Decision No. 324-C-A-2002
June 11, 2002
IN THE MATTER of a complaint filed by Jan McCarthy against Skyservice Airlines Inc. carrying on business as Skyservice and Roots Air concerning its limitation of liability for loss of checked baggage applicable to carriage between Toronto, Ontario, Canada, and Cancun, Mexico.
File No. M4370/R177/00-6
COMPLAINT
On October 25, 2000, Jan McCarthy filed with the Air Travel Complaints Commissioner the complaint set out in the title. However, due to the regulatory nature of the complaint, it was referred to the Canadian Transportation Agency (hereinafter the Agency) on January 8, 2001.
On January 11, 2001, Agency staff requested that Skyservice Airlines Inc. carrying on business as Skyservice and Roots Air (hereinafter Skyservice) address the complaint within the context of sections 111 and 113 of the Air Transportation Regulations, as amended, SOR/88-58 (hereinafter the ATR).
On February 2, 2001, Skyservice filed its answer to the complaint, and on February 22, 2001, Ms. McCarthy filed her reply.
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, the parties have agreed to an indefinite extension of the deadline.
PRELIMINARY MATTER
Although Ms. McCarthy filed her reply after the prescribed deadline, the Agency, pursuant to section 6 of the National Transportation Agency General Rules, SOR/88-23, accepts this submission as being relevant and necessary to its consideration of this matter.
ISSUES
The issues to be addressed are:
- whether Skyservice applied the terms and conditions relating to limitations of liability for checked baggage specified in its international charter tariff, as required by subsection 110(4) of the ATR; and
- whether the terms and conditions relating to limitations of liability for checked baggage specified in Skyservice's international charter tariff are just and reasonable within the meaning of subsection 111(1) of the ATR.
POSITIONS OF THE PARTIES
The complaint concerns the loss of Ms. McCarthy's checked baggage on June 14, 2000 while she was travelling on Skyservice flight number 580 from Toronto, Ontario, Canada, to Cancun, Mexico. Ms. McCarthy submits that the articles in her checked baggage were worth over CAD$4,000, that Skyservice personnel in Cancun advised her that she was allowed CAD$400 for the immediate purchase of replacement items, and that she would be reimbursed this amount and would be compensated for her lost articles. However, after returning to Canada, Ms. McCarthy was only offered CAD$500 by Skyservice, as well as a travel voucher in the amount of CAD$50. Ms. McCarthy further submits that Skyservice's limitation of liability for checked baggage, being based on the weight of its contents as opposed to their value, is "unjust and unreasonable". Ms. McCarthy also argues that the compensation provided by Skyservice was insufficient, particularly given that a Skyservice representative had advised her that she could purchase replacement items up to a value of $50 per day, and that she would be reimbursed for those items in addition to being compensated for her lost baggage. Ms. McCarthy further states that, because she was misinformed by one of Skyservice's employees respecting compensation, the carrier should offer her more than a CAD$50 travel voucher.
Skyservice submits that its tickets and tariffs set out limitations of liability applicable to the loss of luggage, which, for international transportation, are governed by the Warsaw Convention. Skyservice further submits that, according to the Warsaw Convention, a carrier's liability for lost baggage is determined from the weight of the baggage recorded at check-in. As Ms. McCarthy's bag was recorded as having the maximum allowed weight of 20 kilograms, Skyservice offered to pay Ms. McCarthy CAD$500 (or CAD$25 per kilogram). As a goodwill gesture, Skyservice also offered Ms. McCarthy a travel voucher in the amount of CAD$50. Skyservice contends that it acted in accordance with its tariff provisions respecting limitations of liability for checked baggage. In addition, Skyservice submits that its tariff is approved in advance by the Agency and "its fairness and reasonableness was accordingly presumed". Skyservice adds that the formula for compensation in cases such as this is common in the airline industry, and notes that baggage travel insurance can be purchased at the time passengers buy their tickets.
