Decision No. 533-C-A-2002

September 23, 2002

File No. M4370/A74/02-162

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COMPLAINT

On January 29, 2002, Andrew and Penelope Spooner filed with the Canadian Transportation Agency (hereinafter the Agency) the complaint set out in the title.

On February 12, 2002, Agency staff requested that Air Canada address the complaint within the context of sections 111, 113 and 116 of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR).

On March 14, 2002, Air Canada requested an extension of time, until March 21, 2002 to file its answer to the complaint. By Decision No. LET-C-A-85-2002 dated March 20, 2002, the Agency granted the extension.

On March 21, 2002, Air Canada filed its answer to the complaint, and on March 26, 2002, Mr. Spooner filed his reply to the answer.

Pursuant to subsection 29(1) of the Canada Transportation Act (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 extension of the deadline until September 30, 2002.

ISSUES

The issues to be addressed are:

1. whether Air Canada applied the terms and conditions, relating to airfare penalty provisions, as specified in its tariff applicable to international carriage, as required by subsection 110(4) of the ATR;
2. whether the terms and conditions specified in Air Canada's tariff applicable to international carriage, relating to airfare penalty provisions, are clear within the meaning of paragraphs 122(a) and 122(c) of the ATR; and
3. whether Air Canada met its obligations within the meaning of section 116 of the ATR, with regard to public inspection of tariffs.

POSITIONS OF THE PARTIES

On September 16, 2001, the Spooners purchased Air Canada tickets for travel between Toronto, Canada and Zurich, Switzerland from February 26 to March 10, 2002.

Mr. Spooner states that, following this, he had gone to the Air Canada ticket purchase counter, at Lester B. Pearson International Airport in Toronto, in order to purchase Air Canada tickets for travel between Toronto, Canada and Madrid, Spain from May 16 to 27, 2002. Mr. Spooner wanted to cancel the previously purchased Air Canada tickets for travel between Toronto and Zurich and to apply the credit from those cancelled tickets to the purchase of the new tickets to Madrid.

Mr. Spooner alleges that the Air Canada agent advised him that any credit from the cancelled Zurich tickets could only be used to purchase full-fare, unrestricted air tickets and could not be applied towards the purchase of the discounted tickets between Toronto and Madrid that Mr. Spooner had reserved. Mr. Spooner advised the agent that this information had not been made clear to him, when he purchased the original Zurich tickets and that such penalty restrictions were not detailed on the Air Canada website.

Mr. Spooner maintains that when he asked the Air Canada agent to show him a copy of the fare rules governing his original Zurich airfare, the agent advised him that they were not available. When he further suggested that Air Canada was mandated to keep a copy of its rules and regulations available for review by a customer, on request, the agent consulted an Air Canada supervisor who allegedly advised that the air carrier did keep copies of fare rules on site, but that a passenger was not entitled to see those rules. Mr. Spooner advised that when he disagreed, he was directed to call the Air Canada Customer Solutions telephone line for assistance. Mr. Spooner advised the air carrier's staff that he had previously experienced very slow service from that Customer Solutions department and that this situation required an immediate solution.

Mr. Spooner also points out that he told the Air Canada staff that this policy of attaching restrictions to the application of credit "appeared bordering on the illegal".

The Spooners are requesting 1) a full credit of the purchase price of the Zurich tickets that may be used against the purchase of any future Air Canada tickets, regardless of the class of service, and a waiver of any fees for reissuing of the tickets, 2) that Air Canada provide full disclosure of all ticket restrictions, by fare class, on its website and in writing when a ticket is purchased, 3) that Air Canada offer a grace period so that customers can reconsider reservations in the event that there is a misunderstanding regarding fare restrictions, 4) an assessment of the legality of Air Canada's purported policy that certain fare classes have restrictions on the classes of service against which a credit can be applied, and 5) that Air Canada provide a copy of the terms and conditions of sale to the customer, on request, at any ticket office.

