refund set out in the provision.

Submissions in response to the Show Cause Decision

[11] As noted above, in response to the Show Cause Decision, WestJet submits that it does not contest the principles set out in that Decision.

[12] WestJet also accepts the conclusion of the Agency that overbooking and cancellation, to the extent that they are within the control of the carrier, should fall within the meaning of “delay” as found in Article 19 of the Convention.

[13] In an “attempt to respect and implement the spirit” of the Show Cause Decision, WestJet submitted proposed amendments to the Tariff in question.

[14] However, WestJet further submits that its voluntary proposed compliance should not be taken as acceptance of the assertions made by Mr. Lukács and set out in the Show Cause Decision. For example, WestJet asserts that Mr. Lukács’ statement that overbooking produces additional revenue for the carrier is incorrect.

[15] Mr. Lukács submits that he accepts the Agency’s conclusions on all four of the issues identified in the Show Cause Decision.

Analysis and findings

[16] In determining whether a tariff provision is just and reasonable, the Agency must strike a balance between an air carrier's statutory, commercial and operational obligations and the rights of passengers. In responding to the Show Cause Decision, WestJet was given an opportunity to provide any submissions that it considered relevant including providing any statutory, operational or commercial reasons as to why the Agency should not determine that the tariff provisions at issue are unreasonable. However, WestJet responded by stating that it does not contest the principles set out in the Show Cause Decision. Accordingly, in assessing the balance between WestJet and its passengers, the Agency adopts as final the preliminary findings that it made in the Show Cause Decision and that are identified above.

Conclusion on the Show Cause Decision

[17] In light of the foregoing, the Agency disallows Tariff Rules 15.2 and 15.3 of the existing Tariff.

CLARITY AND REASONABLENESS OF THE PROPOSED TARIFF RULES

[18] The Agency will now consider the pleadings made in respect of WestJet’s Proposed Tariff Rules in order to determine if they are clear, as required by section 122 of the Air Transportation Regulations, SOR/88‑58, as amended (ATR) and reasonable within the meaning of section 111 of the ATR. In making its determination, the Agency will take into account the principles developed in the Show Cause Decision, and refer to the preliminary findings in the Show Cause Decision and the principles on which they are based in evaluating WestJet’s Proposed Tariff Rules.

Clarity of Proposed Tariff Rule 15.2

Applicable legislation

[19] The Agency's jurisdiction in matters respecting international tariffs is set out in Part V, Division II, International Tariffs of the ATR.

[20] Subsection 110(4) of the ATR requires that tariffs must be consistent with the provisions of the ATR, which includes section 122 of the ATR.

[21] A carrier’s tariff must conform to section 122 of the ATR which requires that, for international carriage, the terms and conditions of carriage contained in the carrier's tariff should clearly state the air carrier's policy in respect of, at minimum, certain enumerated matters.

[22] More specifically paragraph 122(a) of the ATR provides that:

Every tariff shall contain:

(a) the terms and conditions governing the tariff generally, stated in such a way that it is clear as to how the terms and conditions apply to the tolls named in the tariff;

Subparagraphs 122(c)(iii), (iv), (v) and (vi) of the ATR provide that:

Every tariff shall contain

(c) the terms and conditions of carriage, clearly stating the air carrier's policy in respect of at least the following matters, namely,

[...]

(iii) compensation for denial of boarding as a result of overbooking,

(iv) passenger re-routing,

(v) failure to operate the service or failure to operate on schedule,

(vi) refunds for services purchased but not used, whether in whole or in part, either as a result of the client's unwillingness or inability to continue or the air carrier's inability to provide the service for any reason,

[...]

[23] The Agency has previously stated that an air carrier meets its tariff obligation of clarity when, in the opinion of a reasonable person, the rights and obligations of both the carrier and the passengers are stated in such a way as to exclude any reasonable doubt, ambiguity or uncertain meaning². Applying this standard with respect to clarity, the Agency will address below the specific provisions of Proposed Tariff Rule 15 which Mr. Lukács, in his submission dated December 26, 2011, has identified as failing to meet the Agency’s legal test for the clarity of air carrier tariff provisions.

Proposed Tariff Rule 15.2- Available options

Positions of the parties

[24] Mr. Lukács submits that Proposed Tariff Rule 15.2 fails to clearly state whether a passenger may choose only one of the listed options, or a combination. For example, it is not clear whether a passenger could choose both options set out in Proposed Tariff Rules 15.2.1 and 15.2.4.

[25] WestJet claims that when Proposed Tariff Rule 15.2 is read in conjunction with Proposed Tariff Rules 15.2, 15.3, and 15.4, it is apparent that the passenger will be given one or more alternatives depending on the circumstances of the case. WestJet states that it is clear that it has the obligation to consider the circumstances of the passenger affected by the overbooking or cancellation and offer remedies designed to recognize and appropriately mitigate the impact of the overbooking or cancellation. WestJet submits that in some cases, such as cancellations which cause only very brief delays in continued transportation, it may be that continued transportation alone will be sufficient, while in others a combination of remedies may be required to mitigate the impact.

Analysis and findings

[26] Although WestJet submits that the tariff wording clearly indicates that, depending upon the case, a passenger will be provided with one or more alternative remedies, the Agency is of the opinion that this intention is not clearly reflected in the Proposed Tariff Rule. The addition of “and/or”, rather than clarifying the options available, in the Agency’s opinion, creates confusion as to which permutations and combinations of options are available. The Agency is of the opinion that this would leave a reasonable person with a reasonable doubt as to the remedies to which they might be entitled.

[27] For example, clearer wording would indicate that the carrier will give the passenger the option to choose between Proposed Tariff Rules 15.2.1 or 15.2.2, and any one or more of Proposed Tariff Rules 15.2.3 and 15.2.4. Proposed Tariff Rules 15.2.1 and 15.2.2 are mutually exclusive, so stating that a passenger might be entitled to 15.2.1 and/or 15.2.2 leads to an absurd result. The Agency is of the opinion that using the phrase “and/or” leads to inconsistency and contributes to the ambiguity of the provision.

[28] The Agency is of the opinion that the text with respect to the specific issue of choice of options, as set out in WestJet’s Proposed Tariff Rule 15.2, would be considered to lack clarity if it were filed with the Agency.

Conclusion

[29] The Agency has determined that the revision to Proposed Tariff Rule 15.2 lacks clarity with respect to the specific issue of choice of options, and that if such Rule were to be filed with the Agency, it would be considered to be contrary to section 122 of the ATR.

Proposed Tariff Rules 15.2.3 and 15.2.4 – Method used to define the amount of compensation

Positions of the parties

[30] Mr. Lukács submits that Proposed Tariff Rules 15.2.3 and 15.2.4 fail to clearly state the method WestJet will use to define the amount of the compensation.

[31] Mr. Lukács identifies the following phrases of Proposed Tariff Rule 15.2, “a transportation service which service will be identified by the Carrier”, “monetary payment in an amount to be defined by the Carrier” and “a credit to be defined by the Carrier” as unclear and contrary to paragraph 122(a) of the ATR in that they fail to clearly define the carrier’s obligations.

[32] WestJet claims that Proposed Tariff Rules 15.2.3 and 15.2.4 clearly state that it will consider the known circumstances and make a good faith effort to fairly recognize, and appropriately mitigate, the impact of the overbooking or cancellation.

Analysis and findings

[33] The Agency notes that Mr. Lukács also raises issues respecting the reasonableness of these Proposed Tariff Rules. Those issues will be dealt with in the section that follows, which addresses the concerns of Mr. Lukács with the reasonableness of certain provisions of Proposed Tariff Rule 15.

[34] Subject to the review of reasonableness set out below, the Agency is of the opinion that the Proposed Tariff Rules are unambiguous in that together with Proposed Tariff Rules 15.4 and 15.5, they clearly state that WestJet, when determining the amount of compensation to be offered a passenger in the event of delay, will take into account the circumstances of the passenger, including expenses incurred, and will make a good faith effort to recognize and mitigate the impact of the overbooking or cancellation on the passenger. It is clear that a circumstance-focussed approach will be applied and that this is the basis upon which the alternatives will be considered by WestJet.

