Decision No. 565-C-A-2008
November 3, 2008
IN THE MATTER OF a complaint filed by Public Interest Advocacy Centre against Air Canada.
File No. M4120-3/08-03881
INTRODUCTION AND ISSUE
[1] The Public Interest Advocacy Centre (PIAC) filed a complaint with the Canadian Transportation Agency (Agency) alleging that Air Canada's "On My Way" (OMW) program is unduly discriminatory, unjust and unreasonable. OMW is a travel assistance program which may be purchased for an additional fee.
[2] Are the fees, and terms and conditions of carriage governing the OMW program set out in Air Canada's Domestic Tariff and Air Canada's Transborder Tariff, NTA(A) No. 241 (Tariffs) unduly discriminatory and unjust and unreasonable?
[3] As indicated in the reasons that follow, the Agency finds that Air Canada's provisions covering its OMW program are just and reasonable, and are not unduly discriminatory.
FACTS
[4] Air Canada's OMW program came into effect within North America on May 13, 2008. This program, which costs CAD$25.00 for short-haul flights (up to 1609 km/1000 miles) or CAD$35.00 for long-haul flights (over 1609 km/1000 miles) per direction, offers additional services to passengers when there is a flight disruption of an Air Canada or an Air Canada Jazz flight, regardless of the reason.
[5] In the event of a flight disruption of an Air Canada or an Air Canada Jazz flight, access is provided to a special group of Customer Service agents who address each individual OMW customer's travel needs, rebook them accordingly and, when necessary provide complimentary hotel accommodations, car rental or other ground transportation, and meal vouchers.
EVIDENCE AND SUBMISSIONS
[6] PIAC states that Air Canada's OMW program is contrary to a common carrier's obligations in the event of a flight disruption as the program creates different levels of service and, therefore, creates a disadvantage to passengers who do not purchase OMW assistance. PIAC contends that non-OMW passengers will be at a distinct disadvantage in the rebooking process.
[7] PIAC is of the opinion that Air Canada's OMW program is an attempt by the carrier to turn a carrier obligation into a revenue source. PIAC alleges that the services provided by the OMW program differ only slightly from the historical customer service expectations of Air Canada passengers, and that these services were previously provided on a non-tariff basis.
[8] PIAC contends that there is no relationship between the fees charged for the OMW program and the services rendered. PIAC advises that Air Canada has not offered any service level guarantees and is in a position of monopoly provider of OMW services. PIAC points out that the carrier has not set service levels or the reimbursement procedures should the carrier fail to satisfy expectations relating to the OMW program.
[9] PIAC states that the services provided by the OMW program are basic imperative services arising out of the operations of an air carrier, and that this program bestows passengers with different rights dependent upon the purchase of this program. It submits that this two-tier structure is not reasonable. PIAC adds that this program is contrary to the regulations in that the terms and conditions of carriage must be applied without preference or discrimination.
[10] Air Canada indicates that the OMW program is a multi-faceted program provide travel assistance in the event of a flight disruption. It advises that those passengers who choose to purchase this assistance will receive rapid and highly personal assistance, and that the benefits of this program are available regardless of the cause of the disruption. Air Canada also argues that the OMW program provides the passenger with a greater flexibility on rebooking.
[11] Air Canada states that the OMW program is an innovative service that is the result of customer feedback requesting services that go beyond industry standards, and beyond the minimum legal requirements listed in Rule 240 of the Tariffs. Air Canada also cites Agency Decision No. 171-C-A-2007, which accepts the carrier's Rule 240 as just and reasonable with respect to the protection afforded to passengers in the event of a flight disruption.
[12] Air Canada advises that its obligations to provide meals and accommodation occur only when the delay or cancellation of a flight is within the control of the air carrier. It also advises that this obligation is not extended to flight disruptions beyond its control such as weather and air traffic control delays and that this position is upheld by the Montreal Convention and the International Air Transport Association.
[13] Air Canada contends that the OMW program was designed to meet the needs of those passengers who do not necessarily wish to incur the unanticipated expenses associated with a flight disruption, and that it provides service beyond its basic obligations to a passenger. It advises that this program provides greater coverage for transportation options, meals, and accommodation that would otherwise not be available, and that the associated fees are intended to offset the expenses incurred by the carrier in providing these benefits to OMW passengers. Air Canada adds that the OMW program is an additional service that is no different than the purchase of Business Class versus Economy Class.
[14] Air Canada submits that when a flight disruption occurs, it is obliged to provide transportation for all of its passengers on its own services, or those of other carriers with which it has an agreement for such transportation. Air Canada advises that under the OMW program it will purchase tickets with any carrier that has e-ticket capability, regardless of whether it has an agreement, or, if ground transportation is acceptable, provide this at no additional expense to the passenger. Air Canada denies PIAC's claim that the carrier sets aside special inventory for OMW passengers, that this product provides the carrier with a monopoly, and that this product is discriminatory.
[15] Air Canada states that its OMW program is congruent with the Agency's opinion that air carriers should have the flexibility to establish their terms and conditions of carriage as they see fit, and the spirit of the Air Transport Agreement between the Government of Canada and the Government of the United States of America "to compete in the marketplace with minimum government regulation" and "to develop and implement innovative and competitive prices".
[16] PIAC contends that the services provided by the OMW program are an integral part of a carrier's responsibility and that they are part of the passenger's expectations in the event of a flight disruption.