In correspondence to the Air Canada Ombudsman, dated February 11, 2002, Mr. Spooner asked Air Canada to cancel the Spooners' reservations for the Toronto to Zurich trip, but noted that this cancellation does not alter the Spooners' position regarding the complaint before the Agency and it is not an agreement to accept a loss of any part of the value of those tickets.

In its answer, Air Canada advises that, following the filing of the Spooners' complaint with the Agency, Mr. Spooner had discussions with Air Canada's Ombudsman and Call Centre office and, as a result, the Spooners obtained a credit in the full amount of the purchase price of the Zurich tickets that they subsequently used against the purchase of tickets to Spain for travel in May 2002.

Air Canada states that it clearly applied the terms and conditions of carriage applicable to the Zurich airfare, as set out in its tariff, when it did not initially offer the Spooners a credit. The penalty provision in category 16 of the applicable Rule 9573 of Air Canada's International Passenger Rules Tariff (IPRAI) clearly states that changes, rebooking and rerouting are not permitted and, while the ticket is non-refundable, the cancellation penalty may be waived in the case of an upgrade to a higher applicable normal, PEX or excursion fare. Air Canada states that the new fare to Madrid was not a normal/PEX/excursion fare. However, as a credit was later provided to the Spooners, Air Canada contends that the matter relating to credit restrictions is now moot.

Nevertheless, Air Canada also provides justification for the imposition of credit restrictions and other restrictions on discounted airfares, to differentiate them from higher priced, less restricted full fares and Air Canada confirms that these restrictions are applied equally to all passengers purchasing the fare in question, thus making them non-discriminatory. Air Canada is of the opinion that the Agency has no jurisdiction to require a carrier to provide disclosure of fare restrictions on its website or with passenger's tickets or to require the establishment of a suitable grace period in order for a passenger to reconsider reservations.

With respect to the accessibility of the tariff, Air Canada advises that it keeps historical fare data available at Lester B. Pearson International Airport in Toronto, through the use of ResIII, Air Canada's internal reservation system, for a period of 90 days from the last day such a fare was available for sale. The Zurich fare which the Spooners purchased, was a special fare that was only available for sale until October 29, 2001, so it disappeared from ResIII on January 27, 2002, prior to the Spooners' visit to the airport to request changes to their tickets. Air Canada contends that as the tariff for the Zurich fare was no longer in effect, it was not required to keep a copy at the airport. Air Canada advises that its staff did refer the Spooners to its Customer Solutions division to request a copy of the fare rule in question, thus meeting its obligation to have a copy of the tariff available for inspection at its principal place of business for a period of three years after the date of cancellation of the tariff.

In his reply, Mr. Spooner reiterates that the number of different fare types and rules offered by Air Canada is very confusing to the consumer and the fences put on discount fares are too high and too restrictive.

He contests Air Canada's explanation that it had initially applied the listed penalty provisions of the Zurich fare Rule 9573 correctly. He states that he did try to purchase a higher excursion fare ticket and that the Cancellations portion of that Rule 9573 should have let him cancel and apply the credit to that higher excursion fare. He alleges that the Air Canada ticket agent told him he was only eligible for a credit if he purchased a full fare economy ticket.

Mr. Spooner states again that it should be Air Canada's responsibility to fully disclose the fare rules to the customer in written and printable form at the time the buyer is conducting the purchase transaction. He feels that the Air Canada website is its "virtual" office and it should, therefore, include all conditions of sale, clearly stated.

He adds that it is his opinion that the lack of service at Air Canada's phone contact numbers is what leads consumers to use the website and that it should not be the buyer's responsibility to have to wait on hold, on one of those telephone lines, to ascertain what are the terms and conditions of sale of the particular airfare he/she is trying to purchase online. Mr. Spooner included an example, from another carrier, which provided detailed information about the applicable airfare restrictions for travel on a flight that is actually sold by that air carrier but operated by Air Canada.

Mr. Spooner concludes that he finds fare rules unclear and very difficult to interpret and that they should be simplified. He feels that non-refundable tickets should be exchangeable for other fares, regardless of the class of service. Mr. Spooner repeats that all air carriers should be required to provide a grace period, after a consumer purchases a ticket, to give the person the necessary time to review and understand the fare rules, after which the ticket could be cancelled and/or refunded without penalty.