[35] However, another issue to consider is whether reference in Proposed Tariff Rule 15.2.3 to “a monetary payment in an amount... which shall in no case be less than the value of the unused portion of the passenger’s ticket” is clear. The Agency considered that same issue in reviewing WestJet’s domestic tariff in Decision No. 219-C-A-2005. The Agency pointed out that the tariff rule did not identify the basis upon which the “unused portion” would be calculated and that there appeared to be no other tariff provision that set out a general methodology that could be relied on to calculate the “unused portion”. The Agency concluded that a reasonable person would be left with a reasonable doubt as to the refund entitlement of a passenger and that accordingly the subject provision was not clear.

[36] The Agency refers WestJet to that Decision because, although it concerned a domestic tariff, the principle remains the same and applies in the international context. Accordingly, the Agency is of the opinion that Proposed Tariff Rule 15.2.3 is not clear as a reasonable person would be left with a reasonable doubt as to what would be the lower limit of a potential monetary payment in a situation of overbooking or cancellation.

[37] Accordingly, WestJet is directed to file a tariff that identifies the methodology by which a refund of the “unused portion” of a ticket will be calculated, or that makes reference to the methodology to be relied on to calculate the unused portion of the ticket.

Conclusion

[38] The Agency has determined that Proposed Tariff Rules 15.2.3 and 15.2.4 are unambiguous in that, when read with Proposed Tariff Rules 15.4 and 15.5, they clearly state that WestJet, when determining the amount of compensation to be offered to a passenger in the event of delay, will take into account the circumstances of the passenger, including expenses incurred, and will make a good faith effort to recognize and mitigate the impact of the overbooking or cancellation on the passenger.

[39] The Agency, however, has also determined that Proposed Tariff Rule 15.2.3 is not clear insofar as a reasonable person would be left with a reasonable doubt as to what would be the lower limit of a potential monetary payment in a situation of overbooking or cancellation. If this Proposed Tariff Rule were to be filed with the Agency, it would be considered to be contrary to section 122 of the ATR.

Proposed Tariff Rule 15 – out-of-pocket expenses

Positions of the parties

[40] Mr. Lukács maintains that Proposed Tariff Rule 15 fails to clearly state whether a passenger who chooses options 15.2.1 or 15.2.2 is also entitled to be reimbursed for reasonable out-of-pocket expenses such as accommodation, meals and alternative transportation.

[41] WestJet responds that if it determines that the passenger, acting reasonably, incurred such expenses it will be obliged to include an alternative remedy which will appropriately compensate the passenger for the expenses reasonably incurred.

Analysis and findings

[42] The Agency is of the opinion that Proposed Tariff Rules 15.4 and 15.5 make it clear that a passenger, in the appropriate circumstances, will be reimbursed for out-of-pocket expenses. Proposed Tariff Rule 15.2 sets out the alternative remedies that are available and Proposed Tariff Rules 15.4 and 15.5 set out the particulars as to how the specifics of compensation are to be made.

[43] Proposed Tariff Rule 15.4 specifically states that in defining the alternative remedies to be offered, WestJet will consider any expenses that the passenger, acting reasonably, might have incurred. The Agency finds that the subject provision would be considered clear and not ambiguous if filed with the Agency.

Conclusion

[44] Rules 15.2.1 and 15.2.2, when read in conjunction with Rules 15.4 and 15.5, would be considered clear and not ambiguous with respect to out-of-pocket expenses, if filed with the Agency.

Proposed Tariff Rules 15.4 and 15.5

Positions of the parties

[45] Mr. Lukács states that Proposed Tariff Rules 15.4 and 15.5 refer to various considerations that WestJet ought to take into account. However, they appear to leave it to WestJet’s discretion as to how these considerations are taken into account and the Proposed Tariff Rules are therefore contrary to paragraph 122(a) of the ATR in that they fail to clearly define the carrier’s obligations.

[46] Mr. Lukács maintains that Proposed Tariff Rules 15.4 and 15.5 fail to clearly state the obligations of WestJet because the phrases “will consider” and “will make a good faith effort” are vague.

[47] WestJet submits that the phrases “will consider” and “will make a good faith effort” are not always vague, and that the context must be considered. According to WestJet, if a tariff were to simply state that the carrier “will consider” offering compensation (while leaving it open to the carrier to decide to decline to offer compensation), that might properly be said to be a vague undertaking which can provide the passenger no comfort as everything is left to the discretion of the carrier. WestJet submits that, under its Proposed Tariff Rules it has a clear obligation to define alternatives, and that in defining those remedies, WestJet must consider certain circumstances.

[48] WestJet asserts that this approach is in accordance with the directions given by the Agency. In Proposed Tariff Rule 15.5, the basic obligation is clear; that is, to define alternative remedies. The Proposed Tariff Rule then goes on to impose restrictions which bind the carrier in defining those remedies.

Analysis and findings

[49] The Agency agrees with WestJet’s submissions that the context must be considered in determining the clarity of the phrases “will consider” and “will make a good faith effort”. As explained by WestJet, its Proposed Tariff Rules compel the carrier to consider certain circumstances relating to a delay or cancellation of a flight, with respect to available transportation services and the particular circumstances of the passenger affected by a delay or cancellation. This requirement reflects the circumstance-focussed approach which the Agency stated in the Show Cause Decision is appropriate. The Proposed Tariff Rules, as noted by WestJet, clearly establish the alternatives that WestJet must offer to affected passengers.

[50] The Agency finds that the provisions are clear and not ambiguous.

Conclusion

[51] The Agency has determined that if Proposed Tariff Rules 15.4 and 15.5 were filed with the Agency, they would be considered clear and not ambiguous.

Proposed Tariff Rule 15 – alternative remedies

Positions of the parties

[52] Mr. Lukács maintains that Proposed Tariff Rule 15 fails to clearly state whether the “alternative remedies” listed in it are in addition to denied boarding compensation payable to passengers under the Tariff.

[53] WestJet responds that Proposed Tariff Rule 15 makes it clear that if a passenger affected by overbooking accepts alternative remedies proposed by WestJet, the passenger does so in full and final satisfaction of all claims arising from the overbooking.

Analysis and findings

[54] The Agency notes that Mr. Lukács also raises issues respecting the reasonableness of full and final satisfaction of claims as set out in Proposed Tariff Rule 15.6. Those issues will be addressed in the section that follows.

[55] Subject to the review of reasonableness set out below, the Agency is of the opinion that this provision clearly establishes that if an alternative remedy is accepted by a passenger, denied boarding compensation will not be tendered. Proposed Tariff Rule 15.2 clearly states that, subject to Proposed Tariff Rule 15.1, if a passenger is affected by overbooking they will have the option of choosing among the alternative remedies. Proposed Tariff Rule 15.6 goes on to state that the passenger’s acceptance of an alternative remedy is in full and final satisfaction of all claims.

[56] The Agency therefore finds that, in applying the test for clarity in the opinion of a reasonable person, the rights and obligations of both WestJet and passengers respecting this matter are stated in such a way as to exclude any reasonable doubt, ambiguity or uncertain meaning.

[57] The Agency finds that the provisions are clear and not ambiguous.

Conclusion

[58] The Agency has determined that if Proposed Tariff Rule 15, as it relates to alternative remedies and denied boarding compensation, were filed with the Agency, it would be considered clear and not ambiguous.

REASONABLENESS AND CONFORMITY WITH THE CONVENTION

[59] A carrier is required to not only clearly set out its policy with respect to overbooking and cancellation, but to also ensure that with respect to international flights, its tariff is just and reasonable within the meaning of subsection 111(1) of the ATR.

[60] Subsection 111(1) of the ATR states:

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.

[61] The Agency has stated in previous decisions that in order to determine whether a term or condition of carriage applied by a 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 obligations³.

[62] The terms and conditions of carriage are set out by an air carrier unilaterally without any input from passengers. The air carrier sets its terms and conditions of carriage on the basis of its own interests, which may have their basis in purely commercial requirements. There is no presumption that a tariff is reasonable.

