Decision No. 61-C-A-2020

SUMMARY

[1] The applicants filed an application with the Canadian Transportation Agency (Agency) against the respondent, regarding the schedule changes made by the respondent to their flights departing from Calgary, Alberta, to Kahului/Maui, Hawaii, USA, via Vancouver, British Columbia, and returning from Honolulu/Oahu, Hawaii, USA.

[2] The applicants seek compensation in the amount of CAD 519, which represents the difference between the Economy “Comfort Fare” brand and the Economy “Standard Fare” brand.

[3] The Agency will address the following issues:

• Did the respondent properly apply the terms and conditions set out in Rule 30(B) of its International Passenger Rules and Fares Tariff No. AC-2 Containing Local and Joint Rules, Regulations, Fares and Charges on Behalf of Air Canada applicable to the Transportation of Passengers and Baggage Between Points in Canada/USA and Points in Areas 1/2/3 and between the USA and Canada,NTA(A) No. 458 (Tariff), relating to seat allocation and fare brands, as required by subsection 110(4) of the Air Transportation Regulations, SOR/88-58 (ATR)? If the respondent did not properly apply the terms and conditions set out in its Tariff, what remedy, if any, should be ordered?
• Are the terms and conditions set out in Rules 10(C) and 30(B) of the respondent’s Tariff relating to seat allocation and classes of service unclear, contrary to paragraph 122(c) of the ATR? 
• Are the terms and conditions set out in rules 10(C) and 30(B) of the respondent’s Tariff governing classes of service just and reasonable, as required by subsection 111(1) of the ATR? If not, should the Agency suspend or disallow that portion of the respondent’s Tariff and establish a substitute pursuant to section 113.1 of the ATR?

[4] For the reasons set out below, the Agency finds that the respondent properly applied the terms and conditions set out in its Tariff, and that, therefore, the applicants are not entitled to any compensation.

[5] The Agency also finds that Rule 30(B) of the respondent’s Tariff is clear.

[6] The Agency further finds that the respondent’s terms and conditions governing classes of service are just and reasonable.

BACKGROUND

[7] On October 7, 2018, the applicants purchased round-trip tickets with the respondent. The outbound flight was scheduled to depart on April 13, 2019, from Calgary to Kahului/Maui, via Vancouver. The return flight was scheduled to depart on April 28, 2019, from Honolulu to Calgary.

[8] The applicants purchased Economy class tickets with the Comfort Fare brand, which features include, among others, the following:

• advanced seat selection;
• preferred seat selection;
• one free alcoholic beverage;
• one free checked bag;
• 115 percent Aeroplan mileage accumulation; and
• priority boarding.

[9] Due to the closure of Canadian airspace to all Boeing 737 MAX aircraft, which grounded 24 aircraft in the respondent’s fleet, the applicants’ itinerary was modified by the respondent three times between March 20, 2019, and March 26, 2019. The replacement flights that were ultimately included in the applicants’ itinerary used aircraft with fewer preferred seats than on their original itinerary. As a result, the new seats assigned to the applicants were not preferred seats for all the flights of their itinerary.

[10] The applicants’ travelling companions purchased Economy class tickets for the same itinerary; they preselected their seats for a fee of CAD 55. When the itinerary was changed on March 20, 2019, the companions received a refund of CAD 55. The applicants did not receive any refund of any portion of the fare paid.

THE LAW AND RELEVANT TARIFF PROVISIONS

[11] Subsection 110(4) of the ATR requires that an air carrier operating an international service apply the terms and conditions of carriage set out in its tariff.

[12] If the Agency finds that an air carrier has failed to properly apply its tariff, section 113.1 of the ATR empowers the Agency to direct it to:

1. take the corrective measures that the Agency considers appropriate; and
2. pay compensation for any expense incurred by a person adversely affected by its failure to apply the fares, rates, charges or terms and conditions set out in the tariff.

[13] Subsection 111(1) of the ATR provides that the terms and conditions of carriage contained in the tariff must be just and reasonable:

All tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just and reasonable and shall, under substantially similar circumstances and conditions and with respect to all traffic of the same description, be applied equally to all that traffic.

[14] If the Agency finds that a tariff or portion of a tariff is unjust or unreasonable, the Agency may, pursuant to section 113 of the ATR:

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

[15] Subsection 113.1 of the ATR provides:

If an air carrier that offers an international service fails to apply the fares, rates, charges or terms and conditions of carriage set out in the tariff that applies to that service, the Agency may direct it to:

1. take the corrective measures that the Agency considers appropriate; and
2. pay compensation for any expense incurred by a person adversely affected by its failure to apply the fares, rates, charges or terms and conditions set out in the tariff.

