Decision No. 641-C-A-2007

December 19, 2007

File No. M4120-3/07-05951

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COMPLAINT

[1] On May 19, 2007, Dr. Dawn Davies filed with the Complaints Investigation Division (hereinafter the CID) the complaint set out in the title.

[2] The parties were unable to reach a satisfactory agreement despite the intervention of the CID. On August 28, 2007, Dr. Davies requested that the matter be referred to the Canadian Transportation Agency's (hereinafter the Agency) formal complaint resolution process.

[3] On September 5, 2007, the parties were advised of the Agency's jurisdiction in this matter. The parties were also requested to advise whether they agreed to have the comments they had filed with the CID be considered as pleadings before the Agency. Alternatively, Air Canada was allowed thirty (30) days to file with the Agency, and serve on Dr. Davies, an answer to the complaint, and Dr. Davies was provided an opportunity to file with the Agency a reply to the carrier's answer, and to serve a copy on Air Canada within ten (10) days from the date of receipt of the carrier's answer.

[4] On September 7, 2007, Air Canada advised that it wished to file additional comments and that it did not agree that the comments previously filed with the CID be considered as pleadings before the Agency. On the same day, Dr. Davies advised that she accepted that the comments and documents she had filed with the CID be considered as pleadings before the Agency.

[5] On October 4, 2007, Air Canada filed its answer and on October 9, 2007, Dr. Davies filed her reply.

ISSUES

[6] The issues to be addressed are:

1. whether, pursuant to subsection 67(3) of the Canada Transportation Act, S.C., 1996, c. 10, as amended (hereinafter the CTA), Air Canada properly applied the terms and conditions relating to denied boarding due to overbooking as set out in its Domestic Passenger General Rules Tariff No. CDGR-1 (hereinafter the Tariff); and
2. whether, pursuant to subparagraph 107(1)(n)(iii) of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR), the terms and conditions of carriage in respect of compensation as a result of denied boarding are clearly set out in the Tariff.

FACT

[7] Dr. Davies was scheduled to travel with Air Canada from Toronto to Edmonton on April 29, 2007 on Flight No. 157, but was refused transportation because the flight was oversold.

POSITIONS OF THE PARTIES

[8] Dr. Davies submits that she was denied boarding because she did not pre-select her seat and pay the appropriate charge assessed by Air Canada. She indicates that the only other passenger who was refused transportation had also not arranged for the pre-selection of a seat. She claims that Air Canada does not advertise that the first persons to be refused transportation when all seats are sold are those persons who do not have pre-selected seats. She further submits that volunteers were not requested to relinquish their seats on April 29, 2007.

[9] Dr. Davies indicates that she was issued a $200 paper voucher for future travel, but was not offered the option of taking an electronic version of the voucher. She states that using a paper voucher is labour-intensive for passengers and that Air Canada complicates the refund process because to redeem the voucher, passengers must either remit the voucher and proof of completed future travel to Air Canada, or go to the airport within 24 hours of booking another flight.

[10] Dr. Davies submits that if it is a common practice to bump confirmed passengers who have not arranged for pre-selection of seats, Air Canada should advertise this policy.

[11] Air Canada submits that on April 29, 2007, Dr. Davies was the 145th passenger to check in for Flight No. 157; however, the capacity of the aircraft was 140 passengers. Dr. Davies and the other passenger were denied boarding.

[12] Air Canada submits that although advance seat selection provides greater security against overbooking, as such seats are kept until 30 minutes before the scheduled flight departure, checking in early, even when there is no advance seat selection, also provides this security.

[13] Air Canada notes that Dr. Davies was provided with denied boarding compensation and that arrangements were made to transport her on the next available flight, which departed for her destination less than 2 hours later.

[14] Air Canada indicates that Rule 245, Denied Boarding Compensation, of the Tariff provides for overbooking and the associated compensation, and claims that the carrier applied the terms and conditions of carriage set out in the Tariff.

[15] With respect to Dr. Davies' complaint that she was given a paper voucher instead of an electronic voucher, Air Canada indicates that its current reservation system and web page booking do not have the facilities to accept electronic vouchers, but that it is currently in the process of redesigning a new reservation system that will have this capability.