[63] When balancing the passengers’ rights against the carrier’s obligations, the Agency must consider the whole of the evidence and the submissions presented by both parties and make a determination on the reasonableness or unreasonableness of the term or condition of carriage based on which party has presented the more compelling and persuasive case.

[64] In his submissions dated December 26, 2011, Mr. Lukács, in addition to his submissions setting out his concerns regarding the clarity and reasonableness of the Proposed Tariff Rules, provides submissions on whether the provisions are in conformity with the Convention. In keeping with past Agency decisions where the Agency has determined that a tariff provision that is contrary to the Convention is unreasonable, the Agency will consider the submissions of the parties on the issue of conformity with the Convention.

Reasonableness of Proposed Tariff Rule 15.1

Positions of the parties

[65] With respect to WestJet’s Proposed Tariff Rule 15.1, Mr. Lukács submits that Article 19 of the Convention establishes a regime of strict liability, namely, a carrier is liable for the damage occasioned by delay unless it can show that it has taken all reasonable measures to avoid the damage or that such measures were impossible to take. He submits, therefore, that liability under Article 19 does not depend on whether the damage was caused as a result of acts of nature and/or third parties. Mr. Lukács argues that the only question relevant for the purposes of Article 19 is whether the carrier has taken all reasonable measures to avoid damage to its passengers and whether such measures were possible at all. Consequently, Mr. Lukács submits that the reference to “acts of nature or third parties” is a provision tending to relieve WestJet of the liability to which it is subject under Articles 19 and 22 of the Convention and is therefore contrary to Article 26 and unreasonable.

[66] Mr. Lukács further argues that the act of overbooking and/or overselling a flight is by its very definition a deliberate one, which is within the control of WestJet. He submits that if overbooking results in a delay, then it would be fictitious for a carrier to argue that it has taken all reasonable measures to avoid delay, because the act of overbooking itself is inconsistent with taking all necessary measures to avoid a delay.

[67] WestJet responds that the introductory words to Proposed Tariff Rule 15.1 provide useful clarification of the extent of an air carrier’s liability and will allow an interested passenger to understand the nature of carrier legal liability as well as the limiting conditions that apply. Carriers are not responsible for delays caused by strikes, unsafe meteorological conditions, criminal or political interference and other acts of nature or third parties.

[68] WestJet does agree that the specific Convention test should be stated in the Proposed Tariff Rule.

[69] Furthermore, WestJet asserts that it is incorrect to state that overbooking is necessarily an intentional act. WestJet does not intentionally overbook any of its flights and yet situations do arise in which the number of seats sold for a particular flight exceeds the number of passengers who may be carried. The causes of unintentional overbooking are several and an overbooking situation may arise without necessarily rendering it impossible for a carrier to show that it took all necessary measures to avoid delaying its passengers.

[70] For example, as respects crew restrictions, WestJet submits that the Canadian Aviation Regulations (CAR 705.104) specify the number of flight attendants required for the operation of a flight which, simplified somewhat, is one flight attendant for each unit of forty passengers on board or a portion thereof. As such, if a flight is scheduled to be operated with four flight attendants it will be possible to enplane up to 160 passengers but if one of the four scheduled attendants takes ill at the last minute and if it is not possible to replace that attendant, then the maximum number of passengers who can be carried will fall to 120, which may result in some passengers who have purchased tickets being denied carriage on that flight.

[71] Accordingly, in some circumstances, a court or the Agency may determine that a carrier that failed to carry all ticketed passengers on a flight, and caused those passengers delay, may nevertheless have taken all reasonably necessary measures.

[72] WestJet further submits that the number of passengers who may be carried on a flight may be affected by either a legal or physical reduction in the number of available passenger seats. For example, mechanical conditions may require that, as a result of legal regulations, the number of passengers carried be restricted to a lesser number than the number of physical seats. In addition, an aircraft may not be able to operate a specific service for mechanical or operational reasons. As a result, WestJet might have to substitute an aircraft of lesser seating capacity. WestJet argues that bumping passengers in this situation is not necessarily inconsistent with a necessary measures defence.

[73] Finally, WestJet states that the maximum take-off weight of an aircraft, which is established by regulation, depends on such things as runway elevation, outside air temperature, length of available runway, wind direction, speed and runway conditions and that except for runway elevation, any of these may vary and thus cause changes to the maximum take-off weight. In addition, WestJet notes that the amount of fuel required for a particular flight will vary from day to day and this variation may be critical in determining whether an aircraft has the capability to operate from a particular runway on a particular day. Sometimes an aircraft has to carry more fuel to meet regulations due, for example, to meteorological conditions and the impact on the maximum take-off weight may result in some passengers being bumped.

[74] Accordingly, a flight may have been planned for and sold to a greater number of passengers than can be actually carried due to unpredictable weather and its impact on take-off weight. WestJet claims that the carrier that is forced to deny carriage to some passengers who have purchased a ticket may be able to make a necessary measures defence.

[75] In response to WestJet’s submissions, Mr. Lukács refers to the scenario raised by WestJet where, due to an insufficient number of flight attendants, the maximum number of passengers the aircraft can carry is smaller than its capacity, as well as the scenario suggested by WestJet related to take-off weight and fuel. He submits that both scenarios are well within the scope of what the carrier must be prepared for, and must take into account. He further submits that a carrier is reasonably expected to have an adequate crew (both in skills and number), and it must have a reasonable backup in case one of the crew members is ill, which is far from being an exceptional situation. He claims that the same applies for take-off weights and the fact that WestJet suggested this as a possible scenario shows that it is not uncommon, and therefore WestJet ought not sell seats in excess of its capacity.

[76] Furthermore, Mr. Lukács claims that Proposed Tariff Rule 15.1 misstates WestJet’s obligations under the Convention and/or tends to relieve the carrier from liability which is laid down in the Convention in three respects.

[77] First, Mr. Lukács argues that the language of Proposed Tariff Rule 15.1 fails to reflect the heavy burden of proof that Article 19 of the Convention places upon carriers.

[78] Second, Mr. Lukács states in earlier submissions that the phrase “acts of nature or third parties” tends to relieve the carrier of liability as established by the Convention, and thus is void by reason of Article 26. Mr. Lukács asserts that the legal test for liability in cases of delay provided by Article 19 of the Convention is “all measures that could reasonably be required to avoid the damage.” Consequently, Mr. Lukács submits that while acts of nature or third parties may be causes for a delay, the carrier cannot exonerate itself from liability under Article 19 unless it meets the “all measures that could reasonably be required to avoid the damage” test.

[79] Mr. Lukács states that this principle, found also in the Warsaw Convention, was applied in Assaf v. Air Transat A.T. Inc., [2002] J.Q. no 8391, where the delay was originally caused by a mechanical failure, however, the court found that as the carrier failed to take “all measures that could reasonably be required to avoid the damage,” it was liable. He also submits that the same principles were applied in Quesnel v. Voyages Bernard Gendron inc., [1997] J.Q. no 5555, reiterated in D’Onofrio v. Air Transat A.T. Inc., [2000] J.Q. n^o 2332., and recently cited with approval and applied in Lukács v. United Airlines, 2009 MBQB 29 (leave to appeal denied; 2009 MBCA 111).

[80] Third, Mr. Lukács argues that in cases of an overbooking, it is fictitious for a carrier to argue that it has taken all reasonable measures to avoid delay because the act of overselling flights is inconsistent with taking all necessary measures to avoid a delay.

[81] For these reasons, Mr. Lukács claims that Proposed Tariff Rule 15.1 is inconsistent with Article 19 of the Convention and tends to relieve WestJet from liability as laid down in the Convention, and is thus null and void pursuant to Article 26 and cannot be just and reasonable.

[82] WestJet disagrees that Proposed Tariff Rule 15.1 misstates WestJet’s obligations or tends to relieve it from liability laid down in the Convention and states that the Rule accurately describes the circumstances in which it will be liable for damage occasioned by overbooking or cancellation.

[83] WestJet submits that the fact that it is the carrier that bears the onus of proof is stated in Proposed Tariff Rule 15.7 which is the Rule that specifically addresses the issue of the applicable law in cases of overbooking and cancellation.

