Decision No. 99-C-A-2004

March 4, 2004

File No. M4370/A328/03-7

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COMPLAINT

[1] On January 20, 2003, Susan Davis filed with the Canadian Transportation Agency (hereinafter the Agency) the complaint set out in the title.

[2] On January 29, 2003, Air Transat A.T. Inc. carrying on business as Air Transat (hereinafter Air Transat) was requested to 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 February 26, 2003, Air Transat filed its answer to the complaint. On March 5, 2003, Mrs. Davis filed her reply.

[4] Pursuant to subsection 29(1) of the Canada Transportation Act, S.C., 1996, c. 10, (hereinafter the CTA), the Agency is required to make its decision no later than 120 days after the complaint is received unless the parties agree to an extension. In this case, Air Transat has agreed to an indefinite extension of the deadline and Mrs. Davis has agreed to an extension until March 19, 2004.

ISSUE

[5] The issue to be addressed is whether the terms and conditions relating to schedules, delays and cancellations of flights specified in Air Transat's International Scheduled Services Tariff No. TS-1, NTA(A) No. 467 (hereinafter Air Transat's Tariff No. 467), 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] Mrs. Davis submits that she and her husband booked tickets with Air Transat for travel between Edmonton, Alberta and Maui, Hawaii, departing on February 14, 2003 and returning on February 28, 2003. She adds that they chose Air Transat over Air Canada, whose fares were more economical, because of Air Transat's direct flight to Hawaii, and the possibility of booking seats in Club Transat class, which features elements that are superior or additional to those available for Air Transat's Economy class, including wider and more spacious seats. Some time after they had booked, Mr. and Mrs. Davis became aware that Air Transat was offering a seat sale on flights to Maui, with the exception of the flights on February 14 and 28, at ticket prices more comparable to Air Canada's price. Mrs. Davis states that they were later advised by Air Transat that due to a consolidation of flights, the direct flight to Hawaii would be making a stop in Calgary to pick up passengers, and that as a result, Mr. and Mrs. Davis would not get the Club Transat class seats on the return flight. Mrs. Davis submits that although they received a refund of the fare difference for the Club Transat class seats, Air Transat had removed both reasons Mr. and Mrs. Davis chose to book with Air Transat. She adds that they were not allowed to benefit from the sale price or cancel the flights and get a full refund, as their tickets were non-refundable, non-transferable and no changes were permitted. Mrs. Davis states that the carrier's terms also stipulate that Air Transat can change flight times, routings, carriers and aircraft type, without notice and that special requests such as club seats are not guaranteed. Mrs. Davis submits that these terms and conditions are unreasonable.

[7] Air Transat submits that the ability to change routings and/or substitute aircraft has been recognized by the Agency and many aeronautical authorities around the world as providing necessary commercial flexibility to a carrier's operations. The carrier advises that in this particular case, it added a stop in Calgary on its Edmonton-Maui service as a result of a consolidation of flights undertaken for commercial reasons. Air Transat adds that the stopover was brief and resulted in the flight arriving in Maui only a few hours later than originally scheduled.

[8] With respect to the unavailability of the Club Transat class seats, Air Transat states that it is not always possible to accommodate passengers in their original booking class, and notes that a refund of the fare difference was provided to Mrs. Davis. With respect to the subsequent seat sale, the carrier submits that there is nothing which provides for fare guarantees in its general terms and conditions of carriage, or fare rules, and that, moreover, the sale fares did not apply to the Davis' flights. The carrier submits that it acted reasonably and consistently with its terms and conditions of carriage and that Mrs. Davis' complaint should be dismissed.

[9] In her reply, Mrs. Davis argues that when a ticket is purchased from a carrier, a form of business contract is entered into wherein the customer pays for a service and the carrier provides that service. She adds that in this particular case, Air Transat lured her with an offer of service, namely a direct flight to Hawaii and Club Transat class seats, but denied her this level of service. Mrs. Davis states that she sees this as a "bait and switch", and that when Air Transat changed the contract, she should at least have been given the opportunity to cancel the flights and receive a full refund.