[16] Section 122 of the ATR states:

Every tariff shall contain

a.  the terms and conditions governing the tariff generally, stated in such a way that it is clear as to how the terms and conditions apply to the tolls named in the tariff;

….

c.  the terms and conditions of carriage, clearly stating the air carrier’s policy in respect of at least the following matters, namely,

….

[17] The relevant provisions of the Tariff are set out in the Appendix.

DID THE RESPONDENT PROPERLY APPLY THE TERMS AND CONDITIONS SET OUT IN RULES 10(C) AND 30(B) OF ITS TARIFF, RELATING TO SEAT ALLOCATION AND FARE BRANDS, AS REQUIRED BY SUBSECTION 110(4) OF THE ATR? IF THE RESPONDENT DID NOT PROPERLY APPLY THE TERMS AND CONDITIONS SET OUT IN ITS TARIFF, WHAT REMEDY, IF ANY, SHOULD BE ORDERED?

Positions of the parties and findings of fact

THE APPLICANTS

[18] The applicants submit that they purchased Comfort Fare tickets because this fare brand includes preferred seat selection, which would ensure that Mr. Borsato had adequate leg room as he is 6 feet and 4 inches tall.

[19] According to the applicants, when they checked in for their flight departing on April 13, 2019, they were told that they did not have preferred seat selection assignments, and were seated in the regular seating area. They state that the same thing happened when they checked in at the Honolulu airport, on April 28, 2019, for their return flights.

[20] The applicants state that they did not receive most of the services that are included in Comfort Fare, such as preferred seat selection, advanced seat selection and alcoholic beverages. They also claim that the only reason they choose Comfort Fare was for the preferred seat selection.

[21] The applicants submit that despite not having access to all the “perks” of the Comfort Fare brand, they were never offered a refund of any part of their Comfort Fare, even after contacting the respondent.

THE RESPONDENT

[22] The respondent states that, given the importance of the closure of Canadian airspace to all Boeing 737 MAX aircraft, it implemented a goodwill policy where any customer impacted by the resulting rebooking was offered a full refund of their tickets.

[23] The respondent states that, in the itinerary change notice it sent on March 26, 2019, it offered the applicants the option to “change their new seat assignment on the [respondent’s] website” and “advised to contact the [respondent’s] Reservations if they wished to change their new flight.”

[24] The respondent argues that although the applicants did not receive preferred seat selection, they benefited from other services included in the Comfort Fare, such as advanced seat selection, 115 percent Aeroplan mileage accumulation, priority boarding and one free checked baggage.

[25] The respondent submits that many other features also come with the Comfort Fare, such as same day standby travel, the ability to make advance changes or same-day airport changes, the option to use eUpgrade credits or the access to the Maple Leaf Lounge. The respondent argues that the applicants, therefore, benefited from many of the Comfort Fare features.

[26] The respondent argues that the alcoholic beverages were available to the applicants, had they asked. The respondent states that it cannot be held responsible if the applicants did not request their beverages.

[27] The respondent states that it only offers a refund on fees that are additional to the fare selected, in accordance with Rule 10 of its Tariff. Since no such fees were charged to the applicants and considering that the applicants accepted this policy when they purchased their tickets, the respondent did not provide them with a refund.

[28] With respect to the applicants’ request for a refund of the difference between the Comfort Fare brand and the Standard Fare brand, the respondent submits that it only provides refunds when a passenger is downgraded between classes of service, as stated by Rule 100(D)(1) of its Tariff.

FINDINGS OF FACT

[29] The respondent states that the applicants benefited from many of the features of the Comfort Fare, including 115 percent mileage accumulation, the option of advanced seat selection and one checked bag. The applicants have not disputed that they benefited from the 115 percent mileage accumulation and one free checked bag Accordingly, the Agency finds that the applicants received those two benefits of the Comfort Fare.

[30] The applicants indicate that they learned that their new seats were not preferred seats when they checked in on April 13, and on April 28, 2019. The last itinerary change notice dated March 26, 2019, includes their new assigned seats, which are not preferred seats. The Agency, therefore, finds that the respondent did inform the applicants of their new assigned seats in advance of their travels.