[84] WestJet asserts that the introduction to Proposed Tariff Rule 15.1, which refers to acts of nature or third parties and subjects the Rule to certain exceptions (the introduction) does not tend to relieve the carrier of liability in any sense. Rather, it is a simple warning to the passenger that the positive obligations undertaken by its Proposed Tariff Rule 15 are not intended to create an absolute liability regime. WestJet notes that there is nothing in the introduction which states that it will never be responsible for acts of nature or third parties and that all the introduction does is highlight for the passenger that it is not assuming an absolute liability.

[85] Further, WestJet states that the limits of liability are not defined by the introduction but by the statement in Proposed Tariff Rule 15.1 that the carrier is not liable if its employees and agents took all reasonable measures to avoid damage or it was impossible for them to take such measures, which clearly define the exception of the liability created by its undertakings in the Proposed Tariff Rule. According to WestJet, this exception is consistent with the requirements of the Convention.

[86] WestJet argues that with respect to overbooking, it is unreasonable to suggest that an air carrier should be able to foresee, and have excess capacity to address, every contingency which may affect the number of passengers who may be carried on a particular flight. WestJet acknowledges that this is not to say that an air carrier should automatically be excused for an overbooking situation by reference to the number of flight attendants available to work any particular flight or by reference to the maximum legal take-off weight of a particular aircraft on a particular day. However, what WestJet deems reasonable, both in terms of immediate response and long‑term planning, can only be judged in all circumstances of the case.

[87] When considering a case in which a passenger is denied boarding because of the number of flight attendants available, WestJet submits that it would be reasonable to consider such things as the labour pool available at a particular station, the time at which the carrier learned that an attendant would be unable to perform his or her duties and the reason for the inability, including the possibility of local epidemic conditions.

[88] In addition, when considering a case in which a passenger is denied boarding because of a reduction of the maximum take-off weight of the aircraft, WestJet believes that it would be reasonable to consider such things as the predictability of the conditions which caused the reduction. WestJet argues that when a carrier is selling tickets in November, must it have in contemplation a freak blizzard in mid-December which disrupts operations and requires certain flights to operate at lower passenger loads than anticipated?  According to WestJet, to adopt an absolute rule which would preclude the air carrier from attempting to show that, in a particular set of circumstances, it took all measures that could reasonably be expected, would be unreasonable.

[89] WestJet does not agree that Proposed Tariff Rule 15.1 misrepresents WestJet’s obligations under the Convention.

Analysis and findings

[90] With respect to Mr. Lukács’ assertion that Proposed Tariff Rule 15.1 does not reflect the heavy burden of proof required by Article 19 of the Convention, the Agency is of the opinion that the Proposed Tariff Rule clearly sets out the wording of Article 19 and the fact that WestJet will not be liable for damage occasioned by delay if it can meet the burden of establishing  that it and its servants took all measures that could reasonably be required to avoid the damage or it was impossible for them to take such measures. In the Agency’s opinion, setting out Article 19 of the Convention in this way is a reasonable way for a carrier to alert a passenger to the carrier’s obligations and limited exemptions from liability.

[91] With respect to the introduction to Proposed Tariff Rule 15.1 and Mr. Lukács’ assertions that inclusion of the phrase “acts of nature or third parties” relieves WestJet from the strict liability regime established in Article 19, WestJet has stated in its submissions that this part of the Proposed Tariff Rule does not tend to relieve it from liability but rather puts a passenger on notice that Proposed Tariff Rule 15.1 does not create an absolute liability regime.

[92] WestJet goes on to state that there is nothing in the introduction which states that it will never be responsible for acts of nature or third parties.

[93] Whether a carrier will be held liable under Article 19 of the Convention will depend on whether it or its servants and agents took all measures that could reasonably be required to avoid damage occasioned by delay, or that it was impossible for them to take such measures. Rather than setting out broad exclusions from liability such as acts of nature or of third parties, a case by case approach is warranted which looks, for example, at the predictability of an event in determining whether the carrier is exonerated under Article 19 of the Convention.

[94] For example, poor weather conditions may exonerate a carrier from liability, though the authors of the annotated Convention point out that this may not always be the case when it comes to situations such as fog, as an increasing number of airports are equipped for all‑weather air traffic, and aircraft that are properly equipped and authorized may be able to operate in foggy conditions⁴. Such developments in technology may alter the assessment of what constitutes “all reasonable measures”.

[95] With respect to third parties, a carrier may not be liable for delay caused by an unusually lengthy inspection by customs officials⁵. However, it is possible that where security checks are regularly carried out by government bodies or airport authorities, such checks could be considered predictable⁶. The Agency notes that with respect to staffing insufficiencies, the Cour du  Québec has found that a failure to ensure sufficient staff does not exonerate a carrier from liability⁷.

[96] Accordingly, while WestJet may be able to relieve itself from liability for acts of third parties or acts of nature, it is not certain that this will always be the case.

[97] Although it is clear from the submissions of WestJet that Proposed Tariff Rule 15.1 was not drafted to exclude WestJet’s responsibility for acts of nature of third parties, the Agency is of the opinion that the proposed provision is not reasonable as it leaves the impression that WestJet is never responsible for such acts.

[98] Mr. Lukács also asserts that if an overbooking situation results in delay, then a carrier could not argue that it has taken all reasonable measures to avoid delay, because the act of overbooking is inconsistent with taking all necessary measures to avoid a delay.

[99] Mr. Lukács’ argument suggests that overbooking itself is contrary to Article 19 of the Convention which sets out a carrier’s liability for damages arising from delay. With respect to overbooking and cancellation, the Agency has found that Article 19 of the Convention is to be considered in evaluating the reasonableness of WestJet’s Proposed Tariff Rules.

[100] However, in carrying out that evaluation, WestJet has argued that there may be situations in which overbooking occurs, but that it might be in a position to provide evidence that it took all reasonable measures to avoid delay, or that it was impossible for it to take such measures. The Agency notes WestJet’s submissions and is of the opinion that there may indeed be situations where overbooking does not necessarily result in delay, or that it could be shown that the carrier took all reasonable measures or it was impossible for it to do so. In these situations, overbooking may not be contrary to Article 19. This is consistent with the circumstance-focussed approach set out in the Show Cause Decision.

[101] In addition, the Agency does not consider it appropriate to make a finding in this case that overbooking itself is contrary to Article 19 of the Convention, as the parties’ submissions following the Show Cause Decision have been directed to the Proposed Tariff Rule proposed by WestJet and not to this broader issue.

Conclusion

[102] First, the Agency finds that the language of Proposed Tariff Rule 15.1 following the introduction reflects the burden placed on the carrier under Article 19 of the Convention and would be considered reasonable if filed with the Agency.

[103] Second, the Agency finds that the introduction of Proposed Tariff Rule 15.1 would be considered unreasonable if filed with the Agency, as it leaves the impression that WestJet is never responsible for acts of nature or third parties.

Reasonableness of Proposed Tariff Rule 15.2

Positions of the parties

[104] Mr. Lukács submits that Proposed Tariff Rule 15.2 is unreasonable because passengers are at the mercy of the carrier, which is contrary to the principle of balancing between the passenger’s rights and the carrier’s statutory, operational and commercial interests.

[105] Mr. Lukács further submits that Proposed Tariff Rule 15.2 should not be exclusive, and that the proposed wording of Proposed Tariff Rule 15.2 as set out in WestJet’s submission of September 6, 2011 suggests that a passenger who chooses to be transported by a service identified by WestJet as per Proposed Tariff Rule 15.2.1 will not be entitled to any other compensation, such as costs of meals, accommodation and other reasonable out-of-pocket expenses. This amounts to a provision tending to relieve WestJet from the liability set out by Articles 19 and 22 of the Convention and thus is contrary to Article 26 of the Convention.

