Decision No. 28-A-2004

January 16, 2004

January 16, 2004

APPLICATION by Air Transat A.T. Inc. carrying on business as Air Transat for an exemption from subsection 115(1) of the Air Transportation Regulations, SOR/88-58, as amended, to file with the Canadian Transportation Agency a new international scheduled services tariff on less than statutory notice; and IN THE MATTER OF a new international scheduled services tariff applicable to Air Transat A.T. Inc. carrying on business as Air Transat.

File No. M4110/A328-1


APPLICATION

On January 15, 2002, Air Transat A.T. Inc. carrying on business as Air Transat (hereinafter Air Transat) applied to the Canadian Transportation Agency (hereinafter the Agency) for an exemption from subsection 115(1) of the Air Transportation Regulations (hereinafter the ATR) to file a new international scheduled services tariff on less than statutory notice.

Pursuant to subsection 29(1) of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA), the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, Air Transat has agreed to an indefinite extension of the deadline.

BACKGROUND

After numerous exchanges of correspondence between staff of the Agency and Air Transat concerning certain issues arising from the proposed international scheduled services tariff, the Agency, by Decision No. LET-A-359-2002 dated December 10, 2002, advised Air Transat that the Agency was satisfied with Air Transat's proposed international scheduled services tariff, in general, but that certain amendments should be made to make the tariff fully acceptable to the Agency. These amendments concerned the following provisions, respectively: refusal to transport, fare guarantee, schedule irregularity, refunds in cases of schedule irregularity, advancement of flight times, and the introduction of more restrictive conditions/increases in charges.

On February 25, 2003, Air Transat, in response to Decision No. LET-A-359-2002, filed on statutory notice a new international scheduled services tariff, designated CTA(A) No. 4, for effect April 24, 2003. Air Transat advised the Agency that it had considered the amendments proposed by the Agency, and had attempted to address these concerns through a multitude of changes to tariff provisions. Air Transat also advised the Agency that it was unable to accept the Agency's proposal that a full refund be provided should a passenger wish to cancel a reservation for a flight that has been delayed for more than six hours due to a schedule irregularity. In Air Transat's view, such a provision would have a major and perhaps crippling financial impact, given that Air Transat is a non-network, non-connecting and non-interlining carrier that carries primarily origin/destination traffic.

Following additional exchanges of correspondence between Agency staff and Air Transat respecting certain matters not addressed by the carrier in relation to Decision No. LET-A-359-2002, Air Transat filed amendments to its tariff on April 22, 2003 for effect April 24, 2003.

AGENCY ANALYSIS AND FINDINGS

The Agency's jurisdiction in matters respecting international tariffs is set out, in part, in section 26 of the CTA, and sections 111 and 113 of the ATR.

Pursuant to section 26 of the CTA, the Agency may require a person to do or refrain from doing any thing that the person is or may be required to do or is prohibited from doing under any Act of Parliament that is administered in whole or in part by the Agency.

Subsection 111(1) of the ATR provides that:

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.

Further, section 113 of the ATR provides that the Agency may:

(a) 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(b) establish and substitute another tariff or portion thereof for any tariff or portion thereof disallowed under paragraph (a).

By Decision No. LET-A-112-2003 dated May 12, 2003, the Agency advised Air Transat that in order to make the tariff provisions filed by the carrier fully acceptable, further amendments would be required to Rule 5.2 (Responsibility for schedules and operations) and Rule 6.3 (Liability for refusal to transport and for failure to operate on schedule). These tariff provisions provide that:

5.2 Responsibility for schedules and operations:(a) The Carrier will endeavor to transport passengers and baggage with reasonable dispatch. Times shown in schedules, scheduled contracts, tickets, air waybills or elsewhere are not guaranteed. Flight times are subject to change without notice. The Carrier assumes no responsibility for making connections.(b) Schedules are subject to change without notice. The Carrier is not responsible or liable for failure to make connections, or for failure to operate any flight according to schedule, or for a change to the schedule of any flight. Under no circumstances shall the Carrier be liable for any special, incidental or consequential damages arising directly or indirectly from the foregoing (including the carriage of baggage) whether or not the Carrier had knowledge that such damages might be incurred. Notwithstanding, the Carrier will undertake to notify passengers reasonably in advance through means it deems appropriate of any schedule changes resulting in the advancement of flight departure times.(c) Without limiting the generality of the foregoing, the Carrier cannot guarantee that a passenger's baggage will be carried on the flight if sufficient space is not available as determined by the Carrier.(d) Subject to the Convention, the Carrier will not provide or reimburse passengers for expenses incurred due to delays or cancellations of flights.(e) In the event of an involuntary re-routing of a flight, the Carrier will undertake to ensure that the passenger is routed or transported to his/her ultimate destination, as per the contract of carriage, within a reasonable period of time and at no extra cost.6.3 Liability for refusal to transport and for failure to operate on scheduleThe Carrier is not liable for its refusal to transport any passenger in accordance with Rule 6. Subject to Rule 5.3.1, where a passenger incurs a schedule irregularity of not less than six (6) hours involving a flight operated by the Carrier:(a) The Carrier will transport the passenger without stopover on its next flight on which space is available and in the same class of service as his original flight.(b) If the Carrier is unable to provide reasonable alternative transportation on its services, the Carrier will arrange transportation on the services of other carriers or combination of carriers with whom the Carrier has interline traffic agreements for such transportation. In such cases, the passenger will be transported without stopover and at no additional costs to himself, in the same class of service as applied to his original outbound flight on the Carrier.(c) In the event that space on the Carrier is only available and used in a lower class of service than applied to the passenger's original flight(s), the difference in fares will be refunded.(d) Where the flight is cancelled after the initial delay, the Carrier will provide a full refund of the fare paid.

