Decision No. 55-C-A-2002
January 31, 2002
IN THE MATTER of a complaint filed by Aden Clark against Labrador Airways Limited carrying on business as Air Labrador concerning its airfare restrictions on its flights between the southern Labrador coastal communities.
File No. M4370/A615/00-1
COMPLAINT
On October 25, 2000, Aden Clark 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 May 28, 2001.
On June 1, 2001, Agency staff requested that Labrador Airways Limited carrying on business as Air Labrador (hereinafter Air Labrador) address the complaint within the context of subsection 67.2(1) of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA).
On June 30, 2001, Air Labrador filed its answer to the complaint, and on July 18, 2001, Mr. Clark filed his reply to the answer.
By letter dated July 19, 2001, the Southeastern Aurora Development Corporation (hereinafter SADC) filed an intervention in respect of this matter. On November 21, 2001, Mr. Clark filed his answer to the intervention and on November 22, 2001, Air Labrador filed its reply.
By Decision No. LET-C-A-458-2001 dated November 21, 2001, the Agency requested that Air Labrador provide information that would support the carrier's decision to introduce restrictions applicable to fares for travel between the southern Labrador coastal communities. The Agency also indicated that Air Labrador's Local Domestic Tariff, provided by the carrier to the Agency on October 16, 2001, lacked the following information: (1) the different fare levels offered by Air Labrador between any two cities (based on availability of Air Labrador fares in the computer reservations systems); and (2) the fare rules applicable to the basic fares which are listed in the tariff.
The Agency noted that Air Labrador had advised Agency staff that, while the carrier distributes its fares and fare rules to the different computer reservations systems through the Airline Tariff Publishing Company (hereinafter ATPCo), the ATPCo tariff does not constitute Air Labrador's official domestic tariff. The Agency concluded that Air Labrador's Local Domestic Tariff lacked clarity, and that this tariff should reflect all fare rules which Air Labrador sets out and all fare levels which the carrier proposes to offer for purchase, and advised Air Labrador to effect the tariff updates immediately.
On December 12, 2001, Air Labrador filed its response to Decision No. LET-C-A-458-2001.
Pursuant to subsection 29(1) of 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 January 31, 2002.
PRELIMINARY MATTER
Although Air Labrador filed its response to Decision No. LET-C-A-458-2001 after the prescribed deadline of November 30, 2001, the Agency, pursuant to section 6 of the National Transportation Agency General Rules, SOR/88-23, accepts this submission as being necessary and relevant to its consideration of this matter.
ISSUES
The issues to be addressed are:
- whether the terms and conditions imposed by Air Labrador are properly set out in its domestic tariff, as required by subsection 67(3) of the CTA; and
- whether the terms and conditions imposed by Air Labrador are unreasonable or unduly discriminatory, within the meaning of subsection 67.2(1) of the CTA.
POSITIONS OF THE PARTIES
Mr. Clark submits that the imposition, by Air Labrador, of advance reservation restrictions and penalty provisions on all fares applicable to flights between the southern Labrador coastal communities is discriminatory. The air carrier does not apply the same restrictions to flights on its northern route.
Air Labrador states that it had a high number of no-shows or phantom bookings on the southern routes which resulted in its inability to confirm passengers who wanted to travel because many seats were booked by potential travellers using false names, and the aircraft would eventually depart with minimal numbers on board. Air Labrador advises that the aircraft flying the southern routes is a Twin Otter (DHC-6) with only 18 seats onboard and that any level of false booking negatively affects its ability to serve its customers.
Mr. Clark submits that the addition of these restrictions penalizes all passengers for the indiscretion of a few and discriminates against travellers purchasing tickets on these southern routes. He adds that Air Labrador is the only air carrier providing regularly scheduled passenger service for this area while there are alternate airline services available on the northern routes. Mr. Clark submits that another way to address Air Labrador's problem is to target only the clients who do not show up for a flight and who do not cancel their reservations. Mr. Clark contends that the double-booking problem exists " because Air Labrador does not provide enough guaranteed flights from the South Coast" of Labrador.