[106] WestJet does not agree that Proposed Tariff Rule 15.2 is unreasonable. According to WestJet, the Agency has determined that it is not possible to determine in the abstract what the proper remedy is in any particular case as everything depends on individual circumstances. WestJet also claims that the circumstances in which the need to propose solutions to the problems of individual affected passengers is such that it is not possible to secure the timely intervention of an independent third party. WestJet concludes that the only workable solution is to allow the carrier, acting in good faith, to propose a solution and to allow the passenger to determine if the solution is acceptable given the carrier’s contractual obligations.

[107] WestJet agrees that Proposed Tariff Rule 15.2 should not be exclusive and in its proposed revised tariff has added the wording “and/or” to the end of subsections 2.1, 2.2, and 2.3. WestJet asserts that this modification, taken in conjunction with Proposed Tariff Rules 15.3 to 15.5, makes it clear that the carrier is to consider all the circumstances with the aim of crafting a good faith offer to appropriately mitigate the impact of the overbooking or cancellation.

[108] Mr. Lukács maintains that contrary to the Agency’s findings at paragraph 92 of its Show Cause Decision, the Proposed Tariff Rule 15 fails to contain clear provisions concerning the refund of the entire ticket cost, or the transportation of passengers affected by an overbooking or cancellation to their points of origin by and/or at the cost of WestJet.

[109] With respect to offering transportation to the point of origin, without additional costs, WestJet agrees with Mr. Lukács and has modified Proposed Tariff Rule 15.2 by adding sub-Rule 2.2 which reads “transportation, without further charge, to the passenger’s point of origin on a transportation service which service will be identified by the carrier; and/or.”

[110] WestJet argues that with respect to a refund of the entire ticket cost, this is a remedy which may be appropriate in a particular case, but it is not possible to define in advance which will be the appropriate case. WestJet submits that the structure of Proposed Tariff Rule 15 requires the carrier to consider all the circumstances and make an appropriate offer and in some cases this may be the return of the entire ticket cost.

Analysis and findings

[111] With respect to Mr. Lukács’ concern that the initial draft wording of 15.2 is exclusive and relieves WestJet from liability prescribed by Articles 19 and 22 of the Convention, the Agency notes that WestJet, in its Proposed Tariff Rules, added the words “and/or” at the end of sections 15.2.1, 15.2.2 and 15.2.3 which addresses Mr. Lukács concerns with exclusivity.

[112] However, as set out in paragraph 26 of this Decision, although WestJet submits that the proposed tariff wording clearly indicates that, in appropriate circumstances, a passenger will be provided with one or more alternative remedies, the Agency is of the opinion that this intention is not clearly reflected in the Proposed Tariff Rule.

[113] The Agency finds that the intent of the revised wording based on the submissions of WestJet addresses Mr. Lukács’ concerns and is reasonable. Accordingly, WestJet, in revising Proposed Tariff Rule 15.2 to address the Agency’s conclusions on clarity, must ensure that the revised wording also respects the Agency’s finding on reasonableness, that is that WestJet will consider all of the circumstances, including the offering of compensation that could include the cost of meals, accommodation and other reasonable out-of-pocket expenses.

[114] With respect to Mr. Lukács’ reference to paragraph 92 of the Show Cause Decision and the issue of returning a passenger to their point of origin, the Agency refers to WestJet’s Proposed Tariff Rules and in particular the addition of section 15.2.2 which provides for the additional alternative remedy of transportation of the passenger to their point of origin.

[115] The Agency notes that Mr. Lukács raised concerns on this issue and the Agency is of the opinion that Mr. Lukács’ concerns have been addressed, save and except for the question of returning a passenger to their point of origin “within a reasonable time”, which was raised by the Agency at paragraph 92 of the Show Cause Decision. The Agency notes that WestJet provided no submissions in response to the Show Cause Decision as to why it could not return the passenger within a reasonable time.

[116] With respect to Mr. Lukács’ reference to paragraph 92 of the Show Cause Decision and the Agency’s preliminary finding that WestJet had not demonstrated why it could not refund the entire ticket cost in cases of delay or cancellation, WestJet is of the view that this is a remedy which must be considered on a case-by-case basis.

[117] As WestJet has pointed out in its submissions, the revised tariff wording permits for the refund of the entire ticket cost in appropriate circumstances.

[118] In the Show Cause Decision, the Agency made a preliminary finding that WestJet had not demonstrated why, given its commercial and operational obligations, it could not refund the entire ticket cost. WestJet points out that the proposed tariff permits the refund of the entire ticket cost in appropriate circumstances. The Agency is of the opinion that the revised proposed wording would permit a passenger to get a full refund when the trip is interrupted and the passenger cannot carry out the intended purpose of the trip and is returned to their departure point.

Conclusion

[119] The Agency has determined that Proposed Tariff Rule 15.2 provides a balance between the passenger’s right to be fairly compensated and the operational and commercial interests of WestJet. Accordingly, the Proposed Tariff Rule, as it relates to a refund of the entire ticket cost and transportation to the passenger’s point of origin, would be considered reasonable if it were filed with the Agency.

[120] However the Agency finds that in response to the Show Cause Decision, WestJet has failed to address the issue of returning a passenger to their point of origin “within a reasonable time”. Accordingly, Proposed Tariff Rule 15.2, as it relates to this issue only, would be considered unreasonable if filed with the Agency.

Reasonableness of Proposed Tariff Rules 15.4 and 15.5

Positions of the parties

[121] Mr. Lukács states that Proposed Tariff Rules 15.4 and 15.5 refer to various considerations that the carrier ought to take into account and notes that they appear to leave it up to the carrier’s discretion as to how these are to be considered. He submits that these Proposed Tariff Rules are unreasonable, because they subject passengers to the mercy of the carrier, contrary to the principle of balancing between the passengers’ rights and the carrier’s statutory, operational and commercial interests.

[122] WestJet does not agree that Proposed Tariff Rules 15.4 and 15.5 are unreasonable and refers back to the comments made in response to Mr. Lukács’ similar objection to Proposed Tariff Rule 15.2.

[123] In response, Mr. Lukács claims that Proposed Tariff Rules 15.4 and 15.5 provide WestJet with discretion about how to compensate its passengers and impose a “subjective” obligation upon WestJet, namely, to consider certain factors. He believes that these Proposed Tariff Rules, as opposed to an “objective” test, are virtually unenforceable, throw passengers at the mercy of the carrier, and fail to consider at all the passenger’s right to be subject to fair and reasonable terms and conditions. In particular, he claims that these Proposed Tariff Rules fail to strike any balance between the carrier’s statutory, commercial and operational obligations and the rights of passengers to be subject to reasonable terms and conditions of carriage. Thus, he finds that these Proposed Tariff Rules are unreasonable.

[124] WestJet argues that a rule which fixed compensation to certain amounts which might vary with changing circumstances, for example the length of a delay, would be objective and easy to apply but would be contrary to the context-sensitive approach the Agency has outlined. WestJet asserts that a truly objective test would be possible but not in accordance with the guidance provided by the Agency in these proceedings to date.

[125] WestJet submits that Mr. Lukács’ alternative is equally subjective. For example, the determination of when a flight no longer serves any purpose in relation to the passenger’s original travel plan requires subjective determinations of what those plans were and what might serve a purpose in relation to those plans. According to WestJet, making a fair offer of compensation in the circumstances of flight cancellation and overbooking requires a subjective assessment of the impact of these events on an individual and also requires a subjective assessment of the ways in which that impact may be most reasonably alleviated.

Analysis and findings

[126] Mr. Lukács points out that Proposed Tariff Rules 15.4 and 15.5 are unreasonable as although they refer to various considerations that WestJet will take into account in determining compensation in cases of delay, it is left to WestJet’s discretion as to how these considerations are taken into account.

[127] As reflected in Proposed Tariff Rule 15.4 and as set out in the Show Cause Decision, WestJet has stated that it will consider the passenger’s circumstances when these are made known to WestJet.

[128] WestJet also makes it clear that it will consider reasonable expenses the passenger may have incurred in defining the alternative remedies to be offered to the passenger. WestJet explicitly states that the expenses may include costs for accommodation, meals or additional transportation.

[129] WestJet further states that it will make a good faith effort to fairly recognize and appropriately mitigate the impact of overbooking or cancellation on the passenger. In the Agency’s opinion, this is consistent with Article 19 of the Convention.

