Decision No. 62-C-A-2018

SUMMARY

[1] Fan (Michelle) Guo, on behalf of her daughter Ms. Hou, filed an application with the Canadian Transportation Agency (Agency) against Air Canada regarding travel credits.

[2] Ms. Hou is seeking a travel credit of CAN$700, which she states is the amount she had to pay for tickets that were not used and for which she is entitled to travel credits.

[3] The Agency will address the following issues:

1. Did Air Canada properly apply the terms and conditions set out in Rule 100 of its International Passenger Rules and Fares Tariff, NTA(A) No. 458 (Tariff), as required by subsection 110(4) of the Air Transportation Regulations, SOR/88-58, as amended (ATR)?
2. If Air Canada did not properly apply the terms and conditions set out in its Tariff, what remedy, if any, is available to Ms. Hou?

[4] For the reasons set out below, the Agency finds that Air Canada did not properly apply the terms and conditions set out in Rule 100 of its Tariff. The Agency orders Air Canada to compensate Ms. Hou with a travel credit in the amount of CAN$206.18. Air Canada is to issue this travel credit to Ms. Hou as soon as possible and no later than January 2, 2019.

BACKGROUND

[5] On May 2, 2015, Ms. Hou’s mother purchased two non-refundable tickets for Ms. Hou to travel in July 2015, from Boston, Massachusetts, United States of America, to Calgary, Alberta, and from Edmonton, Alberta, to Boston. 

[6] Ms. Hou did not travel in July 2015. As a result, Air Canada issued her two travel credits to be used within a year.

[7] In November 2015, Ms. Hou used one of the two travel credits to book a round-trip ticket to travel from Boston to Ottawa, Ontario.

[8] On April 24, 2016, Ms. Hou’s mother paid to extend the validity of the second travel credit, and subsequently used that travel credit to book a round-trip ticket for Ms. Hou to travel from Boston to Ottawa in July 2016. However, Ms. Hou did not travel in July 2016 and her non-refundable ticket was cancelled.

PRELIMINARY MATTER

[9] Air Canada requests that the Agency dismiss Ms. Hou’s application on the basis that it is time barred. Air Canada refers to Article 35 of the Convention for the Unification of Certain Rules for International Carriage by Air – Montreal Convention (Montreal Convention), which sets out that “The right to damages shall be extinguished if an action is not brought within a period of two years […]”.

[10] The Montreal Convention, among other things, sets the limits of liability for damages incurred in the carriage by air of passengers.

[11] In Decision No. 82-C-A-2017, the Agency found that the Montreal Convention does not apply where there is no performance of the contract for carriage by air. Similarly, the Agency notes that Ms. Hou’s application does not relate to the performance of a contract for carriage by air. Therefore, the Montreal Convention does not apply. As the two-year time period prescribed by Article 35 of the Montreal Convention does not apply to this matter, the Agency will consider the application based on an assessment of the carrier’s Tariff provisions.

THE LAW

[12] Subsection 110(4) of the ATR requires that a carrier operating an international service properly apply the terms and conditions of carriage set out in its tariff.

[13] If the Agency finds that an air carrier has failed to properly apply its tariff, section 113.1 of the ATR empowers the Agency to direct the carrier to:

1. take the corrective measures that the Agency considers appropriate; and
2. pay compensation for any expense incurred by a person adversely affected by its failure to apply the fares, rates, charges or terms and conditions set out in the tariff.

[14] Rule 100 of Air Canada’s Tariff, which relates to refunds, states:

(A) General

Refund by carrier: For an unused ticket or portion thereof, or miscellaneous charges order, refund will be made in accordance with this rule.

(1) For non-refundable tickets, the unused value may be used toward the purchase of another ticket within a year from date of issue if ticket is fully unused or from first departure date for partially used ticket, subject to any fee or penalty contained in applicable fare rules and subject to customer cancelling the booking prior to departure.

