Letter Decision No. LET-C-A-80-2011

August 8, 2011

An erratum was issued on September 22, 2011

August 8, 2011

Complaint by Gábor Lukács against Air Canada with respect to its International Passenger Rules and Fares Tariff NTA(A) No. 458, in particular, Rules 80, 89 and 91(B).

File No.: M4120-3/09-07441

BACKGROUND

[1] On April 24, 2009, Air Canada filed with the Canadian Transportation Agency (“Agency”) certain amendments to its International Passenger Rules and Fares Tariff NTA(A) No. 458 (Tariff).

[2] Chief among these amendments was the addition of Rule 91(2), 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 Air Canada. One of the concerns raised by the Agency was that, although Rule 91(2) set out three options to be exercised in the event of overbooking and cancellation, it did not clearly state who, between Air Canada and the passenger, had the discretion to determine which option would be exercised. Air Canada proposed amendments to make the choice of option clear.

[4] In Decision No. 479-A-2009, the Agency made a determination on the clarity of this provision and accepted the amendments proposed by Air Canada. The Agency explicitly stated that it had not assessed the reasonableness of the provisions proposed by Air Canada, 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 91 and Rules 80 and 89 of Air Canada’s Tariff.

[6] Mr. Lukács’ complaint primarily concerns whether these provisions are 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 these Tariff provisions 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. Separate, although similar, decisions are being 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] Since Mr. Lukács filed his complaint, Air Canada has amended its Tariff Rules. Air Canada has changed the numbering of Rule 91(2) to 91(B) and has added a choice of option clarification in Rule 91(B). In all other respects, the provision remains the same and the submissions of the parties remain relevant. As such, the following analysis and findings refer to the Tariff provisions that are currently in effect.

[11] The impugned portions of Rule 80, namely Rules 80(C)(1) and 80(C)(2), have remained substantially unchanged insofar as they continue to indicate that the actions set out in those Rules constitute the passenger’s sole remedy. The change in title of the provision from “Involuntary Revised Routings” to “Schedule Irregularity”, and the specification of who, between Air Canada and the passenger, has discretion to choose which option will be exercised, are the only changes to those provisions.

[12] Mr. Lukács also refers to Rule 89 on compensation for denied boarding, and challenges the release from liability clause contained in Rule 89(Part 2)(E)(2)(a) and in Part 1 of Rule 89, which contains the “Notice Provided for Passengers” in the event of denied boarding. These impugned sections remain unchanged since the filing of Mr. Lukàcs’ complaint.

[13] 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

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

Do overbooking and cancellation constitute delay for the purpose of Article 19 of the Convention?
Is it reasonable that Air Canada’s current Tariff Rule 91(B) reprotects passengers only on Air Canada’s own aircraft or with other carriers with which it has an interline agreement?
Is it reasonable that Air Canada’s current Tariff Rule 91(B) only calls for a refund of the unused portion of a ticket?
Is it reasonable that Air Canada’s current Tariff Rule 91(B) does not state that passengers have rights and remedies outside those named in the Tariff? Is it reasonable that current Tariff Rules 80(C) and 89 refer 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

[15] 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.

[16] Air Canada denies that its Tariff provision is contrary to the Convention. However, Air Canada argues that whether overbooking and cancellation can be characterized as delay under the Montreal or Warsaw Convention is irrelevant to determining the validity of its Tariff Rule. Air Canada argues that the Convention and its Tariff Rule serve two distinct purposes, namely Article 19 of the Convention covers carrier liability in cases of delay, and the Tariff provision sets out terms and conditions under the contract of carriage with respect to overbooking and cancellation. According to Air Canada, Mr. Lukács has confused these two concepts.

[17] Air Canada admits that should overbooking or cancellation cause delay, Article 19 would apply to determine liability and a passenger could pursue remedies under the Convention. However, according to Air Canada, it is still required under the ATR to set out its policy in the case of overbooking and cancellation. Air Canada contends that legislators around the world have legislated overbooking and cancellation separately from delay.

Analysis and findings

[18] 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.

[19] 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.

[20] 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.

[21] A fundamental question raised by Mr. Lukács in this complaint is whether instances of cancellation and overbooking fall within the scope of “delay” as found in Article 19 of the Convention. Air Canada asserts that its Tariff provision and Article 19 of the Convention serve two distinct purposes and therefore, it argues that the legal characterization of “delay” under the Convention is irrelevant. The Agency disagrees.

[22] Mr. Lukács’ complaint, because it relates to the substance of Air Canada’s Tariff provisions on overbooking and cancellation, initiates an Agency review and determination as to whether the Tariff provisions are reasonable. The Agency must consider such complaints pursuant to subsection 111(1) of the ATR, and in so doing, must consider whether the Tariff is consistent with applicable provisions of the Convention. The question of whether overbooking and cancellation come within the scope of “delay” under Article 19 of the Convention will determine the Agency’s consideration of Article 19 in evaluating the reasonableness of Air Canada’s Tariff.

[23] 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.

[24] 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

[25] 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.

[26] 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.

[27] 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.

[28] Turning to the jurisprudence addressing the legal characterization of delay and the distinction between “delay” and “non-performance”, a review of cases reveals that there are contradictions and inconsistencies in reasoning, both domestically and internationally.

[29] 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.

[30] 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.

[31] 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).

[32] 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.

[33] 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.

[34] 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.

[35] 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.

[36] 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.

[37] 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:

The defendant airlines ultimately provided transportation;
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
Plaintiffs never alleged non-performance.

[38] 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.

[39] 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).

[40] 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.

[41] 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 Air Canada’s control constitute delay for the purpose of Article 19 of the Convention.

[42] 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.

[43] Air Canada, in its pleadings on this issue, chose to argue that the characterization of overbooking and cancellation as delay is irrelevant in determining the validity of its Tariff Rule. Accordingly, the Agency has based its analysis of this issue primarily on the arguments put forward by Mr. Lukács. Considering that this issue is a key element of the matter before the Agency, this will be the subject of a show cause order as set out at paragraph 120 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 Air Canada’s current Tariff Rule 91(B) reprotects passengers only on Air Canada’s own aircraft or with other carriers with which it has an interline agreement?

Submissions

The obligations of Air Canada in the case of delay

[44] 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.

[45] 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

[46] Air Canada argues that the reasonable measures reference in the Convention does not impose a legal obligation on carriers; rather, it is a means of defence that can be raised to rebut the presumption of carrier liability that is created by Article 19.

[47] In any event, Air Canada claims that its provisions are not contrary to the Convention because the Tariff acknowledges the Convention’s applicability and its primacy over the Tariff Rules.

[48] In his reply, Mr. Lukács claims that the Convention does impose operational obligations upon carriers and establishes a standard of care owed by them to passengers. He argues that the purpose of providing a sole defence to carriers is to encourage carriers to take all reasonable measures to avoid delay.

[49] Mr. Lukács argues that even if Air Canada has incorporated the Convention by reference into its Tariff, the Agency has held that such incorporation cannot save a tariff provision that is inconsistent with the Convention.

Providing carriage by the fastest available route

Under the Montreal Convention

[50] 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 Air Canada’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 is contrary to the Convention. According to Mr. Lukács, in the event of overbooking or cancellation, Air Canada 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.

[51] Given its position that the reasonable measures reference in Article 19 of the Convention is a defence to liability and not a legal obligation, Air Canada argues that it cannot be compelled, as Mr. Lukács would like, to provide carriage by the fastest available route in the event of overbooking or cancellation.

[52] Moreover, Air Canada states that there is no binding legal obligation on carriers to reprotect passengers in the event of schedule irregularities and that reprotection is a practice that has been developed within the industry.

[53] Mr. Lukács responds that there is indeed a legal obligation to reprotect passengers, and that this obligation stems from the contract of carriage and its promise to transport passengers to their destination. The question centers on the extent of this obligation and according to Mr. Lukács, Article 19 of the Convention sets this out.

Under the reasonableness test

[54] Air Canada states that reprotecting passengers is not as easy as it may seem. Air Canada claims that it would be operationally and commercially unreasonable for it to purchase a ticket on an airline with which it has no interline agreement. Air Canada asserts that this would impose a high financial burden and place Air Canada at a competitive disadvantage. Furthermore, it claims that this type of reprotection might not be necessary to meet the passenger’s needs.

[55] Air Canada argues that reprotection on carriers with which it has an interline agreement has several advantages for the passenger; it allows for the orderly transfer of baggage and facilitates the rebooking of tickets. Air Canada maintains that reprotection on interline carriers is the most appropriate reprotection method and is in line with industry standards.

[56] In his reply, Mr. Lukács concedes that what constitutes an industry standard can be a consideration in the Agency’s reasonableness test, in addition to the Convention. However, he disagrees that Air Canada’s Tariff is in line with industry standards. In support of this, he refers to European and Andean Community practices.

[57] Mr. Lukács argues that, in the case of overbooking and cancellation, Regulation (EC) No. 261/2004 of the European Community provides passengers with a right to monetary compensation under given circumstances, the right to a refund, rerouting at the earliest opportunity and a right to care. Similar rights are afforded to passengers in the event of delay.

[58] Similarly, Mr. Lukàcs submits that the Andean Community provides “bumped” passengers with the right to care, reimbursement and same-day rerouting on the air carrier’s flight or that of another airline at the earliest opportunity, as well as a right to monetary compensation. Mr. Lukács claims that in the event of cancellation, the passenger has a right to be rerouted on the next available flight, a right to care, the right to a full refund, a return flight to the passenger’s point of origin and compensation in some cases. A right to a refund and a right to care are provided to delayed passengers.

[59] Mr. Lukács also refers to carriers who do not overbook as a matter of practice, in order to demonstrate that it is neither a regulatory nor a commercial requirement for air carriers.

[60] According to Mr. Lukács, given that carriers of the European Community have the same obligations, Air Canada would not be at a competitive disadvantage in respect of travel between Canada and the European Community. Mr. Lukács acknowledges that the application of the obligation to Air Canada’s North American operations would place it in a disadvantageous position, but only if the obligation applied solely to Air Canada. Mr. Lukács submits that if the Agency were to find that the competitive disadvantage caused by requiring Air Canada to apply the “fastest available route” principle on Air Canada’s international flights outweighs passengers’ interests, then the principle should be applied only to Air Canada’s flights from the European Community, where no disadvantage exists.

[61] He submits, in addition, that it is unreasonable to allow carriers to set out standard procedures in their tariff that cause damage to passengers and trigger statutory liability.

Analysis and findings

Tariffs in general

[62] 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.

[63] 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

[64] 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.

[65] The requirement for Air Canada 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. 479-A-2009.

[66] 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.

[67] 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.

[68] 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

[69] 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.

[70] As set out in Issue 1 above, the Agency is of the preliminary opinion that overbooking and cancellation that are within Air Canada’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.

[71] 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.

[72] 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. As such, contrary to Air Canada’s contention, Article 19 of the Convention cannot be said to impose no legal obligations on Air Canada.

[73] 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 the carrier to take, nor does it state which “reasonable measures” would exonerate it from liability.

[74] 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.

[75] 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.

[76] 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.

[77] 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

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

[78] 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 Air Canada’s Tariff provisions on overbooking and cancellation which, in turn, involves the Agency considering these provisions 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.

[79] Air Canada’s Tariff Rule 91(B) does not provide for the possibility that a passenger might, in the appropriate circumstances, be reprotected on any carrier regardless of whether Air Canada has an interline agreement with that carrier.

[80] Instead, Tariff Rule 91(B) provides a closed list of actions to be taken by Air Canada following overbooking or cancellation. The purpose of this list is to set out the measures that Air Canada will take in an effort to avoid damage that is occasioned by overbooking or cancellation.

[81] When considering the issue as to whether Tariff Rule 91(B) is reasonable, several factors must be considered and, as noted above at paragraph 68, 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.

[82] On the one hand, in reviewing Air Canada’s Tariff from the passenger’s perspective, the provision does not leave open the possibility of reprotection on another air carrier for which there is no interline agreement in situations of overbooking and cancellation.

[83] This is despite the fact that case law suggests, as set out in paragraph 77, that in the appropriate circumstances, reprotection on a carrier with which no interline agreement exists might be necessary to establish that a carrier has taken all measures that could reasonably be required to avoid the damages caused by delay.

[84] 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 Air Canada. He emphasizes that the only consideration for Air Canada should be mitigating the passenger’s delay, which requires finding the fastest available route to destination for the passenger.

[85] The Agency is of the opinion that Mr. Lukács’ position is too restrictive and onerous in that it requires Air Canada 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 their destination is reasonable.

[86] 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.

[87] On the other hand, the balancing test also requires that the air carrier’s perspective, namely with regard to its statutory, commercial and operational obligations, be considered. Air Canada, in its submissions, argues that reprotection on any air carrier would not be reasonable from an operational and commercial perspective.

[88] Air Canada maintains that putting a passenger on the flight of a carrier for which it has no interline agreement has significant financial implications and will put Air Canada at a competitive disadvantage. Air Canada argues that, in fact, reprotection of a passenger on another Air Canada flight or a carrier with which it has an interline agreement works to the advantage of the passenger in terms of the movement of baggage and the seamless rebooking of tickets. In addition, Air Canada argues that reprotecting a passenger by the means contemplated by Mr. Lukács might not be necessary to meet the passenger’s needs.

[89] The Agency acknowledges that reprotecting the passenger on any carrier, whether an interline agreement exists or not, may not always be necessary. However, Air Canada’s current Tariff does not provide an option for those passengers where time is of the essence and reprotection on any other carrier may be the only means of addressing the time factor.

[90] Air Canada’s submissions argue against a tariff that would require Air Canada to reprotect a passenger on any carrier in every case. Indeed, this requirement may be too stringent and, as set out above, the Agency is of the opinion that such an approach would be too restrictive and onerous on Air Canada.

[91] However, the Agency is also of the opinion that a provision which outright precludes the possibility of reprotection on a flight with any carrier, except those for which an interline agreement has been established, is likewise overly restrictive and the Agency is of the preliminary opinion that such a provision is unreasonable.

[92] Further, Air Canada has provided limited evidence to counter Mr. Lukács’ position which shows the hardship that Air Canada’s current policy, as reflected in its Tariff, may have on a passenger affected by a flight overbooking or cancellation. Specifically, Air Canada has provided limited proof of the commercial or operational obligations to justify that reprotection on its own flights or those of a carrier for which an interline agreement exists is the only reasonable solution to get a passenger to their destination in the event of overbooking or cancellation.

[93] Air Canada’s approach of putting a passenger only on its own flights or on another carrier where an interline agreement exists is a carrier-focussed approach to remedying the situation of overbooking or flight cancellation. 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 the 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.¹³ Similarly, where a flight delay has prevented a passenger from boarding a cruise ship at a scheduled time and place, the 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.

[94] 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 Air Canada.

Issue 3: Is it reasonable that Air Canada’s current Tariff Rule 91(B) only calls for a refund of the unused portion of a ticket?

Submissions

Under the Montreal Convention

[95] 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.

[96] 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.

[97] Air Canada contends that a refund is not a “necessary measure” to avoid damage under the Convention, but a pre-emptive measure to compensate the passenger in the event that their itinerary cannot be completed. Furthermore, Air Canada argues that it cannot be held responsible for the purpose of a passenger’s trip and it would be unacceptable, as Mr. Lukács appears to argue, for Air Canada to be required to incur additional costs to refund payment for services that it has already rendered.

[98] Air Canada adds that Mr. Lukács’ request to give the passenger sole discretion to obtain a refund is moot because of the changes brought to its Tariff provisions as outlined in Decision No. 479-A-2009. In that Decision, Air Canada agreed to state that the availability of a refund would be at the passenger’s choosing or, if Air Canada cannot perform options (a) or (b) of the applicable Tariff Rule within a reasonable amount of time, then Air Canada may opt for the refund.

[99] In his reply, Mr. Lukács clarifies that he is not claiming that passengers should be refunded for segments of a trip that have been rendered and continue to serve a purpose for the passenger. He argues that Air Canada’s Tariff should state that a refund will be issued not only for the unused portion of the ticket, but also for any portion of a ticket that no longer serves any purpose in relation to the passenger’s original travel plan. This, he maintains, is consistent with the standards adopted by the European Community and Andean Community, referred to in the submissions.

Under the reasonableness test

[100] Air Canada also examines the refund argument with a view to reasonableness and applies the Agency’s balancing test. From its perspective, refunding the unused portion of a ticket is just and reasonable. It is in line with the operational and commercial obligations of Air Canada and industry practice. Furthermore, Air Canada argues that it would be at a competitive disadvantage if it had to refund more than its competitors.

[101] With respect to the reasonableness test, Mr. Lukács submits that, in striking a balance between the passengers’ interests and Air Canada’s statutory, commercial and operational obligations, the revenue accrued to Air Canada by overbooking and cancelling flights for economic reasons should be weighed heavily against the significant inconvenience and loss suffered by passengers who are affected by Air Canada’s practices.

Analysis and findings

Refunding the unused portion of a ticket

[102] 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

[103] 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.

[104] The subject Tariff provision in this case 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 ticket.

[105] Accordingly, the Agency is of the preliminary opinion that the part of Tariff Rule 91(B) that allows for a refund of the unused portion of the ticket only is unreasonable. Air Canada has not demonstrated why, given its commercial and operational obligations, it cannot refund the entire ticket cost. Furthermore, Air Canada 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.

The passenger’s choice of option to obtain a refund

[106] In 2009, Air Canada was called upon by the Agency to indicate who had the choice of option within Tariff Rule 91 for (a) a seat on another Air Canada flight, (b) a seat with an interline carrier or (c) a refund of the unused portion of the ticket.

[107] In Decision No. 479-A-2009, the Agency accepted Tariff language proposed by Air Canada that would give the choice of option to Air Canada. That 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.

[108] Air Canada’s Tariff does allow the passenger to opt for a refund of the unused portion of their ticket. However, Air Canada also retains the right to provide a refund if it is unable to fulfill the first two options, consisting of finding alternative transportation on its own aircraft or on a carrier with which Air Canada has an interline agreement, within a reasonable time. This means that the passenger still remains subject to the decision of Air Canada regardless of what might work best for the passenger. In the event that a passenger would not want a refund of the unused portion of their ticket, Air Canada could still opt to provide this instead of securing alternative transportation for the passenger. In other words, Air Canada still retains some discretion over whether the passenger will continue travelling or receive a refund. By retaining some discretion over the selection of the choice of options from its Tariff provision, Air Canada may be limiting or avoiding the actual damage incurred by a passenger as a result of delay. The Agency also notes that with respect to this Issue, Air Canada has not demonstrated to the satisfaction of the Agency why, from an operational and commercial perspective, the choice of option could not lie exclusively with the passenger.

[109] Accordingly, the Agency is of the preliminary opinion that the subject Tariff provision is unreasonable.

Issue 4: Is it reasonable that Air Canada’s current Tariff Rule 91(B) does not state that passengers have rights and remedies outside those named in the tariff? Is it reasonable that current Tariff Rules 80(C) and 89 refer to a sole remedy available to passengers?

Submissions

[110] 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 remedies against Air Canada. Mr. Lukács further argues that a tariff provision that sets out a passenger’s “sole remedy” in the event of cancellation or denied boarding is invalid.

[111] In its answer, Air Canada points to its Tariff Rules 5(5), 55(3)(A) and 55(5), which incorporate by reference and subject the Tariff to the Warsaw and Montreal Conventions. Air Canada argues, in addition, that it does not have to state that other remedies exist, as access to justice is a fundamental principle and Air Canada is not denying this. Air Canada also claims that “sole remedy” provisions do not prevent a passenger from trying to obtain further compensation. They are an accepted and well-established industry standard and are not unreasonable.

[112] Mr. Lukács responds that references to the passenger’s sole remedy should be removed from Rules 80(C)(1) and 80(C)(2) on schedule irregularities because they bar the passenger from pursuing Air Canada and tend to relieve it from liability, contrary to Article 26 of the Convention.

[113] Mr. Lukács points out that the same release from liability applies in the case of Air Canada’s denied boarding compensation provisions under Rule 89. He states that this is not part of the industry standard in Europe. He also argues that the International Air Transport Association’s practices reflect only airline interests, are inconsistent with European standards and should not be relied upon.

Analysis and findings

[114] 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.

[115] The Agency is of the opinion that a tariff must clearly and plainly set out the rights and remedies of passengers. While Air Canada’s Tariff Rules 5(5), 55(3)(A) and 55(5) are still in effect and make reference to the Conventions, Rule 91(B) 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 91(B) of Air Canada’s tariff is unreasonable.

[116] As to the reasonableness of sole remedy provisions, Rule 80(C) limits the passenger’s recourse against Air Canada in the event of a schedule irregularity, which includes, among other things, flight cancellation, failure to operate according to schedule and inability to provide previously confirmed space. The sole remedies available to passengers, as listed in the Tariff, involve Air Canada finding alternate transportation and providing a refund.

[117] For its part, Rule 89 specifies in Parts 1 and 2 the compensation to be paid by Air Canada (ranging from CAD$100 to CAD$500) in the event of denied boarding, and states that acceptance of this compensation relieves Air Canada from any further liability towards the passenger. The Notice Provided to Passengers contained in Rule 89 states that a passenger may decline this compensation and seek to recover damages within 30 days of being denied boarding.

[118] Article 19 of the Convention establishes a carrier’s liability for delay. Article 22(1) sets out the limits of liability for damage caused by delay and Article 35 sets a time limit in which to bring an action for damages under the Convention. Articles 22(1) and 35 read as follows:

22(1). In the case of damage caused by delay as specified in Article 19 in the carriage of persons, the liability of the carrier for each passenger is limited to 4,150 Special Drawing Rights.

35(1). The right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

[119] The Agency is of the opinion that Rules 80(C) and 89 are inconsistent with the liability provisions set out in Articles 19 and 22(1) of the Convention. The Agency is also of the opinion that the 30-day time limitation on actions contained in Rule 89 is contrary to the time limitations for actions set out in Article 35 of the Convention. Accordingly, the Agency is of the preliminary opinion that those parts of Rules 80(C) and 89 that limit the carrier’s liability to the cash or credit voucher amounts therein; relieve Air Canada of liability in the event such compensation is paid; and, impose a 30-day limitation period on legal action, are unreasonable.

CONCLUSION

[120] Based on the above findings, the Agency provides Air Canada 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 Air Canada’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 Air Canada’s current Tariff Rule 91(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 more open manner that allows for reprotection, in certain circumstances, on carriers with which there is no interline agreement.

With respect to Issue 3:

iii. Why that part of Air Canada’s current Tariff Rule 91(B) that allows for a refund of the unused portion of a passenger’s ticket only should not be found unreasonable as per subsection 111(1) of the ATR.

iv. Why that part of Air Canada’s current Tariff Rule 91(B) that leaves with Air Canada 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

With respect to Issue 4:

v. Why Air Canada’s current Tariff Rule 91(B) 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 carriers under the Warsaw and Montreal Conventions

vi. Why Air Canada’s current Tariff Rules 80(C)(1), 80(C)(2) and parts of current Tariff Rule 89 that limit the passenger’s recourses, and set a 30-day time limit for taking legal action in the event of denied boarding, should not be found unreasonable

[121] Air Canada’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 Air Canada. Air Canada will then have 7 days to file a response with the Agency, copied to Mr. Lukács.

Member(s)

J. Mark MacKeigan

John Scott

Appendix

AIR CANADA

Tariff Provisions in effect when complaint was filed

RULE 80(C) INVOLUNTARY REVISED ROUTINGS

In the event carrier cancels a flight, fails to operate according to schedule, fails to stop at a point to which the passenger is destined or is ticketed to stopover, substitutes a different type of equipment or class of service, is unable to provide previously confirmed space, causes a passenger to miss a connecting flight on which he holds a reservation, or the passenger is refused passage or removed in accordance with Rule 25(A) carrier will at its option and as passenger’s sole remedy either:
1. carry the passenger on another of its passenger aircraft on which space is available without additional charge regardless of the class of service; or
2. endorse to another air carrier with which Air Canada has an agreement for such transportation, the unused portion of the ticket for purposes of rerouting; or
3. reroute the passenger to the destination named on the ticket or applicable portion thereof by its own or other transportation services; and if the fare for the revised routing or class of service is higher than the refund value of the ticket or applicable portion thereof as determined from Rule 90(D), carrier will require no additional payment from the passenger but will refund the difference if it is lower.
4. make involuntary refund in accordance with Rule 90(D).
In the event carrier is a codeshare carrier and the operating carrier cancels a flight, fails to operate according to schedule, fails to stop at a point to which the passenger is destined or is ticketed to stopover, substitutes a different type of equipment or class of service, is unable to provide previously confirmed space, causes a passenger to miss a connecting flight on which he holds a reservation, or the passenger is refused passage or removed in accordance with Rule 25(A) carrier will, as the passenger’s sole remedy, if the operating carrier fails to do so:
1. carry the passenger on another of its passenger aircraft on which space is available without additional charge regardless of the class of service; or
2. endorse to another carrier or other transportation service, the unused portion of the ticket for purposes of rerouting; or
3. reroute the passenger to the destination named on the ticket or applicable portion thereof by its own or other transportation services; and if the fare for the revised routing or class of service is higher than the refund value of the ticket or applicable portion thereof as determined from Rule 90(D), carrier will require no additional payment from the passenger but will refund the difference if it is lower.
4. make involuntary refund in accordance with Rule 90(D).

RULE 89 DENIED BOARDING COMPENSATION

PART I

Applicable between Canada and points in the Caribbean/Bermuda/Mexico/South America/Central America and North Pacific, from CA to all points in Area 2 and from Argentina to Chile. When AC is unable to provide previously confirmed space due to there being more passengers holding confirmed reservations and tickets than for which there are available seats on a flight, AC shall implement the provisions of this rule.

RULE 89(PART 1)(F) NOTICE PROVIDED TO PASSENGERS

The following written notice shall be provided to all passengers who are involuntarily denied boarding on flights for which they hold confirmed reservations.

[...]

AMOUNT OF DENIED BOARDING COMPENSATION

If you are eligible for denied boarding compensation, you must be offered a cash payment of $200.00 (Canadian currency) or a Credit Voucher good for future travel on AC in the amount of $500.00 (Canadian currency).

EXCEPTION: If you have been denied boarding for flights destined to/from Mexico and are eligible for denied boarding compensation, you must be offered a cash payment of $100 (Canadian currency) or a Credit Voucher good for future travel on Air Canada in the amount of $200 (Canadian currency). Refer to section (E), paragraph (2) of Air Canada General Rule No. 89 for a complete list of exceptions.

[...]

PASSENGER’S OPTIONS

Acceptance of the compensation (by endorsing the check or draft or not returning Credit Voucher to AC within 30 days) relieves AC from any further liability caused by our failure to honour your confirmed and ticketed reservations. However, you may decline the payment and seek to recover damages in a court of law or in some other manner within thirty (30) days from the date on which the denied boarding occurred.

PART 2

Applicable from points in the United States served by AC to points in Canada and points in Areas 2/3 served by AC.

RULE 89(PART 2)(E)(2) AMOUNT OF COMPENSATION PAYABLE

Subject to the provisions of paragraph (E)(1) of this rule, carrier will tender liquidated damages in the amount of 200 percent of the sum of the values of the passenger’s remaining flight coupons of the ticket to the passenger’s next stopover (see Rule 135), or if none, to his destination, but not more than USD 400.00 or CAD 484.00, if the carrier arranges for comparable air transportation, or for other transportation accepted, i.e. used by the passenger which, at the time, either such arrangement is made, is planned to arrive at the airport of the passenger’s next stopover, or if none, at the airport of the passenger’s destination not later than four hours after the planned arrival at the airport of the passenger’s next point of stopover, or if there is no next point of stopover, at the airport of the passenger’s destination, of the flight on which the passenger holds a confirmed reservation. If the offer of compensation is made by the carrier and accepted by the passenger, such payment shall constitute full compensation for all actual or anticipatory damages incurred or to be incurred by the passenger as a result of the carrier’s failure to provide passenger with confirmed reserved space.

NOTE: Subject to the passenger’s approval carrier will compensate the passenger with credit valid for the purchase of transportation in lieu of monetary compensation. The credit issued will be for a value equal to or greater than the monetary compensation. Such credit will be non-transferrable, non-refundable and valid for one year from the date of issue.

RULE 89(PART 2)(F)

Carrier shall furnish all passengers who are denied boarding involuntarily from flights on which they hold confirmed reserved space a copy of the following written statement:

[...]

AMOUNT OF DENIED BOARDING COMPENSATION

If you have been denied boarding for flights from Israel to North America and have not been given alternative flight immediately thereafter or within six hours and are eligible for denied boarding compensation, the compensation will equal the equivalent of USD $200.00 cash or USD $300.00 credit voucher good for future travel on Air Canada.

Passengers who are eligible for denied boarding compensation must be offered a payment equal to the sum of the face values of their ticket coupons, with a USD 200.00 maximum. However, if the airline cannot arrange “alternate transportation” (see below) for the passenger, the compensation is doubled (USD 400.00 one way maximum). The “value” of a ticket coupon is the one way fare for the flight shown on the coupon, including any surcharge and air transportation tax, minus any applicable discount. All flight coupons, including connecting flights, to the passenger’s destination or first 4-hour stopover are used to compute the compensation.

“Alternate transportation” is air transportation provided an airline licensed by the C.A.B. or other transportation used by the passenger which, at the time the arrangement is made, is planned to arrive at the passenger’s next scheduled stopover (of 4 hours or longer) or destination no later than 4 hours after the passenger’s originally scheduled arrival time.

[…]

PASSENGER’S OPTIONS

Acceptance of the compensation (by endorsing the check or draft within 30 days) relieves Air Canada from any further liability to the passenger caused by its failure to honor the confirmed reservation. However, the passenger may decline the payment and seek to recover damages in a court of law or in some other manner within thirty (30) days from the date on which the denied boarding occurred.

Tariff provisions currently in effect

RULE 80(C) SCHEDULE IRREGULARITY

In the event carrier cancels a flight, fails to operate according to schedule, fails to stop at a point to which the passenger is destined or is ticketed to stopover, substitutes a different type of equipment or class of service, is unable to provide previously confirmed space, causes a passenger to miss a connecting flight on which he holds a reservation, or the passenger is refused passage or removed in accordance with Rule 25(A) carrier will at its option and as passenger’s sole remedy either:
1. carry the passenger on another of its passenger aircraft on which space is available without additional charge regardless of the class of service; or at carrier’s option;
2. endorse to another air carrier with which Air Canada has an agreement for such transportation, the unused portion of the ticket for purposes or rerouting; or at carrier’s option;
3. reroute the passenger to the destination named on the ticket or applicable portion thereof by its own or other transportation services; and if the fare for the revised routing or class of service is higher than the refund value of the ticket or applicable portion thereof as determined from Rule 90(D), carrier will require no additional payment from the passenger but will refund the difference if it is lower or;
4. at passenger’s option or if carrier is unable to perform the option stated in (A), (B) or (C) above within a reasonable amount of time, make involuntary refund in accordance with Rule 90(D).
In the event carrier is a codeshare carrier and the operating carrier cancels a flight, fails to operate according to schedule, fails to stop at a point to which the passenger is destined or is ticketed to stopover, substitutes a different type of equipment or class of service, is unable to provide previously confirmed space, causes a passenger to miss a connecting flight on which he holds a reservation, or the passenger is refused passage or removed in accordance with Rule 25(A) carrier will, as the passenger’s sole remedy, if the operating carrier fails to do so:
1. carry the passenger on another of its passenger aircraft on which space is available without additional charge regardless of the class of service; or at carrier’s option
2. endorse to another carrier or other transportation service, the unused portion of the ticket for purposes of rerouting; or at carrier’s option
3. reroute the passenger to the destination named on the ticket or applicable portion thereof by its own or other transportation services; and if the fare for the revised routing or class of service is higher than the refund value of the ticket or applicable portion thereof as determined from Rule 90(D), carrier will require no additional payment from the passenger but will refund the difference if it is lower at carrier’s option.
4. or, at carrier’s option or if carrier is unable to perform the option stated in (A) (B) or (C) above within a reasonable amount of time, make involuntary refund in accordance with Rule 90(D).

RULE 89-DENIED BOARDING COMPENSATION

PART 1

RULE 89(PART I)(F) NOTICE PROVIDED TO PASSENGERS

The following written notice shall be provided to all passengers who are involuntarily denied boarding on flights for which they hold confirmed reservations.

[...]

AMOUNT OF DENIED BOARDING COMPENSATION

EXCEPTION: If you have been denied boarding for flights destined to/from Mexico and are eligible for denied boarding compensation, you must be offered a cash payment of $100 (Canadian currency) or a Credit Voucher good for future travel on Air Canada in the amount of $200 (Canadian currency). Refer to section (E), paragraph (2) of Air Canada General Rule No. 89 for a complete list of exceptions.

[...]

PASSENGER’S OPTIONS

PART 2

(Applicable from points in the United States served by AC to points in Canada and points in Areas 2/3 served by AC.)

RULE 89(PART 2)(E)(2) AMOUNT OF COMPENSATION PAYABLE

Subject to the provisions of paragraph (E)(1) of this rule, carrier will tender liquidated damages in the amount of 200 percent of the sum of the values of the passenger’s remaining flight coupons of the ticket to the passenger’s next stopover (see Rule 135), or if none, to his destination, but not more than USD 400.00 or CAD 484.00, if the carrier arranges for comparable air transportation, or for other transportation accepted, i.e. used by the passenger which, at the time, either such arrangement is made, is planned to arrive at the airport of the passenger’s next stopover, or if none, at the airport of the passenger’s destination not later than four hours after the planned arrival at the airport of the passenger’s next point of stopover, or if there is no next point of stopover, at the airport of the passenger’s destination, of the flight on which the passenger holds a confirmed reservation. If the offer of compensation is made by the carrier and accepted by the passenger, such payment shall constitute full compensation for all actual or anticipatory damages incurred or to be incurred by the passenger as a result of the carrier’s failure to provide passenger with confirmed reserved space.

RULE 89(PART 2)(F)

Carrier shall furnish all passengers who are denied boarding involuntarily from flights on which they hold confirmed reserved space a copy of the following written statement:

[...]

AMOUNT OF DENIED BOARDING COMPENSATION

[…]

PASSENGER’S OPTIONS

Acceptance of the compensation (by endorsing the check or draft within 30 days) relieves AC from any further liability to the passenger caused by its failure to honor the confirmed reservation. However, the passenger may decline the payment and seek to recover damages in a court of law or in some other manner.

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 at para. 7. ↑
433 F. Supp. 2d 361 (U.S.D.N.Y. 2006). ↑
1999 U.S. Dist. LEXIS 9849 (U.S.D.N.Y). ↑
821 F. 2d 442 (U.S.C.A. 7th Cir. 1987). ↑
2009 MBQB 29 (Application for leave to Appeal dismissed: 2009 MBCA 111). ↑
520 F. Supp. 2d 447 – (E.D.N.Y. 2007). ↑
Quesnel c. Voyages Bernard Gendron Inc. [1997] J.Q. no 5555 (QL)(QCCQ). ↑
Assaf c. Air Transat A.T. Inc. [2002] J.Q. no 8391 (QCCQ). ↑
See for example Wyant v. Air Canada, and Black v. Air Canada, Decision No. 746-C-A-2005. ↑
2010 QCCQ 6858. ↑
McMurry v. Capitol Intern. Airways, 102 Misc. 2d 720 at 722. ↑
Cohen v. Delta Air Lines Inc., 09 Civ. 6709 (S.D.N.Y.) (2010 U.S. Dist. Lexis 118164). ↑
Supra note 5. ↑
Assaf c. Air Transat A.T. Inc., supra note 8. ↑
See for example Balogun v. Air Canada, [2010] O.J. No. 663 (S.C.J.); Lukács v. United Airlines Inc., supra note 5. ↑

Member(s)

J. Mark MacKeigan

John Scott

Back to rulings

Date modified:: 2011-08-08