ANALYSIS AND FINDINGS

[10] In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings, as well as the relevant provisions of Air Transat's Tariff No. 467 which provide that:

[11] Rule 80 (D)(3) - Failure to Operate on Schedule or Failure to Carry

In the event that space on TS is only available and used in a lower class of service than applied to the passenger's original flight(s), the difference in fares will be refunded in accordance with Rule 90 (Refunds).

[12] Rule 85 - Schedules, Delays and Cancellations of Flights

(A) SCHEDULES

The times shown in timetables or elsewhere are approximate and not guaranteed, and form no part of the contract of carriage. Schedules are subject to change without notice and carrier assumes no responsibility for making connections. [...]

(B) CANCELLATIONS

(1) Carrier may, without notice, substitute alternate carriers or aircraft.

(2) Carrier may, without notice, cancel, terminate, divert, postpone or delay any flight or the further right of carriage or reservation of traffic accommodations and determine if any departure or landing should be made, without any liability except to refund in accordance with its tariffs the fare and baggage charges for any unused portion of the ticket if it would be advisable to do so:

(a) Because of any fact beyond its control (including, but without limitation, meteorological conditions, acts of God, force majeure, strikes, riots, civil commotions, embargoes, war, hostilities, disturbances or unsettled international conditions) actual, threatened or reported or because of any delay, demand, conditions, circumstances or requirement due, directly or indirectly, to such fact; or

(b) Because of any fact not to be foreseen, anticipated or predicted; or

(c) Because of any government regulation, demand or requirement; or

(d) Because of shortage of labour, fuel or facilities, or labour difficulties of carrier or others.

[13] 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.

[14] 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,

(a) make any unjust discrimination against any person or other air carrier;

(b) give any undue or unreasonable preference or advantage to or in favour of any person or other air carrier in any respect whatever; or

(c) 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.

[15] 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 subsection 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).

[16] On February 26, 2003, Air Transat filed on statutory notice for effect on April 14, 2003, a new international scheduled services tariff, entitled Tariff Containing Rules Applicable to Scheduled Services for the Transportation of Passengers and Baggage or Goods between Points in Canada on the one hand and points outside Canada on the other hand CTA(A) No. 4 (hereinafter Air Transat's new international scheduled services tariff). This tariff replaced the tariff that was in effect at the time of the complaint and contains the following provisions relevant to the complaint:

[17] Rule 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. 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 of flight departure times.
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.

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

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 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 and used in a lower class of service than applied to the passenger's original flight(s), the difference in fares will be refunded.
4. Where the flight is cancelled after the initial delay, the Carrier will provide a full refund of the fare paid.

[19] In its Decision No. LET-C-A-104-2003 dated May 6, 2003, the Agency noted that Air Transat's new international scheduled services tariff did not contain provisions allowing passengers the possibility of obtaining refunds, should the carrier make material changes to the services that were originally contracted for with a passenger, such as changes to seating accommodation and routing. In light of the absence of such provisions, the Agency advised Air Transat that the provisions with respect to liability for refusal to transport and for failure to operate on schedule set out in Rule 6.3 of its new international scheduled services tariff may not be reasonable within the meaning of subsection 111(1) of the ATR. The Agency therefore provided Air Transat with the opportunity to show cause, by no later than May 19, 2003, why the carrier should not be required to revise its tariff to include a provision which would address the possibility of passengers obtaining refunds, when Air Transat makes material changes to the services originally contracted for with a passenger.

[20] The Agency granted Air Transat a number of requested extensions to respond to Decision No. LET-C-A-104-2003 and on July 4, 2003 Air Transat filed its response.

[21] In its response to Decision No. LET-C-A-104-2003, Air Transat submitted that it is not prepared to include in its tariff a general refund provision based on "material change" to the services and/or products purchased. The carrier added that the concept of "material change" is highly subjective in nature, and that the matter that has changed may be determinative in the decision-making process of one individual but not another. According to Air Transat, the changes in circumstances must be such as to fundamentally alter the nature of the service/product originally purchased or to effectively result in its non-delivery.

