Decision No. 681-C-A-2004

December 14, 2004

IN THE MATTER OF a complaint filed by Philip Wasserman against Air Transat A.T. Inc. carrying on business as Air Transat concerning the carrier's terms and conditions of carriage with respect to cancellation of flights, applicable to transborder scheduled services carriage.

File No. M4370/04-05137

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COMPLAINT

[1] On August 16, 2004, Mr. Wasserman filed with the Canadian Transportation Agency (hereinafter the Agency) the complaint set out in the title.

[2] By letter dated September 14, 2004, Agency staff requested that Air Transat A.T. Inc. carrying on business as Air Transat (hereinafter Air Transat) address the complaint within the context of sections 111 and 113 of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR).

[3] On September 29, 2004, Mr. Wasserman filed an addendum to his original complaint as the result of an incident that occurred subsequent to this complaint. Air Transat was given an additional ten (10) days to respond.

[4] On October 22, 2004, Air Transat filed its answer to the complaint. On October 29, 2004, Mr. Wasserman filed his reply.

ISSUE

[5] The issue to be addressed is whether the terms and conditions concerning the cancellation of flights, as set out in Air Transat's international scheduled services tariff, CTA(A) No. 4 (hereinafter Air Transat's Tariff), in effect at the time of the complaint, are just and reasonable within the meaning of section 111 of the ATR.

POSITIONS OF THE PARTIES

[6] Mr. Wasserman submits that, on April 27, 2004, he purchased from Air Transat four tickets for himself, his wife and his parents for return flights between Toronto, Ontario, Canada and St. Petersburg, Florida, United States of America departing Toronto on dates in October 2004. Mr. Wasserman further submits that exactly three months later, Air Transat informed Mr. Wasserman that the October flights he had booked were cancelled. Mr. Wasserman indicates that Air Transat advised him that he could either obtain a refund for the tickets, or pay $50 each way, per person to have the flights rebooked on Skyservice. Mr. Wasserman indicates that Air Transat informed him that this offer was consistent with the carrier's tariff.

[7] Mr. Wasserman adds that his parents changed their flights with Air Transat to another date, without incurring a further cost, and that he and his wife cancelled their flights with Air Transat for a refund, and rebooked on their own with another carrier.

[8] Further, Mr. Wasserman submits that he received an e-mail on September 27, 2004 from Air Transat, informing him that it was again cancelling his parents' flight. Mr. Wasserman advises that Air Transat informed him that it was cancelling all of its October flights to St. Petersburg but he was not told why. Mr. Wasserman notes that Air Transat offered to refund him, to rebook his parents' flight to either Orlando, Florida, United States of America, or Ft. Lauderdale, Florida, United States of America, for another day, or to rebook his parents on Skyservice for an extra $200. Mr. Wasserman submits that he opted to cancel the flight for a refund, and that he made alternate arrangements on Continental at a cost of $50 more and a longer transit time than would have been the case with the Air Transat flight.

[9] Mr. Wasserman indicates that he believes that airlines must have the ability to cancel or reschedule flights, but feels that the costs associated with such changes should be borne by the airlines. He notes that when a lower fare is advertised, the consumer is not given the option to cancel the flight or take advantage of the lower fare, without incurring a financial penalty. Mr. Wasserman believes that the airlines should not be able to change flights and then pass on the associated costs to the consumer.

[10] Mr. Wasserman maintains that Air Transat's terms and conditions regarding schedules, delays and cancellations of flights are unreasonable, and requests compensation for him and his wife for the stress and aggravation that they have had to endure.

[11] Air Transat submits that it is common industry practice for carriers to reserve the right to revise flight schedules. Air Transat adds that in such circumstances, it will try to take the decision that causes the least amount of discontent to passengers. Air Transat advises that, regrettably, such situations can be more frequent at the end or beginning of seasons, when adjustments must be made to accommodate aircraft availability and change of flight routes.

[12] Air Transat states that in accordance with its tariff, the carrier ensures that all passengers are promptly informed of any significant change to the carrier's flight schedule, that passengers are provided with alternate Air Transat flights, and/or offered the possibility of cancelling their reservation with a full refund. Air Transat maintains that its tariff provisions are reasonable, and that it is not in a position to cover the cost of tickets purchased for travel on other carriers.