Air Labrador states that it introduced the fare restrictions after wide-spread consultation with the region in question; that it consulted with Aboriginal groups, business leaders, community development organizations, municipal governments, as well as others. The air carrier adds that the policy, which was introduced to benefit the users of its service, has been widely accepted and has been highly successful in curbing the extremely high incidence of no-shows on the routes in question.
Mr. Clark challenges Air Labrador's contention that it met with a broad base of the population on the south coast of Labrador. He mentions that the change in policy was not advertised or conveyed to the public in any way, for feedback, before imposition.
In its letter of November 21, 2001, the Agency requested that Air Labrador provide detailed information, including statistics compiled and surveys or consultations carried out, before and after implementation of its new airfare restrictions. The Agency also requested Air Labrador to outline what information it had gathered to explain why the problem of no-shows and duplicate bookings is predominantly a southern route issue and to advise what other courses of action it had taken to resolve the problem, before deciding to implement the airfare restrictions.
Air Labrador advises that it used its staff in the coastal communities and its Reservations Manager to monitor load factors, no-show factors and other information, but that no formal statistics were kept. It accepted input from passengers who travel over the coastal routes. The determining factor in implementation of the restrictions was the high rate of fictitious bookings and the inability to confirm people on flights. Air Labrador indicates that it was concerned that it was not delivering "good customer service" as passengers were not able to book and receive confirmed flights. Air Labrador notes that it is normal practice in the airline industry to oversell flights to counteract no-shows, but that it could not do this on its coastal flights because of the lack of frequency and the inability to move, on subsequent flights, those passengers unable to travel due to an oversell.
Air Labrador submits that, after the restrictions were put into place, the no-show factor virtually disappeared and, with the exception of Mr. Clark's complaint, its customers and the travelling public on the south coast have welcomed the restrictions.
Air Labrador states that its Manager of Customer Service telephoned all community-based organizations to convey its intention to impose the restrictions in question. The groups included town councils, development groups, economic development agencies, Grenfell Regional Health Services and Aboriginal groups. Air Labrador indicates that it included a leaflet insert in its ticket jackets which explained the new policy and why it was being implemented.
Air Labrador submits that it attempted to reconfirm all reservations by contacting passengers booked on the flight, the day before travel day, to verify whether they would be travelling. This was both time-consuming and difficult to carry out as the number of passengers that needed to be called, including those on the wait-list, was great and, often, inaccurate telephone numbers were supplied.
Air Labrador believes that fictitious bookings are not as rampant on other routes because they have more frequent flights. The carrier advises that, on the north coast, specific flights are set up to move medical patients and these are scheduled by the medical facility. The south coast of Labrador is served by a separate medical facility, which moves its patients on the regularly scheduled flights. Air Labrador contends that medical patients often booked air travel in anticipation of receiving medical appointments and, if the appointment was not obtained, the air booking was not cancelled, resulting in a no-show. The north coast routes connect only through the one major hub of Goose Bay, while the south coast routes serve two hubs: Goose Bay and St. Anthony. Air Labrador submits that, when routes are analysed and frequency is considered, there is more demand for seats on the south coast than on the north coast.
Air Labrador advises that, when it established that there was a problem on the south coast of Labrador, it made changes which it felt were in the best interest of the company and all of its customers. It worked with the people of the area at the start of implementation of this new policy and it continues to work with them. Air Labrador feels that, overall, people understand and support its fare restrictions on the south coast routes.
INTERVENTION
In its intervention, SADC, which is a regional economic development board representing an area consisting of 11 permanent communities on the southeast coast of Labrador, explains that it initially had concerns that the prepayment policy would cause many accounting problems. But SADC notes that, at the same time Air Labrador initiated the policy, it also added a Sunday flight to its schedule, which previously featured flights only from Monday to Friday. SADC credits Air Labrador for solving the wait-list problem and commends the air carrier on its first-rate customer service to the residents of the southern Labrador coastal communities and on its accommodation of consumers' travelling needs.
Mr. Clark expresses concerns that Judy Pardy, the Executive Director of SADC and author of its letter of intervention, and/or her husband, were previous agents for Air Labrador.