[22] With respect to routings, the carrier explained that there are two categories of flights in this regard, i.e., direct/same plane and connecting/change of aircraft service, and that several distinguishing factors make these types of services inherently different in nature, which would be a determinative factor for many consumers in making their choice. The carrier asserted that a direct service eliminates or reduces the risks of, among other things, missed connections, lost baggage, denied boarding/overbooking, and delays relating to weather and airport congestion. According to Air Transat, in this case, Mrs. Davis purchased a direct/same flight service from Edmonton to Maui, and the addition of a stop in Calgary, without a requirement to deplane or change aircraft, did not fundamentally alter the nature of the service originally contracted. The carrier submitted that a switch from direct to connecting service would constitute such a change and would probably be determinative in a consumer's decision to enter into the contract. In this regard, Air Transat advised that it is prepared to include a provision in its tariff to the effect that a refund may be available to the consumer where a routing modification subsequent to the purchase of travel results in a change from a direct to connecting service, however, it is not prepared to do so for the addition of a stop to a direct service for the reasons previously outlined. The carrier maintained that such a provision would essentially remove scheduling flexibility essential for the maintenance and support of direct services in certain markets.

[23] By Decision No. LET-C-A-167-2003 dated August 8, 2003, the Agency advised Air Transat that the absence of a tariff provision allowing for a full refund of a fare applicable to Air Transat's premium class service, i.e., Club Transat class, when previously confirmed larger seats are no longer available, may not be reasonable within the meaning of subsection 111(1) of the ATR. The Agency therefore provided Air Transat with the opportunity to show cause, within thirty (30) days from the date of the Decision, why the Agency should not, (i) pursuant to paragraph 113(a) of the ATR, disallow Rule 6.3(c) as being unjust and unreasonable, thereby contravening subsection 111(1) of the ATR, and, (ii) pursuant to paragraph 113(b) of the ATR, substitute the following provision:

c) 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,

i) provide space to the passenger at the lower class of service and refund the difference in fares, or

ii) provide a full refund of the unused portion of the fare paid by the passenger.

[24] Air Transat filed its response to Decision No. LET-C-A-167-2003 on September 5, 2003.

[25] In its response, Air Transat advised that it accepts the Agency's proposed wording with respect to Rule 6.3(c) of its new international scheduled services tariff and proposes to amend Rule 5.2(b) of its tariff by adding the following wording:

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.

[26] Air Transat also proposed to add the following new definitions in Rule 1:

"Direct Service" means a flight itinerary with or without stops involving only one through flight number per origin-destination segment and not involving stopovers and/or change of aircraft.

"Connecting Service" means a flight itinerary involving two or more flight numbers per origin-destination segment and requiring at least one change of aircraft at one or more stops.

[27] The Agency has carefully reviewed and considered Air Transat's proposed amendments to Rule 5.2(b) of its new international scheduled services tariff, including its proposed new definitions, and is of the opinion that those changes, along with the carrier's acceptance of the Agency's suggested changes to Rule 6.3(c) of its tariff, satisfactorily address the issues raised by the complaint. The Agency notes that Air Transat has filed on February 16 and 27, 2004, the following amendments in its new international scheduled services tariff:

[28] 1. The following text was added to Rule 5.2(b):

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.

[29] 2. The following new definitions were added to Rule 1:

"Direct Service" means a flight itinerary with or without stops involving only one through flight number per origin-destination segment and not involving stopovers and/or change of aircraft.

"Connecting Service" means a flight itinerary involving two or more flight numbers per origin-destination segment and requiring at least one change of aircraft at one or more stops.

[30] 3. Rule 6.3(c) was replaced with the following provision:

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,

i) provide space to the passenger at the lower class of service and refund the difference in fares, or

ii) provide a full refund of the unused portion of the fare paid by the passenger.

CONCLUSION

[31] Given that Air Transat has modified its tariff to deal with the concerns raised by Mrs. Davis, and that the Agency is satisfied with these changes, the Agency contemplates no further action in this matter.