In Decision No. LET-A-112-2003, the Agency noted that Rule 5.2 includes a provision that states that Air Transat will undertake to ensure that the passenger is routed or transported to his/her destination, as per the contract of carriage, within a reasonable period of time and at no extra cost. The Agency stated that this provision may not be just and reasonable as it does not provide the passenger with any recourse should such passenger find the anticipated time or the alternate travel arrangements provided by the carrier to reach the passenger's ticketed destination unacceptable. The Agency expressed the view that, in such circumstances, Air Transat should, at the request of the passenger, provide a refund.

The Agency also noted that Rule 5.2(b) is devoid of any provision relating to the notification of passengers in the event of a flight delay. As such, the Agency stated that this provision may not be just and reasonable. The Agency advised Air Transat that it should undertake to notify passengers of all schedule irregularities, not just flight advancements.

With respect to Rule 6.3, the Agency noted that this rule includes a provision which states that where passengers incur a schedule irregularity of not less than six hours involving a flight operated by Air Transat, and the flight is cancelled after the initial delay, Air Transat will provide a full refund. The Agency stated that this provision may not be just and reasonable in that it does not provide adequate options to passengers affected by a schedule irregularity, and does not protect passengers from events that are beyond the passengers' control. The Agency therefore advised Air Transat that it should include a provision that provides a refund, at the request of the passenger, should a flight be delayed for more than a certain period of time, e.g., 12 hours, whether or not a flight is cancelled.

The Agency further noted that Air Transat has removed its liability to passengers who do not concur with the alternate travel arrangements in Rule 6.3 of the tariff. Such liability appeared in Air Transat's tariff previously on file with the Agency. The Agency stated that the current provision may not be just and reasonable, as it does not include a requirement that the passenger agree to the alternate travel arrangements. The Agency also advised Air Transat that it should include a provision that provides for a refund in the event a passenger finds the alternate travel arrangements unsatisfactory.

With respect to flight advancement, the Agency stated that the six hour criterion to qualify as a schedule irregularity, set out in Rule 6.3, may not be just and reasonable. The Agency expressed the opinion that, in the event of a flight advancement, the consumer should be offered alternate travel options immediately. In addition, the Agency stated that it would be beneficial if Air Transat included a provision that provides for a refund, at the request of the passenger, if such passenger should wish to cancel a reservation for a flight that has been advanced.

The Agency therefore provided Air Transat with the opportunity to show cause why the Agency should not (i) pursuant to paragraph 113(a) of the ATR, disallow the aforementioned tariff provisions as being unjust and unreasonable, thereby contravening subsection 111(1) of the ATR, and (ii) pursuant to paragraph 113(b) of the ATR, substitute another tariff or portion thereof to make the tariff acceptable to the Agency.

On May 20, 2003, Air Transat requested an extension until June 19, 2003 to respond to the Agency's letter. By Decision No. LET-A-122-2003 dated May 26, 2003, the Agency granted this extension. On May 29, 2003, Air Transat filed its response, in which it advised that the Agency's proposal respecting refund provisions in cases of flight delays of more than a certain period of time, or if the passenger finds alternative travel arrangements to be unsatisfactory, may constitute an undue financial burden. Air Transat asked the Agency to reconsider its proposal for amendments to the aforementioned tariff provisions.

Concerning the Agency's proposal that the consumer be offered alternative travel options and refunds in the event of any scheduled flight time advancement, Air Transat advised that this is unreasonable, as the advancement may be the result of circumstances beyond the carrier's control, such as the airport authority altering pre-authorized slot times as a result of congestion. Air Transat also advised that by eliminating any minimum threshold for a flight time advancement, it would have to offer alternative travel arrangements or refunds for a 15 minute change. The carrier further stated that by undertaking to notify all passengers in the event of a flight advancement of six hours or less and generally treating all other such schedule changes as irregularities, Air Transat has struck a reasonable and fair balance.