[17] PIAC contests Air Canada's position that non-OMW passengers will continue to have the same access to services as before. PIAC feels that an OMW program passenger has an advantage regarding rebooking and accommodations as they have access to a specially trained agent. PIAC insists that this will leave non-OMW passengers with an inferior level of service.
[18] PIAC submits that this product will lead to an erosion of passenger's rights and that passengers will not have any option but to purchase this program.
ANALYSIS AND FINDINGS
[19] The Agency's jurisdiction with respect to an air carrier's tariff is set out in section 67.2 of the Canada Transportation Act, S.C., 1996, c. 10, as amended, and section 111 of the Air Transportation Regulations, SOR/88-58, as amended (ATR), which permit the Agency to determine whether a term or condition of carriage as published or filed by an air carrier is just and reasonable and not unduly discriminatory.
[20] Pursuant to the ATR, a carrier must clearly state its policy in its terms and conditions of carriage. In this case, the required provisions involve passenger rerouting, and failure to operate the service or failure to operate on schedule.
[21] The Agency is of the opinion that, generally, air carriers should have the flexibility to establish their terms and conditions of carriage as they see fit, subject to legislative or regulatory constraints. In that respect, an air carrier is required to publish for domestic transportation and file with the Agency for international transportation, a tariff clearly setting out its terms and conditions of carriage.
Are Air Canada's "On My Way Program" terms and conditions of carriage just and reasonable?
[22] In determining whether a term or condition of carriage is just and reasonable, a balance must be struck between the rights of the passenger to just and reasonable terms and conditions of carriage and the particular carrier's statutory, commercial and operational obligations. To determine whether such balance has been struck in this case, the Agency must be satisfied that the introduction of the OMW program does not adversely affect the rights of those passengers who choose not to purchase the OMW program.
[23] Air Canada's obligations to its passengers and their rights regarding flight disruptions are covered in the carrier's Rule 240. This rule outlines the procedures the carrier will follow and the services it will provide, and the recourse available to the passenger. In Decision No. 171-C-A-2007, the Agency determined that the provisions within Rule 240 "...represent acceptable means to address passengers' needs when schedule irregularities occur." and that "...Rule 240AC is just and reasonable...".
[24] The Agency finds that the provisions in Rule 250 which govern the OMW program are just and reasonable, however, the Agency is of the opinion that Air Canada must ensure that these provisions are constructed to draw a clear distinction between the rights of a passenger under Rule 240 and those under Rule 250, in its tariffs and in its corporate communications. The Agency is also of the opinion that Air Canada must ensure that its tariff clearly indicates that when there is a flight disruption, Air Canada's call centres and customer service agents will treat OMW passengers and non-OMW passengers equally when rebooking passengers for next available flights.
Are Air Canada's "On My Way Program" terms and conditions of carriage unduly discriminatory?
[25] The determination of whether a term or condition of carriage applied by a carrier is "unduly discriminatory" is a two-step process. The Agency must first determine whether the term and condition of carriage applied is "discriminatory". If the Agency finds that the term or condition of carriage applied by the carrier is discriminatory, the Agency must then determine whether such discrimination is "undue".
[26] The Agency is of the opinion that to determine whether a term or condition of carriage applied by a carrier is "unduly discriminatory", it must adopt a contextual approach which balances the rights of the travelling public with the statutory, operational and commercial obligations of air carriers.
[27] A term or condition would be discriminatory if it singled out a particular category of passenger for different treatment for reasons that could not be justified. In this case, Air Canada's OMW program is available to every passenger to purchase and the terms and conditions governing the program apply equally to all passengers who purchase the service. The Agency therefore finds that there is no evidence before it to suggest that the OMW program is discriminatory or that such program has been applied in a discriminatory manner.
[28] As the Agency does not find the OMW program rule provisions discriminatory, the question of "undue discrimination" need not be addressed.
Are Air Canada's "On My Way Program" fees and service issues reasonable?
[29] PIAC states that the fee structure associated with the OMW program is unjust and unreasonable. However, PIAC has failed to provide compelling evidence to substantiate its allegations.
[30] The Agency notes that PIAC questions whether Air Canada will refund customers who purchase the OMW program, but are not satisfied with the service. Air Canada's tariff states that once purchased, the OMW program is non-refundable. The carrier is obliged to apply the terms and conditions of carriage as published or filed with the Agency and any failure to do so allows the passenger the opportunity to seek recourse.
CONCLUSION
[31] The Agency's findings in this complaint are as follows:
- the terms and conditions respecting the OMW program as set out in Air Canada's domestic and transborder tariffs are reasonable and just,
- the OMW program is not discriminatory, and
- there is no evidence to find that the OMW program fee structure is unjust and unreasonable.
[32] Therefore, PIAC's complaint is dismissed.
[33] While the Agency finds that the rule provisions governing the OMW program are just and reasonable, it directs Air Canada to ensure that, within thirty (30) days of this Decision, these provisions are constructed to draw a clear distinction between the rights of a passenger under Rule 240 and those under Rule 250, in its tariffs and in its corporate communications. Furthermore, Air Canada is directed to ensure that its rules clearly indicate that when there is a flight disruption, OMW passengers and non-OMW passengers will have equal access to Air Canada's call centres and customer service agents for the purpose of rebooking passengers for next available flights.
Members
- Geoffrey C. Hare
- Raymon J. Kaduck
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