ANALYSIS AND FINDINGS
In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings. The Agency has also examined Skyservice's limitations of liability applicable to the carriage of baggage between points in Canada and points outside of Canada as set out in paragraphs a), b) and c) of Rule 10, "Limitation of Liability for Baggage and/or Goods, Excess Valuation Charges", of its international charter tariff CTA (A) No. 3, which provide:
a) Subject to subjection [sic] 10 b, the liability of Skyservice, for any loss, damage or delay is limited to CA $25.00 per kilogram in the case of checked baggage and to CA $500.00 for unchecked baggage per passenger unless a higher value is declared and paid for in advance.
b) The liability of the Carrier is limited to the declared value of baggage when the passenger:
i) has declared a value of baggage in an amount exceeding CA $100.00; and
ii) has declared, at the time of presenting such property for transportation, a higher value and paid an additional transportation charge at the rate of CA $ 0.50 for each CA $100.00 fraction thereof for the excess amount.
c) In no case shall the carrier's liability exceed the actual loss suffered by the passenger. All claims are subject to proof of amount of loss.
The Agency has also reviewed Skyservice's free baggage allowance limits, as set out in paragraph h) of Rule 7, "Acceptance of Baggage or Goods", of its international charter tariff CTA (A) No. 3, which provides:
h) Charge for excess baggage weight:
Baggage will be carried without payment of additional charges up to:
Airbus - A-320-200 20 kilograms per passenger occupying a seat - A-330-300 20 kilograms per passenger occupying a seat except for the Italian destinations where 50 kilograms will be allowed. Baggage in excess of the free baggage allowance will be charged as follows:
Airbus - A-320-200 CA $5.00 per kilogram - A-330-300 CA $5.00 per kilogram
The Agency's jurisdiction over complaints with respect to terms and conditions of carriage established and applied by an air carrier operating an international service is set out in sections 111 and 113 of the ATR.
Section 111 of the ATR provides that:
(1) 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.
(2) No air carrier shall, in respect of tolls or the terms and conditions of carriage,
(a) make any unjust discrimination against any person or other air carrier;
(b) give any undue or unreasonable preference or advantage to or in favour of any person or other air carrier in any respect whatever; or
(c) subject any person or other air carrier or any description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatever.
(3) The Agency may determine whether traffic is to be, is or has been carried under substantially similar circumstances and conditions and whether, in any case, there is or has been unjust discrimination or undue or unreasonable preference or advantage, or prejudice or disadvantage, within the meaning of this section, or whether in any case the air carrier has complied with the provisions of this section or section 110.
Further, section 113 of the ATR states 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).
With respect to the issue of whether Skyservice applied the terms and conditions relating to limitations of liability for checked baggage specified in its international charter tariff, as required by subsection 110(4) of the ATR, the Agency notes that it does not have any information indicating that Ms. McCarthy declared a higher value, and paid an additional transportation cost for her checked baggage. Accordingly, the Agency has determined that, by offering Ms. McCarthy compensation in the amount of CAD$25 per kilogram of lost baggage, Skyservice applied Rule 10a) of its international charter tariff CTA (A) No. 3.
With respect to the issue of whether the terms and conditions relating to limitations of liability for checked baggage specified in Skyservice's international charter tariff are just and reasonable within the meaning of subsection 111(1) of the ATR, the Agency notes that liability limitations for damage, delay or loss of baggage applicable to international carriage by air are set out in the Convention for the Unification of Certain Rules Relating to International Carriage by Air (the Warsaw Convention). The provisions of the Warsaw Convention have the force of law in Canada by virtue of the Carriage by Air Act, R.S.C., 1985, c. C-26. More particularly, Article 22 of Schedule I of the Carriage by Air Act provides in part:
(2) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of 250 francs per kilogram, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery.
(3) As regards objects of which the passenger takes charge himself the liability of the carrier is limited to 5,000 francs per passenger.
