Decision No. 368-C-A-2016

INTRODUCTION

[1] Terrence Ceretti filed an application with the Canadian Transportation Agency (Agency) against American Airlines regarding the rescheduling of his flights from Montréal, Quebec, Canada to Puerto Vallarta, Mexico. Mr. Ceretti states that the schedule change was inconvenient and seeks compensation.

BACKGROUND

[2] On August 4, 2015, Mr. Ceretti booked two business class return tickets with American Airlines for travel scheduled for March 17, 2016, from Montréal to Puerto Vallarta, via Dallas, United States of America. On October 26, 2015, American Airlines notified Mr. Ceretti that his itinerary had been changed from Montréal-Dallas-Puerto Vallarta to Montréal-Chicago-Puerto Vallarta. The change of schedule would have caused Mr. Ceretti to be downgraded from business to economy class on the Montréal‑Chicago flight. It would have also caused a delay of 1 hour and 49 minutes to his original arrival time. Consequently, Mr. Ceretti chose to opt out and not accept the schedule change. American Airlines therefore canceled his reservation and provided him with a full refund of the amount that he had paid for the tickets. Mr. Ceretti then purchased replacement tickets from Air Transat, which cost $682.86 more than the tickets he had originally purchased from American Airlines.

ISSUES

[3] Did American Airlines properly apply the terms and conditions set out in Rules 80 and 90 of its International Passenger Rules and Fares Tariff, NTA (A) No. 273 (Tariff) governing schedule change and refunds, as required by subsection 110(4) of the Air Transportation Regulations, SOR/88-58, as amended (ATR)?

[4] Are the terms and conditions governing schedule change set out in American Airlines’ Tariff Rule 80(C)(1) reasonable within the meaning of subsection 111(1) of the ATR?

SUMMARY OF CONCLUSIONS

[5] The Agency finds that American Airlines properly applied the terms and conditions set out in Rules 80 and 90 of its Tariff. The Agency also finds that Mr. Ceretti has not established that American Airlines’ Tariff Rule 80(C)(1) is unreasonable.

THE LAW

[6] The applicable Tariff provisions and statutory extracts relevant to this matter are set out in the Appendix.

POSITIONS OF THE PARTIES

Mr. Ceretti

[7] Mr. Ceretti acknowledges that he was refunded in accordance with Rule 90 of the Tariff. However, Mr. Ceretti claims that American Airlines should compensate him for the extra amount he paid for his new tickets. Thus, he requests that the Agency order American Airlines to compensate him in the amount of $682.86, which represents the difference between the cost of his original American Airlines tickets and the replacement tickets he purchased from Air Transat.

[8] Mr. Ceretti claims that the reason why American Airlines cancelled, rescheduled and rerouted the flight and offered lower class seating on one leg of his trip was to maximize the number of sold seats in order to improve its financial return. Mr. Ceretti argues that it is unreasonable for a carrier to cancel or reroute flights for any reason that causes passengers inconvenience and financial loss. Mr. Ceretti also questions the fairness of carriers selling seats before receiving slots.

American Airlines

[9] American Airlines submits that Mr. Ceretti is not entitled to compensation for the difference between the amount provided as a refund of his original tickets and the price that he paid with the alternative carrier. American Airlines maintains that it fully complied with the terms and conditions of its Tariff, and that the change in routing and substitution of equipment is a schedule change under Rule 80 of its Tariff and is subject to change by the carrier. Furthermore, American Airlines explains that the reason why it rerouted the flights was because it did not obtain the slot it had originally requested with the Montréal Airport (YUL).

[10] American Airlines filed an affidavit from David Scott, Managing Director of Current Schedules for American Airlines. According to Mr. Scott, American Airlines applied for its airport take-off and landing slots around May or June 2015 following the published International Air Transport Association (IATA) slot timeline. The slots were awarded and communicated to American Airlines on October 14 or October 15, 2015 by IATA standard messaging. However, American Airlines did not receive the YUL slot that it had originally requested, and as the slot assigned was too far away from the filed schedule times, American Airlines changed the flight schedule and implemented the change in its internal systems within 24 hours upon receiving the slot award.

[11] American Airlines submits that it notified Mr. Ceretti of the schedule change well in advance of his February 4, 2016 scheduled travel and that it offered a rerouting to the same destination for arrival on the same day, but refunded Mr. Ceretti without penalty as he opted against accepting the rerouted travel. American Airlines maintains that it is not responsible for Mr. Ceretti’s costs for booking travel with another carrier and that it acted in a manner consistent with subsection 110(4) of the ATR and its Tariff.

ANALYSIS AND FINDINGS

ISSUE 1: DID AMERICAN AIRLINES PROPERLY APPLY THE TERMS AND CONDITIONS SET OUT IN RULES 80 AND 90 OF ITS TARIFF GOVERNING SCHEDULE CHANGE AND REFUNDS, AS REQUIRED BY SUBSECTION 110(4) OF THE ATR?

[12] When an application is filed with the Agency, the applicant must, on a balance of probabilities, establish that the air carrier has failed to apply the terms and conditions of carriage appearing in the applicable tariff.