[130] The Agency concludes that WestJet has not taken a restrictive approach to determining how it will compensate a passenger for delay. It is clear from the Proposed Tariff  Rules that WestJet will consider the circumstances of the passenger’s situation and will make a good faith effort to mitigate the impact of the delay on the passenger. The Agency is of the opinion that these provisions reflect the circumstance-focussed approach set out in the Show Cause Decision and would therefore be considered reasonable if filed with the Agency.

Conclusion

[131] The Agency has determined that Proposed Tariff Rules 15.4 and 15.5 reflect the circumstance-focussed approach set out in the Show Cause Decision, and if these Proposed Tariff Rules were to be filed with the Agency, they would be considered to be reasonable.

Reasonableness of Proposed Tariff Rule 15.6

Positions of the parties

[132] Mr. Lukács opposes the wording of Proposed Tariff Rule 15.6 and asserts that the effect of the Rule is to extinguish every and all legal rights of passengers who accept any kind of standard assistance from WestJet in relation to an overbooking or cancellation. Mr. Lukács argues that this is unreasonable and contrary to the principles laid down by the Agency. For example, while rerouting a passenger may be a way of satisfying the legal obligation to take all reasonable measures to avoid delay of passengers, the carrier’s liability depends on the effectiveness and timeliness of the rerouting. Passengers who are affected by flight overbookings and cancellations may incur a number of out-of-pocket expenses despite being rerouted, for which the carrier is nevertheless liable.

[133] Mr. Lukács further asserts that passengers should not reasonably be expected to make a decision that affects their legal rights against a carrier at an airport during an overbooking or cancellation situation when they are under stress, and without due access to legal counsel and advice.

[134] In response, WestJet states that it is necessary to consider this objection in conjunction with Mr. Lukács’ objection to Proposed Tariff Rule 15.2. WestJet agrees that the measures in 15.2 should not be exclusive and has modified Proposed Tariff Rule 15.2 as is set out in more detail above in paragraph 107.

[135] With respect to Proposed Tariff Rule 15.6, WestJet proposes to remove the words “one of” from the first line. These changes, according to WestJet, will require it to consider the entire circumstances and make an offer which will, in the words of Proposed Tariff Rule 15.5, be a good faith offer to mitigate the impact of overbooking or cancellation upon the passenger. WestJet is of the view that such an offer may, in appropriate circumstances, include both substitute travel and cash payment or a travel credit component.

[136] It is WestJet’s view that a passenger who accepts such an offer should expect that any dispute between WestJet and itself has been regulated. Thus Proposed Tariff Rule 15.6, with the modification noted, should be found to be reasonable.

[137] Mr. Lukács responds that the Proposed Tariff Rule 15.6, in its present form, pre-empts the rights and cause of action of passengers who accept any of the “alternative remedies” listed under Proposed Tariff Rule 15.2. In particular, it purports to pre-empt the claims of passengers under Article 19 of the Convention who agree to be reprotected and rerouted under Proposed Tariff Rule 15.2.1.

[138] For example, Mr. Lukács argues that if a passenger is delayed by 48 hours at a point of connection and accepts to be reprotected, then under Proposed Tariff Rule 15.6 the passenger will not be able to advance a claim for out-of-pocket expenses occasioned by delay pursuant to Article 19. He states that Proposed Tariff Rule 15.6 conditions the continuation of transportation of the passenger (Proposed Tariff Rule 15.2.1) on the passenger waiving their rights under Article 19. Mr. Lukács submits that Proposed Tariff Rule 15.6 has the effect of forcing passengers to give up their rights in exchange for continuation of their journey.

[139] Mr. Lukács also refers to paragraphs 106 and 107 of the Show Cause Decision and asserts that the effect of Proposed Tariff Rule 15.6 is essentially the same as existing Rule 15.3 and therefore it fails to conform to the principles formulated by the Agency.

[140] According to Mr. Lukács, provisions of this nature (in the context of baggage liability), the aim of which is to create contractually a defense to claims under the Convention, have been held to be invalid and unreasonable by the Agency (Lukács v. WestJet, Decision No. 477-C-A-2010). In that Decision the Agency held that freedom of contract and the doctrine of estoppel do not take precedence over the provisions of the Convention.

[141] Mr. Lukács submits that the effect of Proposed Tariff Rule 15.6 is circumvention of WestJet’s liability under Article 19 of the Convention, making it null and void pursuant to Article 26 of the Convention.

[142] Mr. Lukács further argues that Proposed Tariff  Rule 15 fails to adequately address the issue of denied boarding compensation, and suggests that passengers’ rights to such compensation are also pre-empted by Proposed Tariff Rule 15.6. He asserts that this is clearly contrary to subparagraphs 107(1)(n)(iii) and 122(c)(iii) of the ATR, and as such, it cannot be just or reasonable.

[143] Mr. Lukács further asserts that Proposed Tariff Rule 15.6 misrepresents the carrier’s obligations under the Convention, tends to relieve WestJet from liability as set out in the Convention and is therefore null and void pursuant to Article 26 of the Convention and cannot be just and reasonable.

[144] WestJet responds that the reference to the role of freedom of contract in Decision No. 477‑C‑A‑2010 is misplaced and what the Agency decided in that Decision is that the carrier is pre-empted from protecting itself from unwanted liabilities in the period before a loss occurs. Article 26 addresses contractual provisions which attempt to define rights before the transportation in questions occurs. There is nothing in the Convention or applicable jurisprudence which prevents a party who has suffered a loss from giving a release to the carrier after the loss has occurred. Accordingly, the Convention does not render Proposed Tariff Rule 15.6 null and void.

[145] Finally, WestJet asserts that the Convention prevents an air carrier from unilaterally relieving itself of a liability imposed by the Convention. However, WestJet submits that the settlement of claims is an everyday occurrence and the very nature of settlement is to relieve a party from further liability. WestJet argues that it does not purport to define terms which the passenger must accept. Rather, it proposes to make offers of accommodation within the parameters defined in the Rule. According to WestJet, a passenger who accepts such an offer should do so in full and final satisfaction of a claim is not a surprising legal conclusion. As is made clear in Proposed Tariff Rule 15.7, WestJet claims that a passenger is free to decline to accept an offer and exercise his or her legal rights, whether under the Convention or otherwise.

[146] WestJet asserts that the Proposed Tariff Rule does clearly set out its policy in respect of compensation for denial of boarding as a result of overbooking. Rather than adopt hard and fast limited amounts to be paid in the event of overbooking, the Proposed Tariff Rule is context-sensitive and requires that WestJet consider the circumstances of the particular passenger when making an offer of compensation which is in keeping with the guidance given by the Agency in this proceeding.

[147] WestJet does not agree that Proposed Tariff Rule 15.6 misrepresents its obligations under the Convention.

Analysis and findings

[148] It is clear that by the terms unilaterally imposed by WestJet under Proposed Tariff Rule 15.6, a passenger must decide between two options when their flight has been overbooked or cancelled: either accept the carrier’s alternative remedies and give up any rights they may have under the Convention or at law; or refuse the alternative remedies and be forced to find alternative travel on their own and incur any related expenses in order to retain their legal rights.

[149] The Agency is of the opinion that this Proposed Tariff Rule is unreasonable. Proposed Tariff Rule 15.6 does not provide the passenger with a reasonable opportunity to fully assess their options. Instead, the passenger must decide between two options as determined by the carrier, both of which have legal consequences on the passenger’s rights without a reasonable period of time to assess the full potential of the impact of selecting one over another. In such situations, the rights of a passenger should remain available as prescribed by the Convention.

[150] In addition, although WestJet might, in appropriate circumstances, in situations of delay give the passenger the option to choose among one or more remedies, this does not necessarily mean that the carrier will have met the requirements of Article 19. In effect, WestJet’s Proposed Tariff Rule 15.6 is a predetermination by WestJet that the alternative measures offered by it are reasonable measures pursuant to Article 19, and that offering these measures relieves WestJet from liability under that Article.