[31] The applicants state that they did not select their seats in advance. The respondent maintains, however, that the applicants benefited from access to that service. Since they did not provide any argument to support their claim, the Agency finds that the applicants could have changed the seats that the respondent assigned to them in its change of itinerary notice of March 26, 2019, and, therefore, benefited from access to advanced seat selection service.

[32] The applicants give no indication that they asked for alcoholic beverages during their flights and were denied. The respondent states that three of the applicants’ boarding passes mentioned the IATA standard code for a Special Service Request to include a beverage for each flight. The Agency, therefore, finds that the free alcoholic beverage was available to the applicants, had they asked.

Analysis and determinations

[33] The onus is on the applicants to establish, on a balance of probabilities, that the carrier has failed to properly apply the terms and conditions of carriage set out in its tariff.

[34] According to Rule 10(C)(2) of the Tariff, preferred or advanced seat selection is subject to availability. Moreover, it states that the respondent has the right to change the passenger seating at any time after booking, in which case the seat fee will be refunded to the passenger.

[35] Rule 30 of the Tariff relates to fare brands, classes of service and upgrades. Rule 30(B) states that certain complimentary products and services, such as separate check-in, in‑flight entertainment, use of headsets/player, reading material, meals, beverages (some alcoholic), etc., are offered depending on the class of service or fare brand purchased. It also specifies that these products and services are amenities and that their availability is not guaranteed. Lastly, Rule 30(B) states that no compensation will be offered for the unavailability of these amenities.

[36] As set out above, the Agency has determined that the applicants did not receive some of the amenities listed in the Comfort Fare. As Rule 30 of the Tariff indicates that the availability of amenities is not guaranteed and that there is no compensation when an amenity is not available, the Agency finds that the respondent properly applied the terms and conditions set out in Rules 10(C)(2) and 30(B) of its Tariff.

[37] While Rule 100(D) of the Tariff specifies that a passenger is entitled to a refund in case of a downgrade to a lower class of service, the applicants were not downgraded between classes of service and, thus, are not entitled to any refund pursuant to Rule 100(D)(1) of the Tariff.

[38] In light of the above, the Agency finds that the respondent properly applied the terms and conditions set out in its Tariff. Therefore, the Agency does not need to consider what remedy, if any, should be ordered.

ARE THE TERMS AND CONDITIONS SET OUT IN RULE 30(B) OF THE RESPONDENT’S TARIFF RELATING TO CLASSES OF SERVICE UNCLEAR, CONTRARY TO PARAGRAPH 122(C) OF THE ATR?

Positions of the parties

THE APPLICANTS

[39] The applicants assert that Rule 30 of the Tariff is written in such a way to ensure that the respondent does not have to guarantee a service or amenity purchased in the upgraded fare classes, nor does it have to refund any portion of the added cost for the upgraded fare classes when it does not deliver that service. The applicants describe this practice as unfair and unreasonable to consumers.

THE RESPONDENT

[40] The respondent did not address the issue of clarity in its answer to the application.

Analysis and determinations

[41] In Determination No. A-2019-241 (Inquiry into WestJet’s International Tariff), the Agency stated that it must first determine whether the terms and conditions are clear, then whether they are reasonable.

[42] A term or condition is clear when a reasonable person concludes that the rights and obligations of both the carrier and passenger are stated in such a way as to exclude any reasonable doubt, ambiguity or uncertain meaning.

[43] With respect to international carriage, paragraph 122(c) of the ATR states that the tariff shall contain the terms and conditions of carriage in respect of “at least the following matters.” The use of the phrase “at least” in paragraph 122(c) of the ATR indicates that the list of matters that shall be contained in a tariff is not exhaustive. Rather, the Agency has consistently held that it has the authority to perform a broad interpretation of this provision and to consider additional matters that are not otherwise listed therein. See, for example, Decision No. 66-C-A-2018 (Rousselle v Air Canada) and Decision No. 67‑C‑A‑2018 (Kenny v China Southern Airlines).

[44] In light of the above, the Agency finds that the phrase “terms and conditions of carriage” encompasses the matter of “classes of service.”

[45] Rule 10(C)(1) of the Tariff states that the respondent does not guarantee allocation of any particular space in the aircraft. Rule 10(C)(2) states that preferred or advance seat selection are subject to availability; that the respondent reserves the right to change passenger seating; and that if it does change the seating, it will refund the seating fee. Charts submitted by the respondent indicate that advance seat selection and preferred seats for the Comfort Fare are free.