[13] Air Transat sympathizes with the negative impact that numerous flight revisions can have on passengers, and indicates that on such "rare occasions", the carrier may offer goodwill compensation. In the present case, Air Transat has offered a travel voucher for $100 per person as a token of the carrier's good faith.

[14] Mr. Wasserman takes issue with Air Transat's contention that it offers its passengers an adequate and timely alternative. He states that, in the end, his parents were given eight business days to make alternate flight arrangements when Air Transat cancelled its flight for a second time. Mr. Wasserman feels that offering a flight to another city over 75 miles away, or offering a full refund, does not relieve the passenger of his or her problem.

[15] Mr. Wasserman submits that, if an air carrier cancels its flight within ten business days of the originally scheduled departure date of a person's flight, the carrier should be required to cover any costs incurred by the person when he or she is compelled to make alternate arrangements. As an alternative, Mr. Wasserman proposes that, when a person cancels his or her reservations more than ten business days before the scheduled departure date of the person's flight, the carrier should provide a full refund.

ANALYSIS AND FINDINGS

[16] In making its findings, the Agency has carefully considered all of the evidence submitted by the parties during the pleadings, as well as the relevant provisions of Air Transat's Tariff, which provide:

Rule 5 - CONDITIONS OF CARRIAGE:

5.2 Responsibility for schedules and operations:

1. The Carrier will endeavour to transport passengers and baggage with reasonable dispatch. Times shown in schedules, scheduled contracts, tickets, air waybills or elsewhere are not guaranteed. Flight times are subject to change without notice. The Carrier assumes no responsibility for making connections.
2. Schedules are subject to change without notice. The Carrier is not responsible or liable for failure to make connections, or for failure to operate any flight according to schedule, or for a change to the schedule of any flight. However, where a routing modification subsequent to the purchase of travel results in a change from a direct service to a connecting service, the Carrier will, upon request by the passenger, provide a full refund of the unused portion of the fare paid. Under no circumstances shall the Carrier be liable for any special, incidental or consequential damages arising directly or indirectly from the foregoing (including the carriage of baggage) whether or not the Carrier had knowledge that such damages might be incurred. Notwithstanding, the Carrier will undertake to notify passengers reasonably in advance through means it deems appropriate of any schedule changes resulting in the advancement or delay of flight departure times. Where a flight delay of at least three hours becomes known to the Carrier within a minimum of six hours in advance of the original scheduled departure time, the Carrier undertakes to advise affected passengers, normally by telephone.
3. Without limiting the generality of the foregoing, the Carrier cannot guarantee that a passenger's baggage will be carried on the flight if sufficient space is not available as determined by the Carrier.
4. Subject to the Convention, the Carrier will not provide or reimburse passengers for expenses incurred due to delays or cancellations of flights.
5. In the event of an involuntary re-routing of a flight, the Carrier will undertake to ensure that the passenger is routed or transported to his/her ultimate destination, as per the contract of carriage, within a reasonable period of time and at no extra cost. If no reasonable transportation can be arranged, then the Carrier will refund the unused ticket or portion thereof.

Rule 6.3 - Liability for Refusal to Transport and for Failure to Operate on Schedule

[17] The Carrier is not liable for its refusal to transport any passenger in accordance with Rule 6. Subject to Rule 5.3.1, where a passenger incurs a schedule irregularity of not less than six (6) hours involving a flight operated by the Carrier:

1. The Carrier will transport the passenger without stopover on its next flight on which space is available and in the same class of service as his original flight.
2. If the Carrier is unable to provide reasonable alternative transportation on its services, the Carrier will arrange transportation on the services of other carriers or combination of carriers with whom the Carrier has interline traffic agreements for such transportation. In such cases, the passenger will be transported without stopover and at no additional costs to himself, in the same class of service as applied to his original outbound flight on the Carrier.
3. In the event that space on the Carrier is only available in a lower class of service than was reserved by the passenger for the original flight, or any one or more of the original flights, as the case may be, the Carrier will, at the option of the passenger,
   
   1. provide space to the passenger at the lower class of service and refund the difference in fares, or
   2. provide a full refund of the unused portion of the fare paid by the passenger.
4. If the carrier is unable to provide reasonable alternative transportation on its services or on the services of other carrier(s), in the event of a delay of 24 hours or more from the initially scheduled departure time, then it will refund the unused ticket or portions thereof.

[18] The Agency's jurisdiction over complaints concerning terms and conditions of carriage applicable to transportation to and from Canada is set out in sections 111 and 113 of the ATR.