[151] The Agency is of the opinion that WestJet is depriving the passenger of their rights under the law through a contract of adhesion which it has unilaterally developed and imposed on the passenger.

[152] The Proposed Tariff Rule leaves to WestJet the determination as to what is a reasonable remedy for delay, which might be appropriate for circumstance-focussed determinations pursuant to that Proposed Tariff Rule, but might not be appropriate for the purposes of Article 19.

[153] WestJet has argued that there is nothing in the Convention or applicable jurisprudence that prevents a party who has suffered a loss from giving a release to the carrier after the loss has occurred. While WestJet argues that nothing in the authorities prevents it from obtaining such a release, WestJet has not directed the Agency to any authorities to support its position that Proposed Tariff Rule 15.6 does not tend to relieve it from liability under Article 26 of the Convention.

[154] WestJet has argued that obtaining a release, in itself, is permissible under the Convention. However, it has not demonstrated why unilaterally imposing the terms of a release in its tariff does not tend to relieve it from liability under Article 26 of the Convention. The Agency is therefore of the opinion that WestJet has not shown that Proposed Tariff Rule 15.6 is consistent with Article 26 of the Convention.

[155] Accordingly, the Agency finds that this provision would be considered unreasonable under the ATR if filed with the Agency.

Conclusion

[156] The Agency has determined that if Proposed Tariff Rule 15.6 were to be filed with the Agency, it would be considered to be unreasonable, contrary to section 111 of the ATR.

Reasonableness of Proposed Tariff Rule 15.7

Positions of the parties

[157] Mr. Lukács objects to the wording contained in the latter part of the Proposed Tariff Rule, namely, that part which begins with “In carriage which is not international”.

[158] Mr. Lukács points out that the present case concerns WestJet’s international Tariff.

[159] Further, Mr. Lukács asserts that the Agency held in Lukács v. Air Canada, Decision No. 291‑C‑A-2011, that passengers ought to be afforded the same protection against lost, damaged or delayed baggage as in the Convention regardless of whether the Convention applies. Similarly, in Lukács v. WestJet, Decision No. 483-C-A-2010, the Agency used the Convention as a persuasive authority for determining the reasonableness of WestJet’s domestic tariff provisions.

[160] Thus, Mr. Lukács submits that the legal principles of the Convention ought to be applied to delay of passengers even on itineraries where the Convention does not apply.

[161] Mr. Lukács further submits that the statement that “times shown in timetables and elsewhere are not guaranteed by the carrier” found in Proposed Tariff Rule 15.7 is inconsistent with the principles of the Convention and is a reformulation of the infamous “Condition 9,” which was held to be invalid by American, British, and Canadian courts. In this respect, Mr. Lukács refers to the following cases in support of his position:

• Cohen v. Varig Airlines, 380 N.Y.S.2d 450 (aff’d 405 N.Y.S.2d 44);
• Jones v. Britannia Airways Limited (Chester County Ct, 5th November 1998);
• Assaf (at paras. 5 and 11-12);
• Zikovsky v. Air France, 2006 QCCQ 948 (at paras. 21-23 and 29-31).

[162] According to Mr. Lukács, the importance of time as part of a contract of carriage was also underscored in Daniel v. Virgin Atl. Airways Ltd., 59 F. Supp. 2d 986.

[163] Therefore, Mr. Lukács concludes that the sentence starting with “In carriage which is not international” ought to be disallowed and deleted from Proposed Tariff Rule 15.7.

[164] WestJet responds that it is appropriate and necessary to refer to “carriage which is not international”. For licensing and tariff purposes, all carriage which is not solely between points in Canada is international. For the purposes of liability, carriage is international only if it falls within the definition of international carriage as set out in an applicable Convention. Practically, the two senses of international will usually coincide but that is not a necessary result.

[165] WestJet adds that the words indicating that times in timetables are not guaranteed by the carrier are necessary to confirm that the applicable standard is the same as is applied in cases governed by the Convention.

[166] WestJet asserts that to guarantee a result is to promise that an act will be carried out and it is important to distinguish between a promise of performance which amounts simply to an agreement to exercise reasonable care and a promise to produce a particular result which imposes an obligation greater than the exercise of care.

[167] WestJet submits that the Convention does not require the carrier to guarantee that timetables will be met and only imposes an obligation to take all necessary measures to avoid delay; that is, it imposes a standard of reasonable care. Accordingly, Proposed Tariff Rule 15.7 is a statement that the carrier does not, in cases not governed by the Convention, assume the more onerous standard of guarantee.

[168] WestJet also asserts that the fact that timetables are not guaranteed does not mean that the carrier will never be liable for delay, it only means that any liability will not arise from a guarantee of producing a particular result but rather from a failure to take that degree of care required by the governing law. It is WestJet’s view that the nature of the carrier’s liability for delay, in cases not governed by the Convention, will depend upon the proper law of the contract or the proper law of tort and may differ depending upon the jurisdiction in which a claim is made.

[169] WestJet points out that it was in large part to avoid the very difficult jurisdictional problems which may arise in carriage between different sovereign states that the Convention system was adopted in the first place. WestJet submits that in most cases, the complexities are removed by an applicable Convention, but as there may be the very occasional case of non-Convention carriage, some reference should be included in the Tariff.

[170] WestJet submits that Proposed Tariff Rule 15.7, which includes such reference, does not misstate its obligation under the Convention or tend to relieve it from liability laid down by the Convention.

Analysis and findings

[171] With respect to Proposed Tariff Rule 15.7, Mr. Lukács has raised concerns respecting the last sentence of that provision which begins, “In carriage which is not international....”

[172] After considering the submissions of WestJet, the Agency is of the opinion that it appears that this part of Proposed Tariff Rule 15.7 is not intended to cover domestic itineraries but rather to cover the very limited situations where a Convention does not apply to international travel. Although Mr. Lukács raises the issue of unreasonableness, Proposed Tariff Rule 15.7 is ambiguous and uncertain and does not meet the test for clarity as set out in Decision No. 418‑C‑A-2011.

[173] Mr. Lukács points out that the principles of the Convention should be applied to delay of passengers even on itineraries where the Convention does not apply and cites a number of Agency decisions in support of this position.

[174] On the assumption that this latter part of Proposed Tariff Rule 15.7 is intended to apply to international travel that is not subject to a Convention, the Proposed Tariff Rule provides that the rights of passengers will generally be governed by the contract of carriage which may provide a remedy in the case of delay. However, it is not clear what is the contract of carriage that WestJet is referring to.

[175] In light of the fact that the Proposed Tariff Rule is unclear, it is not necessary for the Agency to determine whether it would be considered unreasonable if filed with the Agency. Based on the lack of clarity, the Agency finds that WestJet must revise this Proposed Tariff Rule.

Conclusion

[176] The Agency has determined that Proposed Tariff Rule 15.7 is unclear and that WestJet must revise this Proposed Tariff Rule.

SUMMARY OF CONCLUSIONS

[177] In light of the foregoing, the Agency concludes the following:

Clarity

1. With respect to Proposed Tariff Rule 15.2 – Available options

The Agency has determined that the revision to Proposed Tariff Rule 15.2 lacks clarity with respect to the specific issue of choice of options, and that if such Rule were to be filed with the Agency, it would be considered to be contrary to section 122 of the ATR.

2. With respect to Proposed Tariff Rules 15.2.3 and 15.2.4 – Method used to define the amount of compensation

The Agency has determined that Proposed Tariff Rules 15.2.3 and 15.2.4 are unambiguous in that, when read with Proposed Tariff Rules 15.4 and 15.5, they clearly state that WestJet, when determining the amount of compensation to be offered to a passenger in the event of delay, will take into account the circumstances of the passenger, including expenses incurred, and will make a good faith effort to recognize and mitigate the impact of the overbooking or cancellation on the passenger.

The Agency, however, has also determined that Proposed Tariff Rule 15.2.3 is not clear insofar as a reasonable person would be left with a reasonable doubt as to what would be the lower limit of a potential monetary payment in a situation of overbooking or cancellation. If this Proposed Tariff Rule were to be filed with the Agency, it would be considered to be contrary to section 122 of the ATR.