[16] With respect to Air Canada's policy concerning overbooking, and Dr. Davies' allegation that it is not well publicized, Air Canada submits that overbooking is a known fact in the air transport industry and that the carrier's right to deny boarding as well as the appropriate level of compensation are provided for in the Tariff. Air Canada also notes that a notice respecting overbooking appears on the carrier's Web site and on the itinerary receipt issued to passengers.

APPLICABLE LEGISLATIVE AND REGULATORY PROVISIONS

[17] The Agency's jurisdiction over the present complaint is set out in subsection 67(3), section 67.1 and subsection 67.2(1) of the CTA, and subparagraph 107.(1)(n)(iii) of the ATR.

[18] Subsection 67(3) of the CTA provides that:

(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.

[19] Section 67.1 of the CTA provides that:

If, on complaint in writing to the Agency by any person, the Agency finds that, contrary to subsection 67(3), the holder of a domestic licence has applied a fare, rate, charge or term or condition of carriage applicable to the domestic service it offers that is not set out in its tariffs, the Agency may order the licensee to

(a) apply a fare, rate, charge or term or condition of carriage that is set out in its tariffs;

(b) compensate any person adversely affected for any expenses they incurred as a result of the licensee's failure to apply a fare, rate, charge or term or condition of carriage that was set out in its tariffs; and

(c) take any other appropriate corrective measures.

[20] Subsection 67.2(1) of the CTA provides that:

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.

[21] Subparagraph 107.(1)(n)(iii) of the ATR provides that:

Every tariff shall contain:

...

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

...

(iii) compensation for denial of boarding as result of overbooking.

APPLICABLE TARIFF PROVISIONS

[22] The terms and conditions of carriage set out in Rule 245, Denied Boarding Compensation, of the Tariff provide, in part, that:

...

(B) REQUEST FOR VOLUNTEERS

(1) from among the confirmed passengers, AC will request volunteers to relinquish their seats in exchange for compensation as defined in (E).

...

(C) BOARDING PRIORITIES

(1) if a flight is oversold, no passenger may be involuntarily denied boarding until AC has first requested volunteers to relinquish their seats.

(2) in the event there are not enough volunteers, other passengers may be involuntarily denied boarding in accordance with AC's boarding priority policy. Passengers with confirmed reservations who have not received a boarding pass, will be permitted to board in the following order until all available seats are occupied:

(A) Passengers with disabilities:

Unaccompanied children under 12 years of age and others for whom, in AC's assessment, failure to carry would cause severe hardship

(B) Passengers paying First (F), Executive (J) or Full Economy (Y) Class fares.

(C) All other passengers, including tour conductors accompanying a group. These passengers will be accommodated in the order in which they present themselves for check-in and boarding.

(E) COMPENSATION

In addition to providing transportation .., a passenger who has been denied boarding will be compensated by AC as follows:

...

(2) Amount of compensation

... AC will tender liquidated damages in the amount of $100.00 cash or a credit voucher (good for future travel on Air Canada) in the amount of $200.00. If accepted by the passenger, such tender will constitute full compensation for all actual or anticipatory damages, incurred or to be incurred.

...

ANALYSIS AND FINDINGS

[23] In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings. The Agency has also reviewed the applicable terms and conditions of carriage specified in the Tariff.

1) Did Air Canada properly apply the terms and conditions relating to denied boarding as set out in Rule 245 of the Tariff?

Request for volunteers

[24] Rule 245(B)(1) of the Tariff provides, in part, that when a flight is oversold, "from among the confirmed passengers, AC will request volunteers to relinquish their seats in exchange for compensation". Furthermore, Rule 245(C)(1) provides that "if a flight is oversold, no passenger may be involuntarily denied boarding until AC has first requested volunteers to relinquish their seats". The Agency notes that Air Canada has presented no evidence that it made any such request to passengers. Consequently, the Agency finds that Air Canada contravened Rule 245(B)(1) and Rule 245(C)(1) of the Tariff by not seeking volunteers to relinquish their seats prior to refusing transportation to Dr. Davies for Flight No. AC157 on April 29, 2007.