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 Air Canada's penalty provisions applicable to the original airfare purchased by the Spooners for travel between Toronto and Zurich as set out in category 16 of Rule 9573, "AC Promotional Seat Sale Between Canada and Europe", of its International Passenger Rules tariff No. IPRAI , that states:

CANCELLATIONS

ANY TIME

TICKET IS NON-REFUNDABLE.
WAIVED FOR UPGRADE TO HIGHER FARE/DEATH OF PASSENGER OR FAMILY MEMBER.
NOTE -

PENALTY IS WAIVED IN THE CASE OF AN UPGRADE TO A HIGHER APPLICABLE NORMAL/PEX/EXCURSION ONLY AND THE NON-REFUNDABLE AMOUNT SHALL REMAIN NON-REFUNDABLE.

CHANGES

ANY TIME

CHANGES NOT PERMITTED.
NOTE -

REBOOKING/REROUTING - NOT PERMITTED.

The Agency also notes that Air Canada publishes general rules applicable to all of its scheduled international fares in its tariff No. NTA(A) No. 458. While Air Canada does not define PEX fare or Excursion fare in Rule 1, "Definitions", of that tariff, it does include two separate definitions for normal fare, being:

Normal fare means the full fare established for a regular or usual service, the application of which is not dependent upon any limited period of ticket validity or other special circumstances. Unless otherwise specified in the provisions of this tariff, normal fares shall be considered to include the following, all year one-way, round trip, circle trip and open jaw trips, First Class, Business Class, Executive Class, Economy Class, one-class Standard Service, Standard Service, Tourist/Coach Class service and Thrift Class service fares, on-season and off-season fares.

Normal fare means a fare established for First, Intermediate or Economy Class service and any other fares denominated and published as a normal fare. Children's fares and infants' fares which are established as a percentage of the fares referred to above are also considered to be normal fares.

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 part, in subsection 110(4) of the ATR that provides:

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.

The requirements relating to the contents of a carrier's international tariff are outlined in section 122 of the ATR, that states:

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;

(b) the tolls, together with the names of the points from and to which or between which the tolls apply, arranged in a simple and systematic manner with, in the case of commodity tolls, goods clearly identified; and

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

(i) the carriage of persons with disabilities,

(ii) acceptance of children for travel,

(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,

(vii) ticket reservation, cancellation, confirmation, validity and loss,

(viii) refusal to transport passengers or goods,

(ix) method of calculation of charges not specifically set out in the tariff,

(x) limits of liability respecting passengers and goods,

(xi) exclusions from liability respecting passengers and goods, and

(xii) procedures to be followed, and time limitations, respecting claims.

The Agency's jurisdiction over complaints with respect to the public inspection of tariffs is set out in section 116 of the ATR which provides that:

(1) Every air carrier shall, immediately on filing a tariff with the Agency and thereafter while the tariff remains in effect, keep available for public inspection at each of its business offices a true copy of every tariff in which the air carrier participates that applies to the international services to or from the point where the business office is situated.

(2) Every air carrier shall, in a prominent location in each of the carrier's business offices, post a notice

(a) directing attention to the place where the tariffs are kept; and

(b) indicating the business hours during which the tariffs may be inspected by members of the public.

(3) Every air carrier shall, for a period of three years after the date of any cancellation of a tariff participated in by the carrier, keep a copy of that tariff at the principal place of business in Canada of the carrier or at the place of business in Canada of the carrier's agent.

Section 2, "Interpretation", of the ATR defines "business office" as:

"business office", with respect to an air carrier, includes any place in Canada where the air carrier receives goods for transportation or offers passenger tickets for sale, but does not include an office of a travel agent.

With respect to the issue of whether Air Canada applied the terms and conditions specified in its international tariff relating to airfare penalties, as required by subsection 110(4) of the ATR, the Agency notes that Air Canada did, subsequent to having received the complaint, provide the remedy sought by Mr. and Ms. Spooner by applying a credit for their unused tickets to Zurich against the purchase of their new tickets to Madrid and did not assess any fee or charge to do so. Consequently, the Agency finds the portion of this application concerning Air Canada's application of its tariff provisions concerning airfare penalties to be moot, as a decision on the merit of that portion of the application will have no practical effect on the rights of the parties.