3. With respect to Proposed Tariff Rule 15 – Reasonable out-of-pocket expenses

Rules 15.2.1 and 15.2.2, when read in conjunction with Rules 15.4 and 15.5, would be considered clear and not ambiguous with respect to out-of-pocket expenses, if filed with the Agency.

4. With respect to Proposed Tariff Rules 15.4 and 15.5

The Agency has determined that if Proposed Tariff Rules 15.4 and 15.5 were filed with the Agency, they would be considered clear and not ambiguous.

5. With respect to Proposed Tariff Rule 15 – Alternative remedies

The Agency has determined that if Proposed Tariff Rule 15, as it relates to alternative remedies and denied boarding compensation, were filed with the Agency, it would be considered clear and not ambiguous.

Reasonableness

1. With respect to Proposed Tariff Rule 15.1

First, the Agency has determined that the language of Proposed Tariff Rule 15.1 following the introduction reflects the burden placed on the carrier under Article 19 of the Convention and would be considered reasonable if filed with the Agency.

Second, the Agency has determined that the introduction of Proposed Tariff Rule 15.1 would be considered unreasonable if filed with the Agency, as it leaves the impression that WestJet is never responsible for acts of nature or third parties.

2. With respect to Proposed Tariff Rule 15.2

The Agency has determined that Proposed Tariff Rule 15.2 provides a balance between the passenger’s right to be fairly compensated and the operational and commercial interests of WestJet. Accordingly, the Proposed Tariff Rule, as it relates to a refund of the entire ticket cost and transportation to the passenger’s point of origin, would be considered reasonable if it were filed with the Agency.

However the Agency finds that in response to the Show Cause Decision, WestJet has failed to address the issue of returning a passenger to their point of origin “within a reasonable time”. Accordingly, Proposed Tariff Rule 15.2, as it relates to this issue only, would be considered unreasonable if filed with the Agency.

3. With respect to Proposed Tariff Rules 15.4 and 15.5

The Agency has determined that Proposed Tariff Rules 15.4 and 15.5 reflect the circumstance-focussed approach set out in the Show Cause Decision, and if these Proposed Tariff Rules were filed with the Agency, they would be considered to be reasonable.

4. With respect to Proposed Tariff Rule 15.6

The Agency has determined that if Proposed Tariff Rule 15.6 were to be filed with the Agency, it would be considered to be unreasonable, contrary to section 111 of the ATR.

5. With respect to Proposed Tariff Rule 15.7

The Agency has determined that Proposed Tariff Rule 15.7 is unclear and that WestJet must revise this Proposed Tariff Rule.

ORDER

[178] WestJet has stated that it does not contest the principles set out in the Show Cause Decision. Therefore, in recognition of the fact that existing Tariff Rules 15.2 and 15.3 do not reflect the Show Cause Decision, the Agency disallows existing Tariff Rules 15.2 and 15.3 pursuant to paragraph 113(a) of the ATR for being unreasonable within the meaning of subsection 111(1) of the ATR.

[179] WestJet has filed Proposed Tariff Rule 15 in “an attempt to respect and implement the spirit” of the Show Cause Decision. Appendix A sets out WestJet’s Proposed Tariff Rule 15. However, as set out in this Decision, the Agency has determined that certain provisions of Proposed Tariff Rule 15 are unclear or unreasonable.

[180] Considering that WestJet has proposed tariff amendments in “an attempt to respect and implement the spirit” of the Show Cause Decision, and that the parties have filed extensive pleadings in this proceeding, including in relation to WestJet’s Proposed Tariff Rule 15, the Agency considers it appropriate, in this case, to substitute tariff language pursuant to paragraph 113(b) of the ATR for certain provisions of Proposed Tariff Rule 15.

[181] Accordingly, WestJet is required, within 30 days of the date of this Decision, to file with the Agency:

1. The tariff provisions in Appendix A which the Agency found to be reasonable and clear.
2. The following substituted wording for Rule 15.2.2:
   • transportation, without further charge and within a reasonable time, to the passenger’s intended destination on a transportation service which service will be identified by the Carrier.
3. A reworded provision with respect to the choice of options, as found in Proposed Tariff Rule 15.2, that takes into account the Agency's finding on clarity set out in this Decision.
4. A reworded provision with respect to the methodology for calculating the “unused portion” of a passenger’s ticket, as found in Proposed Tariff Rule 15.2.3, that takes into account the Agency's finding on clarity set out in this Decision.

[182] WestJet shall, within 30 days of the date of this Decision, make and file any consequential amendments to its Tariff that are required to respond to the ordered disallowance, substitution and rewording set out above.

[183] Pursuant to paragraph 28(1)(b) of the CTA, this disallowance and substitution are effective when WestJet complies with the above or in 30 days from the date of this Decision, whichever is sooner.

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APPENDIX A TO DECISION NO. 249-C-A-2012

PROPOSED TARIFF

Rule 15

1. The provisions of this Rule are not intended to make the Carrier responsible for the acts of nature or third parties and all the rights here described are subject to the following exception: The Carrier shall not be liable for damage occasioned by overbooking or cancellation if it, and its employees and agents, took all measures that could reasonably be required to avoid the damage or if it was impossible for the Carrier, and its employees or agents, to take such measures.
2. Subject to the exception stated in Rule 15.1, if a flight is overbooked or cancelled, with the result that a ticketed passenger is not transported on a flight for which he held confirmed space, the Carrier will give the passenger the option to choose among the following remedies (“the alternative remedies”):
   
   1. 2.1 transportation, without further charge, to the passenger’s intended destination on a transportation service which service will be identified by the Carrier; and/or
   2. 2.2 transportation, without further charge, to the passenger’s point of origin on a transportation service which service will be identified by the Carrier; and/or
   3. 2.3 a monetary payment in an amount to be defined by the Carrier which shall in no case be less than the value of the unused portion of the passenger’s ticket; and/or
   4. 2.4 a credit, to be defined by the Carrier, towards the purchase of future transportation on a service operated by the Carrier.
3. In identifying the transportation service to be offered to the passenger, the Carrier will not limit itself to considering its own services or the services of carriers with which it has interline agreements.
4. In defining the alternative remedies to be offered, the Carrier will consider, to the extent they are known to the Carrier, the circumstances of the passenger affected by the overbooking or cancellation, including any expenses which the passenger, acting reasonably, may have incurred as a result of the overbooking or cancellation as, for example, costs incurred for accommodation, meals or additional transportation.
5. In defining the alternative remedies to be offered, the Carrier will make a good faith effort to fairly recognize, and appropriately mitigate, the impact of the overbooking or cancellation upon the passenger.
6. If a passenger accepts the alternative remedies offered by the Carrier, that acceptance shall be in full and final satisfaction of all claims the passenger may have had against the Carrier by reason of the overbooking or cancellation.
7. If a passenger declines to accept the alternative remedies offered by the Carrier, the passenger shall be entitled to exercise any legal rights it may have against the Carrier by reason of the overbooking or cancellation. In cases of international carriage those rights will generally be defined by the Montreal Convention. Article 19 of that Convention provides that an air carrier is liable for damage caused by delay in the carriage of passengers and goods unless it proves that it did everything it could be reasonably expected to do to avoid the damage. In carriage which is not international, the rights of the passenger will generally be governed by the contract of carriage, which may provide a remedy in the case of delay, although it should be noted that times shown in timetables and elsewhere are not guaranteed by the Carrier.

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1. Note that the Agency, at paragraphs 99 and 100 of this Decision, elaborates on this finding.↑
2. Lukács v. WestJet, Decision No. 418-C-A-2011; Desrochers v. Aeroflot Russian Airlines, Decision No. 382-C-A-2003.↑
3. Lukács v. Air Canada, Decision No. 291-C-A-2011.↑
4. E. Giemulla & R. Schmid, et al, Montreal Convention (Wolters Kluwer: Netherlands, 2011) at Article 19, para. 46.↑
5. Ibid at Article 19, para. 55.↑
6. Ibid, art. 19, par. 56.↑
7. Zikovsky c. Air France, 2006, QCCQ 948.↑