Air Labrador advises that Mrs. Pardy has not been an employee of Air Labrador since approximately 1983.
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 Labrador's domestic tariff. While that tariff does not include the subject airfare restrictions of this complaint, Air Labrador, in its letter to the Agency, received on June 30, 2001, outlines the rule restrictions as follows:
Individguals (sic) traveling on Air Labrador flights WJ300, WJ303 and WJ301 must purchase tickets within 24 hours from time of booking; in advance of travel. Full refunds will be made to individguals (sic) who are unable to travel on the date booked due to circumstances beyond ones (sic) control; thus judged as extenuating circumstances. Individuals canceling (sic) reservations more than 24 hours of the date and time of travel will receive an immediate full refund. Individuals who book and purchase tickets and do not complete all or portions of the travel booked will be required to pay a $50.00 change fee for the reactivation of the issued ticket.
The advance reservation restrictions which were published by ATPCo, on behalf of Air Labrador, for its basic fare, effective October 25, 2000, state:
IF THE FARE COMPONENT IS ON
ONE OR MORE OF THE FOLLOWING
WJ FLIGHT 0300
WJ FLIGHT 0303RESERVATIONS FOR ALL SECTORS AND TICKETING MUST BE COMPLETED
AT THE SAME TIME.
The penalty restrictions which were published by ATPCo, on behalf of Air Labrador, for its basic fare, effective October 25, 2000, state:
IF THE FARE COMPONENT IS ON
ONE OR MORE OF THE FOLLOWING
WJ FLIGHT 0300
WJ FLIGHT 0303CHANGES
CHARGE CAD 50.00.
NOTE -
THE 50.00 CAD CHARGE APPLIES ONLY IF CHANGES ARE MADE WITHIN 48 HOURS OF DEPARTURE. IN EXTENUATING CIRCUMSTANCES WHERE TRAVEL CANNOT BE COMPLETED AUTHORIZATION TO WAIVE THE CHANGE FEE CAN BE OBTAINED BY CONTACTING BARRIE HYNES-RESERVATION MANAGER- 709-896-6772.CANCELLATIONS
CHARGE CAD 50.00 FOR NO-SHOW.
NOTE -
THE 50.00 CAD CHARGE APPLIES ONLY IF CHANGES ARE MADE WITHIN 48 HOURS OF DEPARTURE. IN EXTENUATING CIRCUMSTANCES WHERE TRAVEL CANNOT BE COMPLETED AUTHORIZATION TO WAIVE THE CHANGE FEE CAN BE OBTAINED BY CONTACTING BARRIE HYNES-RESERVATION MANAGER- 709-896-6772.
The Agency's jurisdiction over complaints with respect to terms and conditions of carriage established and applied by an air carrier operating a domestic service is set out in subsection 67(3) and subsection 67.2(1) of the CTA.
Section 67 of the CTA provides that:
(1) The holder of a domestic licence shall
(a) publish or display and make available for public inspection at the business offices of the licensee all the tariffs for the domestic service offered by the licensee;
(b) in its tariffs, specifically identify the basic fare between all points for which a domestic service is offered by the licensee; and
(c) retain a record of its tariffs for a period of not less than three years after the tariffs have ceased to have effect.
(2) A tariff referred to in subsection (1) shall include such information as may be prescribed.
(3) The holder of a domestic licence shall not apply any fare, rate, charge or term or condition of carriage applicable to the domestic service it offers unless the fare, rate, charge, term or condition is set out in a tariff that has been published or displayed under subsection (1) and is in effect.
(4) The holder of a domestic licence shall provide a copy or excerpt of its tariffs to any person on request and on payment of a fee not exceeding the cost of making the copy or excerpt.
Further, subsection 67.2(1) of the CTA states that:
(1) If, on complaint in writing to the Agency by any person, the Agency finds that the holder of a domestic licence has applied terms or conditions of carriage applicable to the domestic service it offers that are unreasonable or unduly discriminatory, the Agency may suspend or disallow those terms or conditions and substitute other terms or conditions in their place.