(4) The sums mentioned above shall be deemed to refer to the French franc consisting of 65 ½ milligrams gold of millesimal fineness 900. These sums may be converted into any national currency in round figures.
Pursuant to subsections 2(6) and (7) of the Carriage by Air Act, the (French Gold) franc is to be converted into Canadian dollars as follows:
2. (6) Any sum in francs mentioned in Article 22 of Schedule I shall, for the purposes of any action against a carrier, be converted into Canadian dollars at the rate of exchange prevailing on the date on which the amount of any damage to be paid by the carrier is ascertained by a court.
(7) For the purposes of subsection (6), the Canadian dollar equivalents of francs or Special Drawing Rights, as defined in Article 22 of the Convention set out in Schedule I, are determined by
(a) converting francs into Special Drawing Rights at the rate of one Special Drawing Right for 15.075 francs; and
(b) converting Special Drawing Rights into Canadian dollars at the rate established by the International Monetary Fund.
Using the formula set out in section 2 of the Carriage by Air Act, as copied above, 250 French gold francs (FGF) convert to 16.58 Special Drawing Rights (SDR) and 5,000 FGF are the equivalent of 331.65 SDR.
On June 14, 2000, the day Skyservice lost Ms. McCarthy's checked baggage, the International Monetary Fund (hereinafter the IMF) converted Special Drawing Rights (SDR) to Canadian Dollars (CAD) using a rate of SDR 1 = CAD 1.95977. Utilizing that rate, 250 FGF equalled CAD$32.49 and 5,000 FGF equalled CAD$649.96.
For comparison, using the IMF rate of SDR 1 = CAD 1.97500, which was in effect on May 1, 2002, the current conversion of those same amounts results in 250 FGF equalling CAD$32.75 and 5,000 FGF equalling CAD$655.01.
Therefore, on June 14, 2000 and May 1, 2002, the liability of an air carrier operating an international service for checked baggage was limited, respectively, to CAD$32.49 and CAD$32.75 per kilogram. The Agency notes that Skyservice's liability limitation of CAD$25 per kilogram for checked baggage, as set out in its international charter tariff CTA(A) No. 3, falls short of the limit set out in the Carriage by Air Act.
Accordingly, the Agency has determined that the terms and conditions relating to limitations of liability for checked baggage, as set out in of Rule 10a) of Skyservice's international charter tariff CTA (A) No. 3, are not just and reasonable, contrary to subsection 111(1) of the ATR.
The Agency also notes that, pursuant to the provisions of the Carriage by Air Act, on June 14, 2000 and May 1, 2002, the liability of an air carrier operating an international service for unchecked baggage (of which the passenger takes charge) was limited, respectively, to CAD$649.96 and CAD$655.01 per passenger. The Agency further notes that Skyservice's liability limitation of CAD$500 per passenger for unchecked baggage, as set out in its international charter tariff CTA (A) No. 3, falls short of the limit set out in the Carriage by Air Act.
Accordingly, the Agency has determined that the terms and conditions relating to limitations of liability for unchecked baggage, as set out in Rule 10a) of Skyservice's international charter tariff CTA (A) No. 3, are not just and reasonable, contrary to subsection 111(1) of the ATR.
CONCLUSION
Based on the above findings, the Agency, pursuant to section 113 of the ATR, hereby disallows Rule 10a) of Skyservice's international charter tariff CTA (A) No. 3. Pursuant to section 28 of the CTA, this disallowance is effective 30 days from the date of this Decision.
The Agency notes that the effect of this disallowance is that Skyservice's international charter tariff no longer includes the air carrier's policy in respect of limitations of liability respecting passengers and goods, as required by subparagraph 122(c)(x) of the ATR. Accordingly, Skyservice is hereby required, pursuant to section 26 of the CTA, to file with the Agency a new tariff provision clearly stating its policy in respect of limitations of liability respecting passengers and goods.
- Date modified: