Letter Decision No. LET-C-A-79-2011

BACKGROUND

[1]On April 24, 2009, WestJet filed with the Canadian Transportation Agency (Agency) certain amendments to its Scheduled International Passenger Rules Tariff No. CTA(A) No. 4 (Tariff).

[2]Chief among these amendments was the addition of Rule 24.3, which provided for additional service standard commitments for passengers.

[3]At that time, the Agency evaluated the Tariff amendments from the perspective of clarity pursuant to section 122 of the Air Transportation Regulations, SOR/88-58, as amended (ATR),and raised certain issues with WestJet. One of the concerns raised by the Agency was that, although Rule 24.3 set out three options to be exercised in the event of overbooking and cancellation, it did not clearly state who, between WestJet and the passenger, had the discretion to determine which option would be exercised. WestJet proposed amendments to make the choice of option clear.

[4]In Decision No. 480-A-2009, the Agency made a determination on the clarity of certain provisions of the Tariff and accepted amendments proposed by WestJet. The Agency explicitly stated that it had not assessed the reasonableness of the provisions proposed by WestJet, but had limited itself to the issue of clarity.

[5]On June 8, 2009, Mr. Lukács filed a complaint with the Agency in which he challenged Rule 24 of the Tariff.

[6] Mr. Lukács’ complaint primarily concerns whether this provision is consistent with Article 19 of the Convention for the Unification of Certain Rules for International Carriage by Air, commonly known as the Montreal Convention (Convention).

[7]Pursuant to Mr. Lukács’ complaint, the Agency must now assess this Tariff provision from a substantive, rather than a clarity, perspective.

[8]It should be noted that Mr. Lukács filed the same complaint against three carriers, namely Air Canada, WestJet and Air Transat. WestJet and Air Transat filed a single submission setting out the common position of both carriers. Although the submissions respecting Air Transat and WestJet are identical, as, for the most part, are the Agency’s analysis and conclusions, it has been determined that a separate decision will be issued respecting each carrier.

[9]It should also be noted that Mr. Lukács states that his complaint does not extend to situations outside the control of a carrier. Accordingly, this Decision is related to an assessment of situations which are within the control of a carrier.

APPLICABLE TARIFFS

[10]In his complaint, Mr. Lukács referred to Tariff Rule 24.11.3. A review of the provisions of WestJet’s Tariff in effect at the time the complaint was filed reveals that no such provision existed; the Agency concludes that Mr. Lukács was referring to Tariff Rule 24.3, and not 24.11.3.

[11]Since Mr. Lukács filed his complaint, WestJet has replaced Tariff Rule 24.3 with new Tariff Rule 15.2, which differs from its predecessor in three respects.

[12]First, while its predecessor provided that in the event of overbooking or cancellation, “WestJet will” exercise the options listed therein, the current Tariff provision states that “WestJet will make all reasonable efforts” to exercise those options.

[13]Second, WestJet now states, with respect to subsection (b) of Rule 15.2, that it will find the passenger a seat on another carrier, without specifying that the carrier must have an interline agreement with WestJet. This amendment indicates that WestJet has broadened its responsibility to reprotect the passenger, along the lines suggested by Mr. Lukács.

[14]Third, current subsection (c) of Rule 15.2, which provides for a refund of the unused portion of the ticket, refers passengers to Rule 15.3 for details. Rule 15.3, in turn, limits WestJet’s liability in respect of “cancellation or change”, whether caused by force majeure or not, if WestJet, at its discretion, provides passengers with the credit or refund set out therein. The Agency is of the opinion that this new provision is relevant to the present proceedings and will address it in sections 3 and 4 below.

[15]In addition, there continues to be an issue with respect to who, between WestJet and the passenger, has the choice of option in current Tariff Rule 15.2. Despite the Agency’s acceptance of revised tariff language in Decision No. 480-A-2009 that clarified who had the choice of option in Tariff Rule 24.3, current Tariff Rule 15.2 is silent with respect to who has the discretion to choose between available options in the event a flight is overbooked or cancelled.

[16]Although WestJet has amended its Tariff since the filing of Mr. Lukács’ complaint, the Agency is of the opinion that the submissions of the parties remain relevant and notes that the parties will have a further opportunity to address the amendments to the Tariff through the show cause process provided for in this Decision.

[17]Appendix A sets out the subject Tariff provisions both at the time of filing of the complaint by Mr. Lukács and as currently in effect.

ISSUES

[18]In addressing Mr. Lukács’ complaint the Agency will consider the following issues:

1. Do overbooking and cancellation constitute delay for the purpose of Article 19 of the Convention?
2. Is it reasonable that WestJet’s current Tariff Rules 15.2(a) and (b) provide that WestJet will make all reasonable efforts to reprotect a passenger on one of its own flights or that of another carrier?
3. Is it reasonable that WestJet’s current Tariff Rules 15.2(c) and 15.3 only call for a refund of the unused portion of a ticket?
4. Is it reasonable that WestJet’s current Tariff Rule 15.2 does not state that passengers have rights and remedies outside those named in the Tariff? Is it reasonable that the current Tariff Rule 15.3 refers to a sole remedy available to passengers?

Issue 1: Do overbooking and cancellation constitute delay for the purpose of Article 19 of the convention?

Submissions

[19]Mr. Lukács takes the position that overbooking and cancellation are forms of delay and are captured by Article 19 of the Convention. From the point of view of a passenger, he states, the terminology is irrelevant as the effect is the same: the arrival time at destination is delayed. Mr. Lukács cites a number of cases that stand for this proposition.

[20]WestJet asserts that not all cases of overbooking or cancellation constitute “delay” under the Convention. It claims that characterizing all cases of schedule change, flight cancellation, overbooking and equipment changes as “delay” is a great oversimplification which, if accepted, would lead to unreasonable results. In light of the jurisprudence, doctrine and the working papers of the Convention, WestJet argues that one can only determine whether a particular set of facts gives rise to compensable delay under the Convention on a case-by-case basis.

[21]In his reply, Mr. Lukács concedes that the definition of “delay” has been left open in the Convention. However, he refers to jurisprudence which, he argues, tends to show that overbooking and cancellation are forms of delay under the Convention, rather than non-performance. He concludes that WestJet’s Tariff provision falls squarely within Article 19.

Analysis and findings

[22]By virtue of the Carriage by Air Act, R.S.C., 1985, c. C-26, the Convention has the force of law in Canada and governs, among other matters, the liability limitations for delay applicable to international carriage by air for travel to which the Convention applies. The Convention modernizes the liability regime governing international carriage and consolidates the Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed in Warsaw on 12 October 1929 (Warsaw Convention) and the various instruments comprising the Warsaw system.

[23]Under Article 26 of the Convention, an air carrier may not relieve itself from liability nor fix a lower limit to its liability than that prescribed in the Convention.

[24]The focus of the complaint is Article 19 of the Convention which reads:

The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo. Nevertheless, the carrier shall not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures.

[25]A fundamental question addressed by the parties to this complaint is whether instances of cancellation and overbooking fall within the scope of “delay” as found in Article 19 of the Convention. As the term “delay” is not defined and its meaning is not clear from the text of Article 19 or the Convention as a whole, consideration must be given to supplementary sources.

[26]The modern principle of statutory interpretation applicable to international conventions takes a purposive reading of legislation. This approach has been adopted by Canadian courts.¹

[27] Interpreting Article 19 of the Convention therefore requires an analysis that takes into account the ordinary meaning of the text as well as contextual factors to give effect to the purpose of that Article. To that end, reference may be made to the working papers of both the Warsaw and Montreal Conventions, as well as domestic and international doctrine and jurisprudence.

[28]As is clear from the submissions of the parties on this issue, the principle that emerges from the Minutes of discussions leading up to the adoption of the Convention is that the delegates intended to leave the definition of “delay” open-ended, and subject to a case-by-case assessment by the courts.

[29]Although the Warsaw and Montreal Conventions’ working papers show that the scope of Article 19 was not intended to extend to non-performance, the distinction between non-performance and delay was not made entirely clear.

[30]As reflected in the case law arising from the parties’ submissions, jurisprudence addressing the legal characterization of delay and the distinction between “delay” and “non-performance” reveals that there are contradictions and inconsistencies in reasoning, both domestically and internationally.

[31]The cases of Weiss v. El Al Israel Airlines² and Minhas v. Biman Bangladesh³ provide an example of the contradictory characterization of “delay” by the courts. In Weiss the District Court for the Southern District of New York considered a case where passengers were “bumped” from a flight from New York to Jerusalem. The plaintiffs, after being placed on stand-by and waiting for two days, eventually purchased a flight on another airline. The plaintiffs received no refund or compensation for bumping from the carrier. The Court asserted that the standard international position on the question of bumping was that it was akin to non-performance.

[32]In Minhas a passenger had been “bumped” from her flight from India to the United States. The plaintiff attempted to secure a flight home with the carrier over a period of 45 days, until she eventually obtained a ticket from another carrier. The same District Court for the Southern District of New York held that her claim constituted “delay” pursuant to Article 19 of the Convention.

[33]Although the facts canvassed in Weiss are substantially similar to those in Minhas, namely that the passengers in each case were bumped from their original flight and eventually resorted to purchasing tickets with another airline, this was determined to be contractual non-performance in Weiss (after two days of waiting) while characterized as delay in Minhas (after 45 days of waiting).

[34]There are further examples of contradictory characterizations of “delay”. Basing itself in no small part on the working papers of the Warsaw Convention, the U.S. Court of Appeals, Seventh Circuit, in Wolgel v. Mexicana Airlines,⁴ drew a boundary between damages arising from “delay” under Article 19 of the Warsaw Convention, and damages arising from the act of being “bumped” from a flight.

[35] Wolgel was a case of overbooking. The passengers had confirmed reservations on an international flight but upon arrival at the airport, were informed that they had been bumped. Plaintiffs sued in private law and cited a now-repealed section of the Federal Aviation Act. The Court held as follows:

This case is one of non-performance of a contract. The Wolgels are not attempting to recover for injuries caused by their delay in getting to Acapulco. Rather, their complaint is based on the fact that, as far as the record shows, they never left the airport. Because the Wolgels’ claim is for total non-performance of a contract, the Warsaw Convention is inapplicable.

[36] In the Canadian case of Lukács v. United Airlines Inc.,⁵ the plaintiff had been informed by air carrier personnel before arriving at the airport that his flight was cancelled. He went to the airport on the understanding that his ticket would be endorsed by another airline providing a flight that afternoon, but the process took so long that he ultimately decided not to travel at all. After hearing the position of the parties as to whether this event constituted “delay”, the Manitoba Court of Queen’s Bench ultimately decided that it came within the scope of Article 19 of the Convention.

[37]The facts in Wolgel and Lukács are similar insofar as the passengers, due to overbooking or cancellation, never left the airport. However, this situation was characterized as non-performance in the former case and delay in the latter.

[38]In recent years, U.S. courts have begun to trace the outline of a principled distinction between delay and non-performance, which (1) recognizes the possibility that the alternative categorizations can coexist, although each is governed by a different legal regime; and (2) makes their characterization dependent on specific factors.

[39]Building on this distinction is the case of In re Nigeria Charter Flights Contract Litigation,⁶ referred to by Mr. Lukács in his reply submissions, in which the Court attempted to synthesize several key distinctions between delay and contractual non-performance. The Court stated that in the case law, courts tended to find “delay” where one of three conditions is met:

1. The defendant airlines ultimately provided transportation;
2. The plaintiffs secured alternate transportation without waiting to see whether the airline would transport them or they refused an offer of a later flight; or
3. Plaintiffs never alleged non-performance.

[40]The Court held, in that case, that the claim for non-performance was founded because the air carrier simply refused to transport the plaintiffs. As such, the facts of that case were found to resemble those in Wolgel.

[41]This points to the conclusion that the legal characterization of an event depends on certain conditions relating to the actions of both parties (the air carrier’s willingness to provide transportation on the one hand and the passenger’s willingness to accept it on the other).

[42]Although there is contradiction and inconsistency in the meaning to be given the word “delay” as found in Article 19 of the Convention, what is clear is that the intent of Article 19 is to have the meaning of “delay” determined on a case-by-case basis. As is set out above and as submitted by the parties, whether a situation of cancellation or overbooking constitutes delay will depend on the particular circumstances of a case as well as the court’s interpretation of the questions of fact and law in issue. Layered on this, however, is that some courts, as illustrated by the Nigeria case, are setting out specific criteria for assessing whether a particular fact situation falls within the meaning of “delay” as found in Article 19 of the Convention.

[43]In all situations, however, one element is clear. At the core of overbooking or cancellation, the affected passenger is not in a position to proceed with their journey in the timeframe originally established. Accordingly, the Agency is of the preliminary opinion that overbooking and cancellation that are within WestJet’s control constitute delay for the purpose of Article 19 of the Convention.

[44]The Agency recognizes, however, in keeping with the Nigeria case as set out above, that in limited situations there may be clear facts and circumstances that would evidence the alternative of non-performance of the contract of carriage. As further complaints, with different fact situations, are brought before the Agency, the Agency will be able to clarify the conditions that constitute non-performance.

[45]The Agency appreciates that the parties have made well-reasoned submissions on the legal characterization of delay. However, considering that this issue is a key element of the matter before the Agency, this will nevertheless be the subject of a show cause order as set out at paragraph 108 of this Decision. This will provide the parties with a further opportunity to comment on this issue before a final determination is made.

Issue 2: Is it reasonable that WestJet’s current tariff Rules 15.2(a) and (b) provide that WestJet will make all reasonable efforts to reprotect a passenger on one of its own flights or that of another carrier?

Submissions

The obligations of WestJet in the case of delay

[46] Mr. Lukács is seeking a determination from the Agency concerning the basic obligations of carriers in the case of overbooking or cancellation. Because Mr. Lukács argues that Article 19 of the Convention applies to cases of overbooking and cancellation, he takes the position that, pursuant to that provision, a carrier must prove that it took “all measures that could reasonably be required” to avoid delay.

[47] Mr. Lukács refers to Canadian jurisprudence to determine what constitutes “all reasonable measures”. He cites case law stating that a carrier must be aware of the possibility of mechanical failure and offer efficient solutions in such an event.⁷ He also cites case law that, he argues, found a carrier had not discharged its burden of proof under Article 19 where, after a flight delay, it refused to provide passengers with seats on another carrier’s flight, an act which would have allowed them to catch a departing cruise ship at their destination.⁸

[48] WestJet acknowledges that in cases where the Montreal or Warsaw Convention applies, an air carrier cannot relieve itself from liability or fix a lower limit than that set out in the applicable Convention. WestJet further acknowledges the requirement for an air carrier to provide tariffs that clearly set out the matters identified in the ATR. However, WestJet argues that circumstances affecting carrier liability are many and it is not possible to prescribe the consequences of every variation in a tariff. The best solution, WestJet submits, is to have a basic obligation in the tariff and leave it to common sense, the Agency or courts to determine what compensation is appropriate.

[49] In WestJet’s view, Mr. Lukács has an overly mechanistic approach to delay and reasonable measures that fails to take into account contextual considerations from the perspective of the passenger and carrier, including length of delay, cost of accommodation, nature of the damage and safety concerns. WestJet concludes that one cannot determine in advance what measures are reasonably required of a carrier. WestJet therefore argues that its obligation cannot be defined in the abstract, without due consideration of the circumstances of the case.

[50]WestJet submits that its impugned Tariff provisions are fair and reasonable, defining an uncontentious level of obligation while recognizing that more may be required of it depending on the circumstances.

[51]Mr. Lukács disagrees that it is impossible to define WestJet’s obligations in the abstract. He asserts that the Agency has jurisdiction to make a determination on principle, and that it does this routinely when it considers the reasonableness of a tariff. Mr. Lukács goes on to point out that paragraph 122(c) of the ATR in fact requires WestJet to clearly state in its tariff its policy concerning overbooking, failure to operate, and failure to operate on schedule. He concludes that the legislators were of the opinion that it is not only possible but necessary for carriers to state their policies on these matters in the abstract, despite the complexity of the task.

[52]Mr. Lukács submits that Article 19 of the Convention sets out a standard of care owed by WestJet to the passenger during and before delay. He claims that the purpose of his complaint is to determine the basic obligations of carriers in cases of overbooking and cancellation.

Reprotection of a passenger on the fastest available route

[53]Mr. Lukács considers that carriage to destination by the fastest available route is a measure that could reasonably be required under Article 19. He therefore argues that WestJet’s Tariff provision limiting itself to finding a seat on one of its own flights or that of a carrier with which it has an interline agreement, as was set out in WestJet’s original Tariff Rule 24.3(b), is contrary to the Convention. According to Mr. Lukács, in the event of overbooking or cancellation, WestJet must search all possible routes and arrange or pay for the route that would get a passenger to his or her destination the soonest, regardless of the identity of the carrier used for rerouting.

[54]According to WestJet, providing carriage by the fastest available route or providing additional remedies at the sole discretion of the passenger is not always required to meet the standard of all reasonable measures set out in Article 19.

[55]In Mr. Lukács’ reply, he claims, in addressing WestJet’s original Tariff Rule 24.3(b), that limiting possible reroutes to carriers with whom an interline agreement exists may result in further delay to passengers and falls short of what he sees as the reasonable measures obligation.

[56]Mr. Lukács applies a balancing test and argues that the cost of rerouting on the fastest available route should be weighed against the additional revenue that overbooking produces for WestJet. He reiterates that the only consideration for WestJet should be mitigating the passenger’s delay, which requires finding the fastest available route to destination for the passenger.

[57]As for cancellation which is within WestJet’s control, Mr. Lukács similarly submits that WestJet’s basic obligation is to provide transport on the fastest available route. Again, the cost to WestJet must be weighed against the financial benefit that a “schedule change” or failure to provide back-up equipment generates.

Analysis and findings

Tariffs in general

[58]Section 55 of the Canada Transportation Act, S.C. 1996, c. 10, as amended (CTA), defines an air carrier’s tariff as a “schedule of fares, rates, charges and terms and conditions of carriage.” Essentially, a tariff is the contract of carriage between the passenger and the air carrier and is a central feature of carriage by air because it sets out the terms and conditions that will apply to the applicable carriage. However, the carrier’s tariff is not the type of contract that is negotiated between two parties. Rather, it is a contract that is unilaterally imposed on the passenger by the carrier. In Decision No. 456-C-A-2009, Wyant v. Air Canada, the Agency stated:

[10] It should be noted that the terms and conditions of carriage are set by an air carrier unilaterally without any input from future passengers. The air carrier sets its terms and conditions of carriage on the basis of its own interests, which may have their basis in statutory or purely commercial requirements. There is no presumption that a tariff is reasonable.

[59]The Agency’s authority with respect to tariffs is set out in the CTA and in the ATR. In the international context, carriers are required to file their terms and conditions of carriage with the Agency pursuant to section 110 of the ATR. The Agency’s oversight power over a carrier’s tariffs allows it, on its own motion or on complaint, to inquire into whether the tariff is clear, just and reasonable and to take such remedial actions as suspending or disallowing tariffs that do not meet regulatory requirements.

ATR requirements respecting international flights

[60]There is a clear and definitive requirement for a carrier, pursuant to paragraph 122(c) of the ATR to set out in its tariff its terms and conditions of carriage and, in particular, to clearly state its policy in respect of, among other matters, compensation for denial of boarding as a result of overbooking, passenger rerouting, failure to operate the service and refunds for services purchased but not used.

[61] The requirement for WestJet pursuant to paragraph 122(c) of the ATR to clearly set out its policy on overbooking and cancellation was addressed by the Agency in Decision No. 480-A-2009.

[62] Subsection 110(4) of the ATR requires an air carrier to charge the tolls and apply the terms and conditions of carriage set out in its tariffs while subsection 110(5) requires a carrier to not charge a toll or apply a term and condition of carriage that is not specified in its tariffs.

[63] In addition, a carrier is required to not only clearly set out its policy with respect to overbooking and flight cancellations, but to also ensure that with respect to international flights, its tariff is just and reasonable within the meaning of subsection 111(1) of the ATR and consistent with the applicable conventions.

[64] The Agency has stated in previous decisions that in order to determine whether a term or condition of carriage applied by a carrier is "reasonable" within the meaning of subsection 111(1) of the ATR, a balance must be struck between the rights of passengers to be subject to reasonable terms and conditions of carriage, and the particular air carrier’s statutory, commercial and operational obligations.⁹

Application of the Montreal Convention

[65] The Agency, in assessing a carrier’s tariff, must have regard to the articles of the Convention and, in this respect, the Agency notes that Article 27 of the Convention sets out a principle that a carrier’s tariff must not conflict with the provisions of the Convention.

[66] As set out in Issue 1 above, the Agency is of the preliminary opinion that overbooking and cancellation that are within WestJet’s control constitute delay which falls within the purview of Article 19 of the Convention. Accordingly, when reviewing a carrier’s international tariff in the context of overbooking and cancellation consideration must be given to not only subsection 111(1) of the ATR but also Article 19 which addresses the issue of delay.

[67] A carrier, pursuant to Article 19 of the Convention, is liable for damage occasioned by delay in the carriage of, amongst other matters, passengers, but will not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or it was impossible for them to take such measures.

[68] This provision imposes on a carrier an obligation, namely to transport a passenger, as contracted, without delay, failing which there will be a presumption of liability for damage arising from any such delay. With a presumption of liability for delay against a carrier, the Agency is of the preliminary opinion that there is a concomitant obligation for a carrier to mitigate such liability and address the damage which has or may be suffered by a passenger as a result of the delay. Article 19 anticipates this by providing a carrier with a defence to the liability if it can show that it took, or it was impossible to take, all reasonable measures to avoid the damage caused by the delay. This is consistent with an assumption that a carrier, when faced with a presumption of liability, will take whatever action is necessary or possible, within reason, to address an issue which arose as a result of a situation which was within its control.

[69] A central component of Mr. Lukács’ argument is that Article 19 of the Convention means, in the event of delay, that a carrier must rebook a passenger on the fastest available alternative route in order to satisfy the requirement to take all reasonable measures. However, the Agency notes that Article 19 does not prescribe specific measures for a carrier to take, nor does it state which “reasonable measures” would exonerate it from liability.

[70] As with the issue of the meaning of “delay” as discussed above, there is controversy and inconsistency in the jurisprudence as to what constitutes a carrier taking all measures that could reasonably be required to avoid damage.

[71] For example, the cases are not consistent as to whether Article 19 extends to booking a passenger on a flight with a carrier for which there is no interline agreement if that is the fastest means for the passenger to arrive at their destination.

[72] In some instances, the courts have been satisfied with reprotection on the carrier’s next flight. In others, courts have required that passengers be put on whatever flight will get them to their destination. The term "reprotect" is used here to refer to the act by a carrier of securing a passenger’s travel on another flight if, due to overbooking or cancellation, the passenger is prevented from travelling on their original flight as planned. To a large extent, the approach taken depends on the particular facts of the case.

[73] In Mohammad v. Air Canada,¹⁰ a case brought against Air Canada and Kuwait Airlines for joint carriage between Canada and Kuwait, the Court of Quebec Small Claims Division held that Air Canada, when faced with a flight cancellation, took all reasonable measures when it put passengers on its next available flight, described as a new flight created by the carrier. However, on a final segment of the same flight itinerary, Kuwait Airlines was found liable under the Convention on the grounds that it should have transferred passengers to another carrier given that its own flights were booked for the next several weeks. The New York City Civil Court has similarly held that reprotection on any other carrier may be reasonable where a carrier’s own flights are fully booked.¹¹ However, the District Court for the Southern District of New York has held that where there are extensive administrative requirements and limited timeframes, reprotection on any other carrier may not be reasonable.¹²

WestJet’s Tariff and the question of reprotection on the fastest available flight

[74] Mr. Lukács’ complaint concerns the obligations of carriers in the case of overbooking and cancellation. In the Agency’s view, this complaint involves a consideration of the reasonableness of WestJet’s Tariff provision on overbooking and cancellation which, in turn, involves the Agency considering this provision pursuant to subsection 111(1) of the ATR, while also taking into account Article 19 and ensuring that the Tariff is consistent with the articles of the Convention.

[75] When considering the issue as to whether a tariff provision is reasonable, several factors must be considered and, as noted above at paragraph 64, the Agency must strike a balance between the rights of passengers to be subject to reasonable terms and conditions of carriage and the particular carrier’s statutory, commercial and operational obligations.

[76] Mr. Lukács provides insight into the passenger’s perspective on this question by arguing that the cost of rerouting on the fastest available route should be weighed against the additional revenue that overbooking and cancellation produces for WestJet. He emphasizes that the only consideration for WestJet should be mitigating the passenger’s delay, which requires finding the fastest available route to destination for the passenger.

[77] The Agency is of the opinion that Mr. Lukács’ position is too restrictive and onerous in that it requires WestJet to always provide the passenger with the fastest possible means of getting to their destination. Mr. Lukács has not shown that in every situation of overbooking or cancellation the fastest possible means for a passenger to get to destination is reasonable.

[78] While the particular circumstances may call for putting a passenger on a carrier for which no interline agreement exists, it cannot be said that this remedy must always be required.

[79] The balancing test also requires that the air carrier’s perspective, namely with regard to its statutory, commercial and operational obligations, be considered. WestJet, in its submissions, admits that its Tariff aims to set out a basic obligation—one that is, in WestJet’s words, “uncontentious”—but it does not provide comments on the statutory, commercial and operational obligations in support of its Tariff provision on reprotection.

[80] Turning to WestJet’s impugned Tariff provision, the Agency notes that on the date the complaint was filed, it was clear that one of the options available to passengers in the event of overbooking or cancellation would be to have WestJet purchase for the passenger a seat on another carrier with which it has a mutual interline traffic agreement.

[81] In the Tariff now in effect, the latter part of that sentence has been removed and Rule 15.2(b) now states that WestJet will make all reasonable efforts to purchase for the passenger a seat on another carrier. It appears from a plain reading of Rules 15.2(a) and (b) of WestJet’s current Tariff that WestJet undertakes to make all reasonable efforts to put the passenger on either one of its own flights or that of another carrier whether an interline agreement exists or not.

[82] The Agency notes that WestJet has not taken a restrictive approach in its Tariff with respect to the carriers on which flights it may reprotect a passenger.

[83] However, WestJet’s Tariff, which provides that WestJet will make “all reasonable efforts” to put a passenger on its own flight or on that of another carrier whether an interline agreement exists or not, is essentially a carrier-focussed approach to remedying the situation of overbooking or flight cancellation. It is through WestJet’s reasonable efforts that a solution will be developed. In other words, Tariff Rules 15.2(a) and (b) leave it to WestJet to determine what “all reasonable efforts” are, and which solution will be pursued. In contrast, the jurisprudence that deals with situations of overbooking and cancellation takes a more circumstance-focussed approach by generally looking to the particular circumstances of a situation in order to determine whether a carrier took all measures that could reasonably be required to avoid the damage. For example, the reasonableness of measures taken has been assessed in light of a passenger’s need to get to a work-related conference at a particular time, as in the case of Lukács v. United Airlines Inc, et al.13 Similarly, where a flight delay has prevented a passenger from boarding a cruise at a scheduled time and place, a carrier’s actions have been evaluated in that particular context.¹⁴ The time-sensitive nature of a passenger’s purpose of travel is a factor that has been considered by the courts in these cases.

[84] Based on the above, the Agency is of the preliminary opinion that a circumstance-focussed approach is a reasonable approach to addressing the issue of overbooking and cancellation when the circumstances are made known to WestJet.

Issue 3: Is it reasonable that WestJet’s current tariff Rules 15.2(c) and 15.3 only call for a refund of the unused portion of a ticket?

Submissions

[85] Mr. Lukács submits that Article 19 of the Convention requires carriers to take measures to avoid damage to passengers and bear the cost of these measures. He argues that by refunding the unused portion of a ticket, a carrier may unilaterally cancel the contract of carriage. In his view, providing a partial, or even a full, refund falls short of the obligation to take all measures that could reasonably be required under Article 19 of the Convention. Refunding only the unused portion of a ticket, he claims, would allow a carrier to exonerate itself from the liability to which it would otherwise be exposed under the Convention.

[86] Mr. Lukács states that providing a refund of the unused portion of a ticket might result in financial loss to the passenger and that a passenger might not always prefer a refund. Therefore, he requests that the provision of a refund be at the sole discretion of the passenger.

[87] WestJet does not address this issue in its submissions, except to comment that giving passengers the sole discretion to choose remedies may not be required under Article 19 of the Convention.

[88] In his reply, Mr. Lukács requests that the refund should be the greater between the portion of the ticket that no longer serves a purpose, and the cost of purchasing a similar itinerary for departure on another carrier that day.

Analysis and findings

Refunding the unused portion of a ticket

[89] Article 19 of the Convention does not specify exactly what type of damage would be compensated for in the case of delay, but some examples from the jurisprudence include expenses for accommodation and meals or the additional transportation costs that would be incurred as a result of overbooking or cancellation.¹⁵

[90] There is therefore a possibility that compensation for damages under the Convention would extend beyond a mere refund of the unused portion of the ticket. In fact, it is reasonable to assume that in many situations of overbooking or cancellation a passenger would expect more than a refund for the unused portion of the ticket.

[91] The subject Tariff provision in this case, namely current Rule 15.2(c), indicates that the Tariff may operate to leave a passenger without a flight to or from their destination and with nothing but a refund for the unused portion of the ticket. In cases where a delay or cancellation occurs at a connecting point during a trip, with the result that a passenger’s travel no longer serves the passenger’s purpose, the passenger could be required to pay the cost of returning to their point of origin. As Mr. Lukács submits, payment of a partial refund may force a passenger to absorb some of the costs directly associated with their delayed travel. The Agency accepts Mr. Lukács’ submission that the actual costs, or damages, incurred by a passenger may exceed the mere refund of the unused portion of a ticket.

[92] Accordingly, the Agency is of the preliminary opinion that Tariff Rule 15.2(c) is unreasonable. WestJet has not demonstrated why, given its commercial and operational obligations, it cannot refund the entire ticket cost. Furthermore, WestJet has not addressed the question of returning a passenger to their point of origin, within a reasonable time and at no extra cost, in cases where delay or cancellation occurs at a connecting point during travel, with the result that a passenger’s travel no longer serves the passenger’s purpose. As Mr. Lukács argues, many situations can be envisioned in which a passenger could be forced to absorb the cost of a flight that does not meet their needs, nor fulfil their purpose of travel, and does not coincide with the transportation for which the passenger contracted.

[93] In addition, WestJet’s Tariff Rule 15.2(c) indicates that it will make “all reasonable efforts” to provide a refund to passengers. This wording indicates that WestJet might conclude that despite its reasonable efforts, a passenger will not receive a refund of the unused portion of their ticket. The Agency is of the preliminary opinion that limiting the availability of a refund in this way is unreasonable.

The passenger’s choice of option to obtain a refund

[94] In 2009, WestJet was called upon by the Agency to indicate who had the choice of option within then Tariff Rule 24.3 for (a) a seat on another WestJet flight, (b) a seat with an interline carrier, or (c) a refund of the unused portion of the ticket.

[95] In Decision No. 480-A-2009, the Agency accepted Tariff language proposed by WestJet that would give the choice of option to WestJet. The Decision explicitly states, however, that the scope of the Agency’s ruling related to clarity only, and not to the reasonableness of the proposed Tariff language.

[96] A review of WestJet’s current Tariff Rule 15.2 reveals that despite Decision No. 480-A-2009, WestJet’s current Tariff contains no choice of option. Notwithstanding, the Agency will review WestJet’s Tariff as currently in effect, and will assess it with the assumption that the choice of which option is to be provided to a passenger is at WestJet’s discretion.

[97] In effect, WestJet’s Tariff gives to WestJet the choice of option as to whether the passenger will receive a refund of the unused portion of their ticket or whether the passenger will continue on their journey on another flight. This means that the passenger is subject to the decision of WestJet on this issue regardless of what might work best for the passenger. A delay of simply a few hours might result in a passenger preferring a refund rather than continuing on with their journey if, for example, the reason for their journey has been negated by the delay. By retaining sole discretion over the selection of the choice of options from its Tariff provision, WestJet may be limiting or avoiding its exposure to the actual damage incurred by a passenger as a result of delay. The Agency also notes, with respect to this issue, that WestJet has not demonstrated why, from an operational and commercial perspective, the choice of option could not lie exclusively with the passenger. Accordingly, the Agency is of the preliminary opinion that the subject Tariff provision is unreasonable.

[98] In addition, Tariff Rule 15.3, which sets out the details relating to refunds, states that either a credit or a refund will be issued at WestJet’s discretion. In Decision No. 641-C-A-2007, Davies v. Air Canada, the Agency assessed a domestic tariff rule relating to the provision of denied boarding compensation in the form of either credit or cash and stated:

[...] 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.

[99] In that Decision, the choice of option was not made clear. The Agency ordered WestJet to clarify the choice of option and indicated that, if it chose to retain the choice of option, WestJet was to show cause why this was not unreasonable.

[100] Rule 15.3 of WestJet’s Tariff makes clear that whether the passenger will obtain a refund or credit is at WestJet’s discretion. In light of the Davies v. Air Canada case above, the Agency is of the preliminary opinion that this choice of option is unreasonable.

Issue 4: Is it reasonable that WestJet’s current Tariff Rule 15.2 does not state that passengers have rights and remedies outside those named in the Tariff? Is it reasonable that current Tariff Rule 15.3 refers to a sole remedy available to passengers?

Submissions

[101] Mr. Lukács claims that the impugned Tariff provisions should clearly state that rerouting or refunding does not affect a passenger’s right to seek further compensation or other remedies against WestJet.

[102] WestJet has proposed to amend its Tariff to state that the passenger rights set out in its Tariff provisions “are without prejudice the [sic] any right a passenger may be found to have, in all circumstances of the case, by reason of the Warsaw Convention or the Montreal Convention”.

Analysis and findings

[103] The Agency considers that a passenger should be able to fully understand their rights in law simply by reading a tariff and without reviewing specific articles of treaties to discern the terms and conditions that apply to that tariff.

[104] While WestJet’s proposed amendment would refer passengers to the Warsaw and Montreal Conventions, this does not sufficiently allow a passenger to understand their rights under the law because it does not accurately and fully represent the rights and remedies extended to passengers by these Conventions.

[105] To be specific with respect to this Issue, WestJet’s proposed amendment does not give any indication of which rights and remedies a passenger might have under the applicable provisions of the Conventions in the event of overbooking or cancellation. Nor does it indicate that passengers may have rights and remedies at law outside the Conventions. For example, a claim for non-performance of the contract of carriage would not be limited by the liability provisions of the Conventions. In fact, the wording of the proposed amendment may misrepresent to passengers that their rights and remedies are only determined within the context of the Conventions. Accordingly, the Agency is of the preliminary opinion that Rule 15.2 of WestJet’s Tariff, and the amendment proposed by WestJet, are unreasonable.

[106] Furthermore, WestJet’s current Tariff Rule 15.3 providing for a refund on the unused portion of a ticket limits WestJet’s liability in the event of a refund. The Rule states that the carrier shall not be liable to any passenger if it provides, at its discretion, the credit or refund outlined in that provision.

[107] The Agency is of the opinion that Rule 15.3 would tend to relieve WestJet of the liability to which it is subject under Articles 19 and 22 of the Convention. Accordingly, the Agency is of the preliminary opinion that Rule 15.3 is unreasonable.

Conclusion

[108] Based on the above, the Agency provides WestJet with the opportunity to show cause, within thirty (30) days from the date of this Decision:

With respect to Issue 1:

i. why overbooking and cancellation that are within WestJet’s control should not fall within the meaning of “delay” as found in Article 19 of the Convention.

With respect to Issue 2:

ii. why WestJet’s current Tariff Rules 15.2(a) and (b) should not be found unreasonable as per subsection 111(1) of the ATR for being too restrictive in dealing with issues of overbooking and cancellation and be drafted in a manner that takes a circumstance-focused approach to reprotection.

With respect to Issue 3:

iii. why WestJet’s current Tariff Rule 15.2(c) that allows for a refund of only the unused portion of a passenger’s ticket should not be found unreasonable as per subsection 111(1) of the ATR.

iv. why WestJet’s current Tariff Rule 15.2(c) that indicates that WestJet will make all reasonable efforts to refund a passenger should not be found unreasonable as per subsection 111(1) of the ATR.

v. why that part of WestJet’s current Tariff Rule 15.2 that leaves with WestJet the choice of option for compensation dealing with an overbooking or cancellation situation should not be found unreasonable as per subsection 111(1) of the ATR.

vi. why WestJet’s current Tariff Rule 15.3 that leaves with WestJet the discretion as to whether to provide a refund or credit to the passenger should not be found unreasonable.

With respect to Issue 4:

vii. why WestJet’s current Tariff Rule 15.2 should not be found unreasonable as per subsection 111(1) of the ATR for failing to accurately and fully set out a passenger’s right to seek further compensation and other remedies against the carrier under the Warsaw and Montreal Conventions or otherwise at law.

viii. why WestJet’s current Tariff Rule 15.3 that limits the passenger’s sole remedy to a refund at the carrier’s discretion should not be found unreasonable as per subsection 111(1) of the ATR

[109] WestJet’s response will be copied, at the same time, to Mr. Lukács who will have 14 days to file comments with the Agency, copied to WestJet which will then have 7 days to file a response with the Agency, copied to Mr. Lukács.

Appendix

(WestJet)

Tariff provisions in effect when complaint was filed

RULE 24 - PROVISIONS OF FLIGHT RIGHTS CANADA

…

24.3 Given that passengers have a right to take the flight they paid for, if the plane is over-booked or cancelled, WestJet will:

1. find the passenger a seat on another flight operated by WestJet;
2. buy the passenger a seat on another carrier with whom it has a mutual interline traffic agreement; or
3. refund the unused portion of the passenger's ticket.

Tariff provisions currently in effect

RULE 15 – CARRIER CANCELLATION, CHANGE AND REFUND TERMS

...

Rule 15.2 – If the plane is over-booked or cancelled, the Carrier will make all reasonable efforts to:

1. find the passenger a seat on another flight operated by the Carrier;
2. buy the passenger a seat on another carrier; or
3. refund the unused portion of the passenger’s ticket (see 3 below for details)

Rule 15.3 – The carrier shall not be liable to any passenger in respect of such cancellation or change, whether or not resulting from an Event of Force Majeure; provided that, the Carrier will, at the carrier's discretion, provide any passengers affected by such cancellation or change with:

1. a credit, valid for one year from the cancellation date, towards the provision of a fare relating to a future flight or flights if booked as a round trip and the originating sector is cancelled, which credit shall be equal to the original fare (s) which was/were canceled; or
2. to otherwise refund to such passenger, an amount which shall not be greater than the fare paid by that passenger in respect of that flight or flights if booked as a round trip and the originating sector is cancelled.

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1. Plourde c. Service aérien FBO inc. (Skyservice), 2007 QCCA 739; Connaught Laboratories Ltd. v. British Airways, 61 O.R. (3d) 204 at paras. 44 and 50; Attorney General of Canada v. Flying Tiger Line, Inc., [1987] O.J. No. 914 (H.C.J.) at para. 7. ↑
2. 433 F. Supp. 2d 361 (U.S.D.N.Y. 2006). ↑
3. 1999 U.S. Dist. LEXIS 9849 (U.S.D.N.Y). ↑
4. 821 F. 2d 442 (U.S.C.A. 7th Cir. 1987). ↑
5. 2009 MBQB 29 (Application for leave to Appeal dismissed: 2009 MBCA 111). ↑
6. 520 F. Supp. 2d 447 – (E.D.N.Y. 2007). ↑
7. Quesnel c. Voyages Bernard Gendron Inc [1997] J.Q. no 5555 (QL) (QCCQ) ↑
8. Assaf c. Air Transat A.T. Inc. [2002] J.Q. no 8391 (QCCQ) ↑
9. See for example Wyant v. Air Canada, and Black v. Air Canada, Decision No. 746-C-A-2005. ↑
10. 2010 QCCQ 6858. ↑
11. McMurry v. Capitol Intern. Airways, 102 Misc. 2d 720 at 722. ↑
12. Cohen v. Delta Air Lines Inc., 09 Civ. 6709 (S.D.N.Y.) (2010 U.S. Dist. Lexis 118164). ↑
13. Supra note 5. ↑
14. Assaf c. Air Transat A.T. Inc., supra note 8. ↑
15. Balogun c. Air Canada, [2010] O.J. No 663 (S.C.J.); Lukács c. United Airlines Inc., supra note 5. ↑