With respect to the issue of whether the terms and conditions imposed by Air Labrador are properly set out in its domestic tariff, as required by subsection 67(3) of the CTA, the Agency notes that, while Air Labrador does publish the terms and conditions in various computer reservations systems, it does not include them in its domestic tariff, which it provided to the Agency. Accordingly, the Agency finds that Air Labrador is applying fares and terms and conditions of carriage that are not set out in its domestic tariff.
Are Air Labrador's airfare restrictions on its flights between the southern Labrador coastal communities "unreasonable" within the meaning of subsection 67.2(1) of the CTA?
According to the principles of statutory interpretation, words of a statute are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme and object of the statute as well as the intention of Parliament. As stated by M. Justice Rouleau of the Federal Court Trial Division in ECG Canada Inc. v. M.N.R., [1987] 2 F.C. 415:
There is no question that the literal approach is a well established one in statutory interpretation. Nevertheless, it is always open to the Court to look to the object or purpose of a statute, not for the purpose of changing what was said by Parliament, but in order to understand and determine what was said. The object of a statute and its factual setting are always relevant considerations and are not to be taken into account only in cases of doubt.
The term "unreasonable" is not defined in either the CTA or the Air Transportation Regulations (hereinafter the ATR). The Canadian Oxford Dictionary defines the word "unreasonable" as "going beyond the limits of what is reasonable or equitable; not guided by or listening to reason". Black's Law Dictionary defines "unreasonable" as meaning "irrational; foolish; unwise; absurd; silly; preposterous; senseless; stupid".
Although the scope of the word "unreasonable" as it relates to terms and conditions of carriage has not been judicially considered in Canada, the meaning of the word has repeatedly been examined by the courts in contexts such as judicial review (C.U.P.E. v. New Brunswick Liquor Corporation, [1979] 2 R.C.S. 227) or the review of a discretionary decision based on irrelevant consideration, improper purpose or bad faith(Associated Provincial Picture Houses v. Wednesbury Corporation, [1948] 1 K.B. 233; City of Montréal v. Beauvais, (1909) 42 S.C.R. 211; Canadian Transportation Agency Decision No. 445-R-2000 dated June 30, 2000). While it is difficult to extrapolate distinct principles on the meaning of the word "unreasonable" from these cases, the courts have consistently held that:
- The meaning of the word cannot be determined by recourse to a dictionary;
- A contextual meaning must be given to the word; and
- In general terms, the word means "without a rational basis".
Subsection 67.2(1) of the CTA appears under the heading entitled "Licence for Domestic Service" found in Part II of the CTA, "Air Transportation". This heading encompasses 10 statutory provisions which provide specific statutory remedies to the travelling public, while imposing obligations on domestic licensees as part of an effort to redress instances where a fare, rate, charge or term or condition of carriage unilaterally established by an air carrier is found to be unreasonable, unduly discriminatory or not applied by the carrier. In the Agency's opinion, the specific wording of subsection 67.2(1) of the CTA reflects a recognition by Parliament that regulation was needed in order to attain the stated objective of the national transportation policy found in section 5 of the CTA which provides, in part, that:
...each carrier or mode of transportation, as far as is practical, carries traffic to or from any point in Canada under fares, rates and conditions that do not constitute an unfair disadvantage in respect of any such traffic beyond the disadvantage inherent in the location or volume of the traffic, the scale of the operation connected with the traffic or the type of traffic or service involved.
This position is also in harmony with section 12 of the Interpretation Act, R.S.C., 1985, c. I-21 which provides that:
Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.
In determining whether a term or condition of carriage applied by a carrier is "unreasonable" within the meaning of subsection 67.2(1) of the CTA, the Agency must, therefore, ensure that it does not interpret the provision in such a way that impairs or jeopardizes the ability of the travelling public to efficiently use the recourse put in place by Parliament to protect it against the unilateral setting of terms and conditions of carriage by air carriers.
Conversely, the Agency must also take into account:
- the operational and commercial obligations of the particular air carrier which is the subject of the complaint;
- the other consumer protection provisions found under Part II of the CTA which compel air carriers to publish, display or make available for public inspection tariffs that contain the information required by the ATR and only apply the terms and conditions of carriage set out in those tariffs; and
- the fact that air carriers are required to establish and apply terms and conditions of carriage designed to apply collectively to all passengers as opposed to one particular passenger.
The Agency is, therefore, of the opinion that, in order to determine whether a term or condition of carriage applied by a domestic carrier is "unreasonable" within the meaning of subsection 67.2(1) of the CTA, a balance must be struck between the rights of the passengers to be subject to reasonable terms and conditions of carriage, and the particular air carrier's statutory, commercial and operational obligations.
With respect to the issue of whether Air Labrador's airfare restrictions on its flights between the southern Labrador coastal communities are"unreasonable" within the meaning of subsection 67.2(1) of the CTA, the Agency is of the opinion that, based on the information provided, Air Labrador did consult with many community and business groups. The terms and conditions imposed appear to have solved the problem of no-shows on the south coast routes and appear to meet with the approval of those community and business groups, as verified by the SADC. The removal of these restrictions would, in the Agency's opinion, recreate Air Labrador's previous no-show problems and cause future difficulties for passengers attempting to obtain confirmed airline reservations. The Agency also notes that it has received only this one complaint with regard to this matter.
The Agency therefore finds that Air Labrador's imposition of airline restrictions on reservations and tickets for flights between the south coast communities of Labrador, is a legitimate means by which Air Labrador can control the number of no-shows and the number of airline seats available for confirmed reservations. Further, the Agency finds that the elimination of those advance reservation and penalty provisions would likely reintroduce problems for travellers attempting to confirm reservations on flights between the southern Labrador coastal communities.
Are Air Labrador's airfare restrictions on its flights between the southern Labrador coastal communities "unduly discriminatory" within the meaning of subsection 67.2(1) of the CTA?
As with the word "unreasonable", the phrase "unduly discriminatory" is not defined in the CTA or the ATR.
With respect to the meaning of the word "discriminatory", the Supreme Court of Canada, in Andrews v. Law Society (British Columbia), [1989] 1 S.C.R. 143, held that "discrimination may be described as a distinction, whether intentional or not but based on grounds relating to personal characteristics of the individual or group, which has the effect of imposing burden, obligation, or disadvantages on such individual or group not imposed on others, or which withholds or limits access to opportunities, benefits, and advantages, available to other members of society".
Further, in O'Connell v. Canadian Broadcasting Corp. (1988), 88 C.L.L.C. 17, 017, the Canadian Human Rights Tribunal held that: "a practice or rule may be found to be discriminatory, whether it involves ... "direct discrimination" (a practice or rule which is on the face of it discrimination) or "adverse impact" (a practice or rule which is on the face of it neutral, applying equally to all employees, but which has a discriminatory effect upon a discriminatory ground on an individual employee or group of employees).".
The above judicial interpretations of the word "discrimination" are well recognized in Canada and have been used by various courts and tribunals (Brooks v. Canada Safeway Ltd., [1989] 4 W.W.R. 193; Canada (Attorney General) v. George, [1991] 1 F.C. 344; Headley v. Canada (Public Service Commission), [1987] 2 F.C. 235.). The Agency notes, however, that, contrary to the human rights and labour relations contexts in which those decisions were rendered, where the overriding principle is that no discrimination is tolerated, the CTA provides that "discriminatory" terms or conditions of carriage may be tolerated provided that they are not "unduly discriminatory" [Emphasis added].
The determination of whether a term or condition of carriage applied by a carrier on a domestic route is "unduly discriminatory" is, therefore, a two step process. In the first place, the Agency must determine whether the term or condition of carriage applied is "discriminatory". In the absence of discrimination, the Agency need not pursue its investigation. If, however, the Agency finds that the term or condition of carriage applied by the domestic carrier is "discriminatory", the Agency must then determine whether such discrimination is "undue".
The meaning of the word "undue" was the subject of a detailed analysis by the Federal Court of Appeal in Via Rail Canada Inc. v. National Transportation Agency and Jean Lemonde, [2001] 2 F.C. 25. In that case, the Court stated that:
While "undue" is a word of common usage which does not have a precise technical meaning the Supreme Court has variously defined "undue" to mean "improper, inordinate, excessive or oppressive" or to express "a notion of seriousness or significance". To this list of synonyms, the Concise Oxford Dictionary adds "disproportionate".
What is clear from all of these terms is that undue-ness is a relative concept. I agree with the position expressed by Cartwright J., as he then was:
"Undue" and "unduly" are not absolute terms whose meaning is self-evident. Their use presupposes the existence of a rule or standard defining what is "due". Their interpretation does not appear to me to be assisted by substituting the adjectives "improper", "quot;, ", "quot;inordinate", "quot;, ", "quot;excessive", "quot;, ", "quot;oppressive" or "wrong", or the corresponding adverbs, in the absence of a statement as to what, in this connection, is proper, ordinate, permissible or right.
The proper approach to determine if something is "undue", then, is a contextual one. Undue-ness must be defined in light of the aim of the relevant enactment. It can be useful to assess the consequences or effect if the undue thing is allowed to remain in place.
The Supreme Court has also recognized that the term implies a requirement to balance the interests of the various parties. In a case dealing with whether an employer had accommodated an employee's right to exercise his religion beliefs up to the point of undue hardship, Wilson J., writing for the majority, found it helpful to list some of the factors relevant to such an appraisal. She concluded by stating: "This list is not intended be exhaustive and the result which will obtain from a balancing of these factors against the right of the employee to be free of discrimination will necessarily vary from case to case".
The Agency is, therefore, of the opinion that, in determining whether a term or condition of carriage applied by a domestic carrier is "unduly discriminatory" within the meaning of subsection 67.2(1) of the CTA, it must adopt a contextual approach which balances the rights of the travelling public not to be subject to terms and conditions of carriage that are discriminatory, with the statutory, operational and commercial obligations of air carriers operating in Canada. This position is also in harmony with the national transportation policy found in section 5 of the CTA.
The first question for the Agency to consider, then, in determining whether a term or condition of carriage applied by an air carrier is "unduly discriminatory" within the meaning of subsection 67.2(1) of the CTA is whether the term or condition of carriage is discriminatory.
The Agency finds that there is evidence before it to suggest that Air Labrador's imposition of airline restrictions on its flights operating between the southern Labrador coastal communities is "discriminatory" as Air Labrador does not apply those same restrictions to flights on its northern routes or on any of its other routes.
Given that Air Labrador's imposition of airline restrictions on its flights operating between the southern Labrador coastal communities is "discriminatory" within the meaning of subsection 67.2(1) of the CTA, the Agency must examine the question of whether the prohibition is "unduly" discriminatory.
The Agency has reviewed the evidence provided by Air Labrador to justify why it did not have the same difficulties with no-shows and non-availability of seats for confirmed reservations on its other routes as it did on its southern routes. On its northern routes, Air Labrador confirmed that there are a greater number of seats available because other air carriers also offer service on those routes and because the local medical facility operates additional flights specifically for medical patients. Air Labrador contended that, when the routes are analysed and when frequency is considered, there is more demand for seats on the south coast than on the north coast. The Agency is of the opinion that Air Labrador is responding to a problem that is unique to flights between the southern Labrador coastal communities and, as such, the airline restrictions imposed are not unduly discriminatory.
Accordingly, the Agency has determined that Air Labrador's imposition of airline restrictions on its flights operating between the southern Labrador coastal communities is neither unreasonable nor unduly discriminatory.
CONCLUSION
Based on the above findings, the Agency, pursuant to subsection 67(3) of the CTA, requires that Air Labrador, within 30 days from the date of this Decision, publish a domestic tariff that reflects all fare rules Air Labrador sets out and all fare levels that Air Labrador proposes to offer for purchase. Also, the Agency, pursuant to subsection 67(4) of the CTA, requires that Air Labrador, within 30 days from the date of this Decision, provide the Agency with a copy of that domestic tariff.
With respect to the issue of whether the terms and conditions imposed by Air Labrador are unreasonable or unduly discriminatory, as outlined in subsection 67.2(1) of the CTA, the Agency finds that such terms and conditions are not unreasonable or unduly discriminatory, and accordingly dismisses the complaint.
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