Determination No. A-2022-112

[1] On July 20, 2022, Air Canada filed an application with the Canadian Transportation Agency (Agency) requesting an exemption from subsection 19(4) of the APPR, which requires that carriers respond to requests by passengers for compensation arising from flight delays and cancellations within 30 days. Air Canada asks that it be provided with 60 days to respond to requests made during the period of June 1, 2022, to September 30, 2022.

[2] On July 22, 2022, WestJet filed an application requesting the same exemption for the period of June 15, 2022, to September 30, 2022.

[3] Due to the similarity of the requests made, the Agency will address both applications in this determination.

[4] Both applicants cite issues impacting the aviation industry that have resulted in unprecedented increases in passenger requests for compensation under the APPR. As a result of these increases, they argue that compliance with subsection 19(4) of the APPR is undesirable or impractical.

[5] For the reasons set out below, the Agency denies the applications for exemption.

THE LAW

[6] Air carriers must provide compensation for inconvenience to passengers affected by flight cancellations and delays of three hours or more if the disruption is within the carrier’s control and not related to safety, and if the carrier notified the passenger of the disruption 14 days or less in advance.

[7] When a passenger requests compensation, subsection 19(4) of the APPR provides that the carrier must, within 30 days after the day on which it receives the request, provide the compensation or an explanation as to why compensation is not payable.

[8] Paragraph 80(1)(c) of the Canada Transportation Act^{Note 1}(CTA) empowers the Agency to grant exemptions where “compliance with the provision by the person is unnecessary, undesirable or impractical”.

SUBMISSIONS

[9] The applicants claim that a period of 30 days is insufficient to allow them to respond to requests for compensation in the current climate, and, as a result, seek exemptions from the requirement. In this case ,the applicants point to numerous issues currently impacting the aviation industry, such as staffing shortages at CATSA and CBSA, limits on flights at major airports, a large internet outage, runway construction at the Toronto Pearson International Airport, and mandatory testing in some jurisdictions as a result of the COVID-19 pandemic. They claim that these issues have impacted the aviation sector in Canada and globally, resulting in increased requests for compensation.  

AIR CANADA’S SUBMISSION

[10] Air Canada submits that a rapid and temporary increase in customer claims caused by current operational issues affecting the aviation sector makes it impractical and undesirable to maintain the 30-day response requirement under the APPR at this time. In its application, Air Canada provided data to illustrate what it characterized as a sharp and unforeseen increase in compensation requests from 2021 to 2022, focusing on the months of May to July 2022.

[11] Air Canada claims that it planned well in advance and took steps to be prepared for the ramp-up of its operations in 2022, but that failures elsewhere in the chain of key service providers in the air industry have affected networks and amplified disruptions for customers. It also states that it has deployed a contingency plan to help mitigate the impact of changes in the volume of requests for compensation being received, but that this plan has proven to be inadequate. It indicates that it has still been addressing incoming requests within the 30-day requirement, albeit more recently within hours or minutes of the deadline.

[12] It is Air Canada’s position that granting a temporary, time-limited, exemption would have a marginal impact on passengers and would not adversely impact their substantive rights under the APPR. It further argues that providing more time to respond to requests for compensation would ultimately benefit passengers, as it would provide the carrier with sufficient time to properly investigate and accurately respond to APPR claims, thereby reducing errors and promoting the successful resolution of complaints.

WESTJET’S SUBMISSION

[13] WestJet asserts that while it diligently and proactively planned for its summer operations, it has been and is continuing to be severely impacted by events that are outside of its control. It indicates that, as a result, WestJet has experienced a dramatic increase in APPR claims received in June and July of this year.

[14] WestJet admits that it is unable to manage the current increase in requests for compensation within the 30-day period required under the APPR. It argues that the 30-day period is impractical and undesirable given the ongoing issues being experienced in the air industry.

[15] WestJet further argues that providing additional time for responding will ensure it is better able to provide appropriate explanations for flight disruptions, thereby providing a greater benefit to its passengers. It also indicates that allowing more time to respond to requests for compensation would not adversely impact the rights of passengers, as their entitlements under the APPR would not be impacted.

ANALYSIS

[16] The applicants both argue that compliance with subsection 19(4) of the APPR is undesirable or impractical at this time such that they should be granted exemptions from that provision under paragraph 80(1)(c) of the CTA. The Agency rejects their argument that compliance with subsection 19(4) is “undesirable” because paying compensation owed to passengers in the timeframe required by the regulation is clearly desirable. The purpose of this provision is to ensure that passengers receive timely responses to requests for compensation and that if they are entitled to compensation they receive it without delay. The volume of complaints does not affect the desirability of this outcome. In any event, the applicants’ arguments focus on trying to establish that compliance is impractical and, accordingly, the Agency’s analysis will focus on this ground for exemption.

[17] These are not the first requests for exemption from the APPR or this provision. As the COVID-19 pandemic produced a series of rapid developments related to domestic and global aviation starting in March 2020, including the enactment of a range of travel restrictions, the issuance of multiple travel advisories, and the ensuing rush by many Canadians to get home, the Agency decided to temporarily exempt air carriers from various APPR obligations. These exemptions were initially approved until April 30, 2020, in Determination A-2020-42, and subsequently extended, as the crisis continued, to June 30, 2020, by Determination A-2020-47.

[18] The Agency also decided, in Determination A-2020-47, to temporarily give air carriers an exemption from subsection 19(4) to give them more time to respond to requests for compensation for inconvenience that were pending on March 25, 2020, or filed between March 25, 2020, and June 30, 2020. Instead of having to respond within 30 days of the submission of a request, carriers were given 120 days from the expiry of the exemption, that is, until October 28, 2020.

[19] However, in response to further requests to extend the exemptions for another period, the Agency issued Determination A-2020-122 on June 29, 2020, denying the requests. The Agency noted that the purpose of the temporary measures in Determination A-2020-42 and Determination A-2020-47 was not to relieve financial pressures on carriers but, rather, to give them increased ability to deal with operational imperatives—particularly the need to repatriate Canadians from abroad—in the context of circumstances that changed suddenly, drastically and repeatedly as the crisis unfolded. The Agency noted that conditions had since evolved and that the carriers provided no evidence that they were facing the same sorts of operational imperatives and the sudden, drastic changes that characterized the initial stages of the pandemic, nor why, after more than three months, it was not possible to adapt operations to new realities such as health and safety precautions. The Agency recognized that carriers would only be required to pay compensation where flights are disrupted for reasons within their control and not required for safety, and expressed the expectation that, in the circumstances at the time of the decision, it was “reasonable to expect carriers to make such decisions at least 14 days before scheduled departures, giving passengers the advance notice and predictability that the APPR’s timeline provides”.

[20] In Determination A-2020-122, the Agency did provide a brief extension of the exemption from subsection 19(4), recognizing the problems that would arise if carriers had until October 28, 2020, to respond to requests for compensation made before June 30, 2020, but had to apply the 30-day requirement for all requests received after June 30, 2020. It ordered a return to the 30-day response requirement for requests for compensation that were received on or after September 29, 2020.

[21] The current circumstances are substantially different than those faced by air carriers in the early days of the pandemic, when the circumstances were changing frequently, suddenly and drastically. After two years, there is a much higher level of predictability and the carriers should be responsible and accountable for their planning or lack thereof. Carriers cannot rely on their own failure to manage their regulatory responsibilities to argue that they should be exempted from them.

[22] The Agency notes that while the applicants provided data and information to support their assertion that there has been a large increase of compensation-related claims in June 2022 compared to previous months and years, their arguments supporting the current high volume of requests for compensation focus extensively on what they deem to be the causes of such high volume. However, the Agency is not convinced that the causes of the volume of requests are all external to the carriers. 

[23] In any event, while the Agency accepts that the air passenger transportation sector has experienced challenges over this summer and that there has been a large increase in the number of requests for compensation from the applicants as a result, the Agency finds that the causes of the increase in requests is not relevant to the question of whether compliance with the regulatory requirement is impractical. What is relevant to this question is the carriers’ processes and capacity to handle the requests, as planned and then as changed over time as the volume of requests rose, and whether they acted as prudent and diligent carriers. 

[24] Both applicants claim to have taken steps to address increased complaint volumes through hiring, adjusting flight operations, automation and other process improvements. However, neither provided specific information or data regarding the expectations or projections upon which they made and implemented these plans nor did they provide any data regarding their current request processing capacity, how it has increased over the past year, or how long it would take to further increase this capacity. They only state that under current conditions it is impractical for them to meet the requirements of subsection 19(4), but have not explained in sufficient detail how their current and planned capacity is insufficient to deal with existing requests for compensation.

[25] In its application, Air Canada indicated that, at the time, it was still managing to respond to requests for compensation within the 30-day time limit. It also stated that it is continuing to work to increase its customer service capacity. While it points to the historic trend of increased requests for compensation, without further data it cannot be determined if complying with the 30-day requirement for response is impractical.

[26] Both applicants claim that they proactively planned and took steps to address increased flight disruptions (with their related increase in compensation claims). They assert that, despite their efforts, it has become impractical for them to comply with subsection 19(4) of the APPR. However, due to the limited information provided regarding these plans and their outcomes, the Agency cannot determine if this is the case.

[27] The Agency finds that the applicants have not established that compliance with subsection 19(4) of the APPR is undesirable or impractical.

CONCLUSION

[28] In light of the above, the Agency denies Air Canada’s and WestJet’s requests for temporary exemptions from the requirements of subsection 19(4) of the APPR.

 

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