[13] With respect to schedule change, Rule 80(C)(1) of American Airlines’ Tariff states, in part, that times shown on tickets are not guaranteed and do not form part of the contract of carriage, and that schedules are subject to change without notice. Furthermore, Rule 80(C)(3) states that when a passenger will be delayed due to a change in its schedule, American Airlines will arrange to transport the passenger on its own line to the destination, endorse the unused ticket for the purpose of rerouting over another carrier, or refund the passenger in accordance with Rule 90 of the Tariff.

[14] The Agency notes that the schedule change to Mr. Ceretti’s flight is provided for in American Airlines’ Tariff. The Agency also notes that American Airlines refunded the passenger according to Rule 90(D)(2), which states that when no portion of the trip has been made, the amount of refund will be an amount equal to the fare and charges applicable to the ticket issued to the passenger.

[15] With respect to Mr. Ceretti’s submission that American Airlines rerouted the flights for financial gain, the Agency finds that American Airlines acted in a timely manner and that the measures taken represent reasonable efforts to arrange for the transport of the passenger as required by Rule 80(C)(3) of its Tariff.

[16] As a result, the Agency finds that American Airlines properly applied the terms and conditions of its Tariff relating to schedule changes and refunds, as required by subsection 110(4) of the ATR.

ISSUE 2: ARE THE TERMS AND CONDITIONS GOVERNING SCHEDULE CHANGE SET OUT IN AMERICAN AIRLINES’ TARIFF RULE 80(C)(1), REASONABLE WITHIN THE MEANING OF SUBSECTION 111(1) OF THE ATR?

[17] To assess whether a term or condition of carriage is “unreasonable”, the Agency has traditionally applied a balancing test, which requires that a balance be struck between the rights of passengers to be subject to reasonable terms and conditions of carriage and the particular air carrier’s statutory, commercial and operational obligations, as stated in Decision No. 24-C-A-2016. In the same decision, the Agency stated that 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. There is no presumption that a tariff is reasonable.

[18] 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. The burden is ultimately on the applicant to provide evidence to demonstrate that the terms and conditions are unreasonable within the meaning of section 111 of the ATR.

[19] In this case, Mr. Ceretti argues that American Airlines’ ability to reroute flights for any reason far outweighs the protection offered to the public, and that the public suffers inconvenience and financial loss while American Airlines is unjustly enriched. Additionally, Mr. Ceretti questions the fairness of carriers being able to advertise and sell seats on flights before they have received the slots. American Airlines does not address this issue; instead it reiterates that when a slot assignment disrupts passenger connectivity, it works as quickly as it can to adjust schedules to meet the awarded slot times, and notifies affected passengers as soon as possible, which it did in this case.

[20] Based on the above, the Agency finds that Mr. Ceretti has not established that American Airlines’ Tariff Rule 80(C)(1) is unreasonable and contrary to subsection 111(1) of the ATR.

CONCLUSION

Issue 1

[21] The Agency finds that American Airlines properly applied the terms and conditions set out in Rules 80 and 90 of its Tariff relating to schedule change and refunds, as required by subsection 110(4) of the ATR.

Issue 2

[22] The Agency finds that Mr. Ceretti has not established that Tariff Rule 80(C)(1) is unreasonable and contrary to subsection 111(1) of the ATR.

[23] The Agency therefore dismisses the application.

APPENDIX

American Airlines' International Passenger Rules and Fares Tariff, NTA (A) No. 273

Schedule changes

RULE 80(C)(1)

(c) Schedules, delays and cancellation of flights

(1)  Schedules times shown in timetables or elsewhere are approximate and not guaranteed, and form no part of the contract of carriage. Schedules are subject to change without notice and carrier assumes no responsibility for making connections. AA will not be responsible for errors or omissions either in timetables or other representations of schedules. No employee, agent or representative of AA is authorized to bind AA by any statements or representation as to the dates or times of departure or arrival, or of the operation of any flight.

RULE 80(C)(3)

(3)  Change in schedule

When a passenger will be delayed because of a change in its schedule, carrier will arrange to:

(a) transport the passenger on its own line to the destination, next stopover point or transfer point shown on its portion of the ticket, without stopover at no additional cost to the passenger, provided that a passenger who paid an Economy Class fare will be transported on one of its First Class flights only if such flight will provide an earlier arrival than its next Economy Class flight on which space is available.

(b)  endorse the unused ticket for the purpose of rerouting over another carrier; or

(c) refund in accordance with rule 90 (REFUNDS).

Refunds

RULE 90(D)(2)

(2)  Amount of involuntary refunds.

The amount of involuntary refunds will be as follows:

(a)  when no portion of the trip has been made, the amount of refund will be an amount equal to the fare and charges applicable to the ticket issued to the passenger.

(b)  when a portion of the trip has been made, the amount of refund will be computed as follows:

(i) either an amount equal to the one way fare less the same rate of discount, if any, that was applied in computing the original one way fare (or on round trip or circle trip tickets, one half of the round trip fare) and charges applicable to the unused transportation from the point of termination to the destination or stopover point named on the ticket or to the point at which transportation is to be resumed, via:

(aa) the routing specified on the ticket, if the point of termination was on such routing; or

(bb) the routing of any carrier operating between such points, if the point of termination was not on the routing specified on the ticket; in such case the amount of refund will be based on the lowest fares applicable between such points; or

(ii)  The difference between the fare paid and the fare for the transportation used, whichever is higher.

Air Transportation Regulations, SOR/88-58, as amended

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

111(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.