[…] 

(4) Time Limitation For Refund Requests:

Application for refund should be made during the period of validity of the ticket or miscellaneous charges order, which is one year from the date of issue. However, the period of validity may be extended subject to payment of applicable fee. For non-refundable tickets exchange for a ticket for travel commencing within 3 months of the end of the period of validity, applicable fee is $50. For refundable tickets, and refundable fees, taxes or charges, an over-aged fee of $100 will be applied to refunds issued after a year from the date of issue. For miscellaneous charges order, an over-aged fee of $25 will be applied to refunds issued after a year from the date of issue. No refund will be issued after 2 years from original ticket date of issue. All fees are subject to applicable taxes.

[…]

POSITIONS OF THE PARTIES

Ms. Hou’s position

[15] Ms. Hou is seeking a travel credit of CAN$700, which she states is the amount she had to pay for tickets that were not used and for which she is entitled to travel credits. Ms. Hou submits that when her mother purchased the ticket with the second travel credit in April 2016, she was not advised by Air Canada that no compensation would be offered if she were to cancel it.

Air Canada’s position

[16] Ms. Hou did not travel in July 2015. As a result, she was issued two travel credits to be used within a year (before May 2, 2016): one in the amount of CAN$436.02 and one in the amount of CAN$489.61. Air Canada submits that these travel credits, as well as the three‑month extension for the second travel credit in 2016, granted for a fee of CAN$50, were issued in accordance with its Tariff. Air Canada also submits that it would be contrary to its Tariff and policy to refund the travel credits in cash.

[17] Air Canada states that Ms. Hou cannot be compensated for the ticket she purchased in 2016 using the second travel credit, given it was issued with a credit that has now expired.

[18] Air Canada argues that the travel credits “had an expiry date of one year, which cannot be perpetually extended for all passengers, which would lead to untenable commercial operations and speculative ticket trading”.

ANALYSIS AND DETERMINATIONS

[19] As clearly stated on the itinerary receipts issued by Air Canada, the tickets that Ms. Hou purchased were non-refundable. Rule 100 of Air Canada’s Tariff sets out that for non-refundable tickets, the unused value may be used toward the purchase of another ticket within a year from the date of issue.

[20] As per Rule 100 of Air Canada’s Tariff, Air Canada issued Ms. Hou two travel credits in the amount of CAN$436.02 and CAN$489.61 to be used within a year, before May 2, 2016, to account for the two unused 2015 tickets. The Agency finds that the two travel credits issued in 2015 by Air Canada to Ms. Hou were issued in accordance with the carrier’s Tariff.

[21] Ms. Hou used the first travel credit within the prescribed timeframe, that is within one year of the date of issuance. In April 2016, the unused travel credit was used to purchase a round-trip ticket to travel in July 2016. The July 2016 ticket was later cancelled.

[22] When Ms. Hou purchased her July 2016 ticket, she redeemed her unused travel credit in the amount of CAN$436.02, and paid an additional amount of CAN$456.18. The additional amount of CAN$456.18 covered a cancellation fee of CAN$200, a fee of CAN$50 for the extension of the validity period of the unused travel credit, and an amount of CAN$206.18 for the difference between the value of the travel credit from the July 2015 ticket and the fare of the July 2016 ticket.

[23] In light of the above, and pursuant to Rule 100 of Air Canada’s Tariff, the Agency finds that:

1. the credit in the amount of CAN$436.02 had expired and could not be extended again;
2. the cancellation fee of CAN$200 and the extension fee of CAN$50 are penalty fees that are not subject to the issuance of a credit or a reimbursement; and
3. the difference between the value of the July 2015 travel credit and the fare of the July 2016 ticket of CAN$206.18 should have been subject to the issuance of a new travel credit when the July 2016 ticket was cancelled.

[24] In light of the above, the Agency finds that Air Canada did not properly apply the terms and conditions set out in Rule 100 of its Tariff when it did not to issue to Ms. Hou a travel credit in the amount of CAN$206.18 further to the cancellation of her July 2016 ticket.

[25]The Agency orders Air Canada to compensate Ms. Hou with a travel credit in the amount of CAN$206.18. Air Canada is to issue this travel credit to Ms. Hou as soon as possible and no later than January 2, 2019.