[19] Section 111 of the ATR provides that:

1. All tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just and reasonable and shall, under substantially similar circumstances and conditions and with respect to all traffic of the same description, be applied equally to all that traffic.
2. No air carrier shall, in respect of tolls or the terms and conditions of carriage,
   
   1. make any unjust discrimination against any person or other air carrier;
   2. give any undue or unreasonable preference or advantage to or in favour of any person or other air carrier in any respect whatever; or
   3. subject any person or other air carrier or any description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatever.
3. The Agency may determine whether traffic is to be, is or has been carried under substantially similar circumstances and conditions and whether, in any case, there is or has been unjust discrimination or undue or unreasonable preference or advantage, or prejudice or disadvantage, within the meaning of this section, or whether in any case the air carrier has complied with the provisions of this section or section 110.

[20] Further, if the Agency finds that the air carrier has contravened section 111 of the ATR, the Agency may, pursuant to section 113 of the ATR:

1. suspend any tariff or portion of a tariff that appears not to conform with subsections 110(3) to (5) or section 111 or 112, or disallow any tariff or portion of a tariff that does not conform with any of those provisions; and
2. establish and substitute another tariff or portion thereof for any tariff or portion thereof disallowed under paragraph (a).

[21] The Agency finds that Air Transat applied the above-quoted tariff provisions in the carrier's dealings with Mr. Wasserman and his family.

Are Air Transat's terms and conditions relating to cancellation of flights, as set out in the carrier's tariff, "unreasonable" within the meaning of section 111 of the ATR?

[22] 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.

[23] Therefore, the word "unreasonable" must be read not only within the context of section 111 of the ATR, but also keeping in mind the scheme and object of the Canada Transportation Act, S.C. 1996, c. 10 (hereinafter the CTA).

[24] 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 (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) or the review of a discretionary decision based on irrelevant consideration, improper purpose or bad faith (C.U.P.E. v. New Brunswick Liquor Corporation, [1979] 2 R.C.S. 227). 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".

[25] In the Agency's opinion, the specific wording of section 111 of the ATR 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:

...

(g) each carrier or mode of transportation, as far as is practicable, carries traffic to or from any point in Canada under fares, rates and conditions that do not constitute

(i) 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.

[26] 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.

[27] In determining whether a term or condition of carriage applied by a carrier is "unreasonable" within the meaning of section 111 of the ATR, 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.

[28] Conversely, the CTA dictates that the Agency must also take into account:

• the operational and commercial obligations of the particular air carrier that 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.

[29] The Agency is therefore of the opinion that in order to determine whether a term or condition of carriage applied by a carrier is "unreasonable" within the meaning of section 111 of the ATR, 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.

[30] Mr. Wasserman alleged that Air Transat's terms and conditions of carriage are unreasonable in that they do not provide for the reimbursement of expenses incurred by a person who, following a change by Air Transat of the flight originally booked by the person, cancels a reservation and books another flight. Mr. Wasserman proposed that if an air carrier cancels its flight within 10 business days of the originally scheduled departure date of a person's flight, the carrier should be required to cover any costs incurred by the person when he or she is compelled to make alternate arrangements. As an alternative, Mr. Wasserman submitted that, when a person cancels his or her reservations more than 10 business days before the scheduled departure date of the person's flight, the carrier should provide a full refund. Mr. Wasserman also indicated that Air Transat should compensate him, and his wife and parents, for the aggravation that they suffered in this matter.

[31] In weighing the submissions of the parties, the Agency finds that Air Transat's current tariff provisions relating to flight cancellations provide the carrier with the flexibility that is essential to conduct business according to operational and commercial demands. The Agency also finds that these provisions, which basically require Air Transat to offer alternate flights or to refund, in the event of a schedule irregularity, are largely consistent with the practices of other carriers offering international scheduled services to and from Canada. The Agency is of the opinion that the tariff provisions represent acceptable means to address passengers' needs when flights are cancelled.

[32] The Agency is therefore of the opinion that the terms and conditions relating to flight cancellations, appearing in Air Transat's Tariff, in effect at the time of the complaint, are just and reasonable within the meaning of section 111 of the ATR.

[33] With respect to Mr. Wasserman's request for compensation, the Agency does not have the jurisdiction to award compensation in matters of this nature.

CONCLUSION

[34] Based on the above findings, the Agency hereby dismisses the complaint.