With respect to a provision allowing for refunds where an involuntary routing is invoked and the anticipated time or the alternate travel arrangements are deemed unacceptable to the passenger, Air Transat stated that this is unfair and imbalanced, given that a rerouting can often be caused by reasons beyond Air Transat's control.

Concerning passenger notification for all schedule irregularities, the carrier suggested that airport notification is sufficient, except where a delay of at least three hours becomes known a minimum of six hours in advance of the scheduled departure time, in which case Air Transat would undertake to advise affected passengers, normally by telephone.

By Decision No. LET-A-166-2003 dated August 7, 2003, the Agency advised Air Transat that it was not satisfied that Air Transat had shown cause as to why the Agency should not, pursuant to paragraph 113(b) of the ATR, substitute another tariff or portion thereof to make the tariff acceptable to the Agency. The Agency advised Air Transat that Rule 6.3 of Air Transat's tariff was not just and reasonable within the meaning of subsection 111(1) of the ATR, in that it does not provide adequate options to passengers affected by a schedule irregularity, and does not protect passengers from events that are beyond the passengers' control, and, therefore, does not allow passengers any recourse if they are unable to connect to other air carriers or alternate modes of transportation such as cruise ships or trains. The Agency also advised Air Transat that the Agency found that the six hour criterion to qualify as a schedule irregularity set out in the rule was not reasonable in the event of a flight advancement. The Agency further advised Air Transat that the passengers should have some recourse if a flight is advanced beyond the check-in requirement.

With respect to involuntary rerouting and passenger notification, the Agency advised Air Transat that the Agency found paragraphs (b) and (e) of Rule 5.2 to be not just and reasonable, as they do not provide the passenger with any recourse if the carrier can not arrange any reasonable transportation in the event of an involuntary rerouting. The Agency also noted that Rule 5.2(b) was devoid of any provision relating to the notification of passengers if a flight is delayed or cancelled.

In view of the foregoing, the Agency provided Air Transat with the opportunity to show cause as to why the Agency should not:

  1. pursuant to paragraph 113(a) of the ATR, disallow Rule 6.3 (Liability for refusal to transport and for failure to operate on schedule), appearing on First Revised Page 16; Rule 1 (Definitions) as it pertains to the definition of "Schedule Irregularity", appearing on First Revised Page 7; and paragraphs (b) and (e) of Rule 5.2 (Responsibility for schedules and operations), appearing on First Revised Page 10 of Air Transat's International Scheduled Services Tariff, CTA(A) No. 4, for being unjust and unreasonable, thereby contravening subsection 111(1) of the ATR, and
  2. pursuant to paragraph 113(b) of the ATR, substitute the wording of these provisions with certain prescribed wording.

Regarding passenger notification in the event of a flight delay, the Agency advised Air Transat that the carrier's position, as described in its May 29, 2003 letter, was acceptable, and requested Air Transat to provide the Agency with proposed wording, for consideration.

On September 3, 2003, Air Transat filed its response, indicating that it was prepared to accept the Agency's proposed changes to Rule 5.2(b) and to the definition of "Schedule Irregularity" contained in Rule 1. With respect to Rule 6.3, Air Transat advised the Agency that it was not prepared to accept the proposed amendment to paragraph (d) because, as previously stated, the carrier believes that this could have a major financial impact on its operation.

On September 30, 2003, Air Transat further advised the Agency that it was prepared to accept the principle of refunding the unused portion of a ticket in the event of a delay exceeding a certain amount of time, i.e., 36 hours.

The Agency has carefully considered the submissions filed by Air Transat with respect to this matter, and is satisfied, in general, with the tariff provisions filed by Air Transat. However, the Agency is of the opinion that Air Transat has not proven to the Agency's satisfaction, that it is reasonable to have a time limit in the event of a delay of 36 hours or more, after which Air Transat would refund the unused ticket or portion thereof.

CONCLUSION

Based on the above findings, the Agency has determined that the terms and conditions relating to liability for refusal to transport and failure to operate on schedule, as set out in Rule 6.3(d) of Air Transat's International Scheduled Services Tariff, CTA (A) No. 4, are not just and reasonable, and are therefore contrary to subsection 111(1) of the ATR.

Accordingly, the Agency, pursuant to paragraph 113(a) of the ATR, hereby disallows Rule 6.3(d) of Air Transat's International Scheduled Services Tariff, CTA (A) No. 4, and, pursuant to paragraph 113(b) of the ATR, hereby substitutes the following provision:

6.3(d) If the Carrier is unable to provide reasonable alternative transportation on its services or on the services of other carrier(s) within a reasonable period of time, then it will refund the unused ticket or portions thereof.

Pursuant to section 28 of the CTA, this disallowance and substitution are effective 10 (ten) days from the date of this Decision.

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