[25] The Agency is of the opinion that there may be confusion among Air Canada front-line staff as to procedures to be followed in cases where it becomes necessary to deny boarding due to overbooking. The Agency is also of the opinion that the need to seek volunteers before denying boarding involuntarily is a key element of the denied boarding policy.

Denied boarding because of failure to pre-select seat

[26] Dr. Davies alleged that she was denied boarding because she did not pre-select her seat and pay the appropriate pre-selection charge. Air Canada submitted that Dr. Davies was denied boarding because she was the 145th passenger to check-in for a flight that could only accommodate 140 passengers. The Agency is of the opinion that there is no evidence on file to substantiate Dr. Davies' allegation that she was denied boarding because of her failure to pre-select a seat. The Agency finds, based on the evidence on file, that Air Canada denied boarding to Dr. Davies on the basis of the order in which she presented herself for check-in for Flight No. 157 on April 29, 2007.

2) Are Air Canada's terms and conditions related to denied boarding compensation due to overbooking clearly set out in the Tariff?

[27] Rule 245(E)(2) of the Tariff provides, in part, that "AC will tender liquidated damages in the amount of $100.00 cash or a credit voucher (good for future travel on Air Canada) in the amount of $200.00". The Tariff also provides that "If accepted by the passenger, such tender will constitute full compensation for all actual or anticipatory damages, incurred or to be incurred." The options of cash or credit voucher are clearly different and may be of different value to a passenger depending on the immediate needs of the passenger or the future travelling intentions of the passenger. The Agency is of the opinion that there is no evidence on file to indicate that Dr. Davies was offered the option of taking either cash or a credit voucher as compensation. This implies that Air Canada interprets the Tariff to mean that it has the sole discretion to determine what compensation will be offered to passengers. However, if a choice is to be offered as full and final compensation, it is not unreasonable to interpret that choice as being one that should be in favour of the person who has been put at a disadvantage, in this case a passenger being denied boarding as a result of a carrier overbooking a flight.

[28] The Agency is therefore of the opinion that the tariff provision respecting compensation due to overbooking should be rewritten in such a way as to clearly state where the choice of option of compensation lies. If Air Canada states that the choice of option lies solely within its discretion, Air Canada should explain why that interpretation is not unreasonable.

3) Advertising of the policy respecting denied boarding

[29] Dr. Davies submits that Air Canada should advertise its policy respecting denied boarding. In this regard, the Agency notes that Air Canada's Web site and the itinerary receipts issued to passengers generally set out such policy. The Agency is of the opinion that, with respect to this matter, no further action is warranted, at this time.

4) Issuance of a paper voucher instead of an electronic voucher

[30] With respect to Dr. Davies' complaint that paper travel vouchers are not convenient, the Agency notes that Air Canada is in the process of redesigning its reservation system to allow the issuance of electronic travel vouchers. As such, the Agency is of the opinion that, at this time, no further action is warranted.

CONCLUSION

[31] Based on the above findings, the Agency hereby orders Air Canada, within thirty (30) days from the date of this Decision, to:

• pursuant to section 67.1 of CTA, issue a bulletin to Air Canada's staff involved in the denied boarding process, reminding them of the carrier's denied boarding policy, and of the need to properly apply this policy, as set out in the Tariff, including the requirement to seek volunteers to relinquish their seats before involuntarily denying boarding to passengers. A copy of this bulletin must be provided to the Agency;
• revise the Tariff, so as to be consistent with subparagraph 107(1)(n)(iii) of the ATR, by clearly indicating with whom the option resides respecting the choice of either cash or voucher as compensation in the event of a denied boarding situation.

[32] In the event Air Canada advises that the option lies solely within its discretion, it will be provided with an additional thirty (30) days from the date of so advising, to show cause why that Tariff revision is not unreasonable pursuant to subsection 67.2(1) of the CTA.

Members

• J. Mark MacKeigan
• John Scott