The Agency will now consider the issue of whether Air Canada's terms and conditions relating to airfare penalty provisions, specified in its tariff applicable to international carriage, are clear within the meaning of paragraphs 122(a) and 122(c) of the ATR.

In reviewing the definitions found in Rule 1 of Air Canada's international tariff NTA(A) No. 458 for the purposes of investigating this complaint, the Agency notes that there are two separate definitions for normal fare and that the tariff does not include definitions for PEX fare or Excursion fare. Accordingly, the Agency has determined that the presence of two different definitions of normal fare in Rule 1, "Definitions", of Air Canada's international tariff NTA(A) No. 458 makes the application of that rule unclear and contrary to paragraph 122(a) of the ATR. The Agency has also determined that, with the presence of two different definitions for normal fare and in the absence of definitions for PEX fare and Excursion fare, Air Canada's use of the terms NORMAL/PEX/EXCURSION, in the Penalty provision of the fare rule 9573 of its International Passenger Rules tariff No. IPRAI, makes the application of that rule unclear and contrary to paragraph 122(a) and subparagraph 122(c)(vii) of the ATR.

With respect to the issue of whether Air Canada met its obligations within the meaning of section 116 of the ATR, with regard to public inspection of tariffs, the Agency makes the following findings.

As Air Canada does offer tickets for purchase at Lester B. Pearson International Airport in Toronto, Canada, the Agency finds that the Toronto airport location is a business office of Air Canada, based on the definition of "business office" in section 2 of the ATR.

The Agency finds that Air Canada's website is not a "business office" as per the definition in section 2 of the ATR. The Agency finds, therefore, that Air Canada's obligations, within the meaning of subsection 116(1) of the ATR, did not require the air carrier to make a copy of its tariff available on its website.

The Agency notes that the original Zurich airfares in question have not been available for purchase since October 29, 2001. Accordingly, the Agency finds that the tariffs applicable to those fares were no longer in effect, since that date, and, as such, were not required to be available for viewing at the business offices of Air Canada. The Agency has determined, therefore, that Air Canada did meet its obligations within the meaning of subsection 116(1) of the ATR, when it advised the Spooners that it was not required to make a copy of that tariff available to them, at the Lester B. Pearson International Airport in January 2002.

Nevertheless, the Agency is of the opinion that Air Canada would have had to have a copy of the tariff available in order to ascertain the correct penalty provision applicable to the original Zurich fares. While the provision of a copy of the tariff to a customer, in a case such as this, or the ability to just view it, is not strictly required by the ATR, the Agency is of the opinion that when the tariff is obviously available on site, an air carrier should make every effort to allow the customer to view it, on request.

The Agency notes that Air Canada did direct the Spooners to its Customer Solutions telephone line to request a copy of the tariff for the Zurich fares. By making a copy of the tariff available, the Agency finds that Air Canada did meet its obligations within the meaning of subsection 116(3) of the ATR.

CONCLUSION

Based on the above findings, the Agency hereby dismisses the issues in this application relating to:

1. Air Canada's application of its terms and conditions of carriage, in its international tariff, regarding penalty provisions; and
2. Air Canada's obligations, under subsections 116(1) and 116(3) of the ATR, with regard to public inspection of tariffs.

The Agency finds that Air Canada's international tariff NTA(A) No. 458 does not contain terms and conditions of carriage clearly stating definitions for normal fare, PEX fare and excursion fare.

Therefore, the Agency, pursuant to section 26 of the CTA, hereby directs Air Canada to ensure, within thirty (30) days from the date of this Decision, that its international tariff NTA(A) No. 458 contains the terms and conditions of carriage clearly stating its definitions for normal fare, PEX fare and excursion fare, pursuant to paragraph 122(a) and subparagraph 122(c)(vii) of the ATR.