[46] Rule 30(B) of the Tariff relates to fare brands, classes of service and upgrades; it lists products and services for which the availability is not guaranteed. Advanced seat selection and preferred seating do not form part of that list, but the presence of the word “etc.” at its end indicates that it is not exhaustive.

[47] Although it would be beneficial to passengers if the respondent included a more complete list of amenities in Rule 30(B) of its Tariff, including preferred seat selection and any other non-guaranteed amenity offered in a fare brand, the Agency finds that as currently formulated, Rule 30(B) does not create reasonable doubt, ambiguity or uncertain meaning. The Agency therefore finds that Rule 30(B) of the Tariff is clear.

ARE THE TERMS AND CONDITIONS SET OUT IN RULE 30(B) OF THE RESPONDENT’S TARIFF GOVERNING CLASSES OF SERVICE JUST AND REASONABLE, AS REQUIRED BY SUBSECTION 111(1) OF THE ATR? IF NOT, SHOULD THE AGENCY SUSPEND OR DISALLOW THAT PORTION OF THE RESPONDENT’S TARIFF AND ESTABLISH A SUBSTITUTE PURSUANT TO SECTION 113.1 OF THE ATR?

Positions of the parties

THE APPLICANTS

[48] The applicants submit that Rule 30 of the respondent’s Tariff is unreasonable because it does not require the respondent to guarantee a service sold as part of the upgraded Comfort Fare, nor does it require the respondent to provide a refund if it does not provide this service.

THE RESPONDENT

[49] The respondent argues that Rules 10 and 30 of its Tariff are reasonable, with respect to the possibility of certain services and amenities being unavailable.

[50] The respondent indicates that it offers “different combinations of fare levels, each being associated with fewer or more travel options, designed to appeal to different groups of potential travelers with different levels of willingness to pay, making this a key marketing variable in the airline industry.” Doing so forms vital elements of its strategy and ensures competitive rates. The respondent also indicates that its unique fare structure allows it to compete with competitors by offering products that are more in line with low cost airlines’ products.

[51] The respondent also argues that it needs the latitude and flexibility to make operational decisions and, therefore, cannot guarantee advanced or preferred seat selection.

[52] The respondent further argues that it cannot guarantee preferred seat selection just as it cannot guarantee flight schedules without impacting its ability to effectively and efficiently deliver its product to customers. It refers to Decision No. 16-C-A-2013 (Lukács v Porter) where the Agency determined that carriers should have the latitude required to amend flight schedules based on commercial and operational obligations, including the management of the air carrier’s fleet so as to achieve optimal results, which may benefit both the carrier and passengers, in order to conduct business in a dynamic environment.

[53] Moreover, the respondent refers to several past Agency decisions to illustrate that, in its view, the Agency has confirmed that operational flexibility is essential to the conduct of business.

Analysis and determinations

[54] The Agency has stated in previous decisions, such as in Decision No. 60-C-A-2018 (Osborne and Parkinson v WestJet), that in order to determine whether a term or condition of carriage applied by an air 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.

[55] As referenced above, Rule 10(C)2 of the Tariff states that preferred or advanced seat selection is subject to availability.

[56] Rule 30(B) of the Tariff states that certain complimentary products and services are offered depending on class of service or fare brand purchased, such as separate check-in, in-flight entertainment, use of headsets/player, reading material, meals, beverages (some alcoholic), etc. It specifies that these products and services are amenities and that their availability is not guaranteed.

[57] The Agency accepts that some services cannot be guaranteed due to commercial and operational obligations. For instance, these Tariff provisions, with regard to preferred seat selection specifically, allow the respondent to reconfigure or replace aircraft on a particular flight, which may be required for various operational reasons, such as the closure of Canadian airspace to all Boeing 737 MAX aircraft. As seen in this case, such an aircraft substitution may result in a change to the total number of seats on an aircraft, including the number of preferred seats available.

[58] Offering several different fare levels is a common practice in the airline industry. Carriers offer a number of fare classes with associated amenities as well as terms and conditions. The root of such practice is economic in nature. Carriers offer pricing models consisting of a low base fare with further fare options at an additional expense. The various fare categories and their associated terms and conditions form significant elements of a carrier’s pricing strategy. While providing a refund in the event of a carrier’s inability to offer every amenity of a fare brand, such as preferred seating, would undoubtedly benefit passengers, it would adversely impact the respondent’s ability to compete in the marketplace and impact its ability to make operational decisions.

[59] In the present complaint, the substitution of aircraft resulted in non-preferred seats for the applicants. However, the applicants did benefit, or could have benefited, from all of the other services that come with the Comfort Fare brand.

[60] The Agency, therefore, finds that a proper balance exists between the operational and commercial interests of the respondent and that of its customers, and that rules 10(C)2 and 30(B) of the respondent’s Tariff fall within the description of a tariff that is just and reasonable within the meaning of subsection 111(1) of the ATR.

CONCLUSION

[61] The Agency finds that the respondent properly applied the terms and conditions set out in Rules 10(C) and 30(B) of its Tariff, and that, therefore, the applicants are not entitled to any compensation.

[62] The Agency also finds that Rule 30(B) of the respondent’s Tariff does not create reasonable doubt, ambiguity or uncertain meaning respecting the rights and obligations of both the carrier and passengers and therefore is clear.

[63] The Agency further finds that the respondent’s terms and conditions governing classes of service are just and reasonable as required under subsection 111(1) of the ATR.

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APPENDIX TO DECISION NO. 61-C-A-2020

International Passenger Rules and Fares Tariff No. AC-2 Containing Local and Joint Rules, Regulations, Fares and Charges on Behalf of Air Canada applicable to the Transportation of Passengers and Baggage Between Points in Canada/USA and Points in Areas 1/2/3 and between the USA and Canada,NTA(A) No. 458 (Tariff)

Rule 10 (RESERVATIONS AND SEAT SELECTION) of the Tariff states:

….

C. SEAT ALLOCATION

….

2.   Preferred or Advance Seat Selection is subject to availability and only on flights operated by Air Canada, Air Canada Express (preferred seats available on Air Canada Jazz only), and Air Canada Rouge, Passengers may pre-select a seat, preferred or not, when booking a fare via the web or call center or where offered. A fee per passenger and per segment of travel may apply as shown below:

a. Restrictions

i. Air Canada reserves the right to change passenger seating at any time after booking, in certain circumstances such as schedule irregularity, aircraft substitution, or if the seat is needed to accommodate the needs of a passenger with a disability. The seat fee will then be refunded automatically or upon request, unless passenger is accommodated in an equivalent seat to his/her satisfaction.

….

Rule 30 (FARE BRANDS, CLASSES OF SERVICE AND UPGRADES) of the Tariff states:

A. FARE BRANDS

Carrier offers various fare brands or fares for each class of service. For Economy class, the fare brands or fares are Basic, Standard, Flex, comfort fare and Latitude. For Premium Economy class, the fare brands are: Premium Economy lowest and Premium Economy flexible. For Business class, the fare brands are: Business class lowest and Business class flexible. †[N]For Signature Class, the fare brands are: Signature Class Lowest and Signature Class Flexible. Fare rules, as well as terms and conditions, may vary by fare brand.

B. CLASS OF SERVICE

Certain complimentary products and services are offered depending on class of service, or fare brand purchased, such as separate check-in, in-flight entertainment, use of headsets/player, reading material, meals, beverages (some alcoholic), etc. These products and services are amenities and their availability is not guaranteed. No compensation will be offered for their unavailability, including for unavailability of in-flight entertainment and choice of meal.

….

3. ECONOMY CLASS

1. Economy class service is provided to passengers paying Economy class fares for transportation in the Economy class cabin on flights operated by Air Canada, Air Canada Express and Air Canada Rouge.
2. Passengers seated in the Economy class section will, when flight times permit, be afforded in-flight amenities on certain flights such as complimentary meals and beverages (including cocktails, beer or wine except on Air Canada Rouge) and complimentary use of headsets for audio/visual entertainment (where such feature is provided inflight; on Air Canada Rouge, use of a player and headsets for a fee.) On certain flights, a fee will apply for headsets/player and a range of meals, snacks and alcoholic beverages.

….

Rule 100 of the Tariff sets out the terms for Refund:

….

REFUND (Continued)

D. CARRIER – CAUSED REFUNDS

2. Amount of Carrier-Caused Refunds (Continued)

b. When a portion of the trip has been made and the passenger elects to continue to destination by travel not arranged by carrier, the amount of refund of the unused portion will be prorated based on mileage.

c. When a schedule irregularity within carrier’s control results in the passenger travelling in a lower class of service than that purchased:

1. 1. If the passenger is notified of the change of class of service more than 7 days prior to departure, Air Canada will refund the fare difference, if any;
   2. If the passenger is notified of the change of class of service 7 days prior to departure or less, Air Canada will refund the passenger as follows:

….