Aug 9, 2022
Regulator issued no fines over airlines' denying compensation for cancelled flights
The Canadian Press,
Lots of fingerpointing going on between the airlines and insurance companies: Martin Firestone
Three years after new rules came into force, the regulator overseeing Canadian airlines has not issued any fines related to passenger compensation claims for flight delays and cancellations.
The lack of action reveals a reluctance by the Canadian Transportation Agency (CTA) to exercise its authority on consumers' behalf, says Air Passenger Rights advocacy group president Gabor Lukacs.
The absence of fines so far comes despite a flood of complaints made by travellers both formally and through social media who say their claims for compensation were rejected after airlines cancelled or delayed their trips amid the airport chaos of the past few months.
“That's really where the concern lies — what enables airlines to behave this way," Lukacs said.
The country's passenger rights charter mandates airlines to pay up to $1,000 in compensation for cancellations or significant delays that stem from reasons within the carrier's control when the notification comes 14 days or less before departure.
But airlines including Air Canada and WestJet have denied payments on the basis of crew shortages, deeming the reason a safety issue that would make it exempt from compensation.
The CTA stance is that a lack of staff typically falls within the airline's control and therefore should result in compensation.
"If a crew shortage is due to the actions or inactions of the carrier, the disruption will be considered within the carrier's control for the purposes of the APPR (Air Passenger Protection Regulations). Therefore, a disruption caused by a crew shortage should not be considered 'required for safety purposes' when it is the carrier who caused the safety issue as a result of its own actions,'' the agency said in an email.
Customers whose claims are rejected by an airline can file a complaint with the regulator, but the backlog tops 15,300, with the time between initial submission and final ruling taking as much as one year.
Separate from the complaints process, federal legislation grants the agency's enforcement officers the power to investigate companies and individuals it believes have breached the legislation, allowing it to demand documents, search premises and issue fines of up to $25,000. So far this year, fines have been levied for such infractions as posting unclear terms or conditions, failing to explain why a flight was delayed and lacking a permit for a charter flight.
The agency's list of enforcement actions does not include any monetary penalties against carriers over customer compensation for flight disruptions.
Air Canada passenger Brittany Noppe was scheduled to fly with her partner on June 9 from Ottawa to Toronto and then on to the United Kingdom, but the initial flight was delayed by more than three hours. When the pair arrived at Toronto's Pearson airport their plane to Manchester had already taken off, forcing the couple to book a hotel for $589 and book a new tickets to London's Heathrow airport the following evening for $2,260, she said.
"When I submitted a claim for compensation for the delay and to be reimbursed for the expenses, both were denied because it was a 'safety related issue' and I was offered a $300 e-coupon as a 'goodwill gesture.' I requested my complaint be escalated and appealed, but they have not gotten back to me in over 30 days," Noppe said in an email.
Since the Air Passenger Protection Regulations came into force in mid-2019, the officers have issued no fines against an airline above $20,000.
The transportation agency did issue 11 penalties amounting to $253,975 in the fiscal year ending March 31. But the vast majority — $210,000 of that total — came in the form of fines against Canada's two main railways. Penalties against air carriers comprised most of the remaining $44,000.
Air Canada's pre-pandemic annual revenue of $19.13 billion. WestJet's annual revenue in 2018, the last fiscal year before Onex Corp. purchased the airline, was $4.73 billion.
"Say I'm selling fake watches, and my cost is $10. I'm selling for $100, so the profit is $90 on each one. Then the penalty has to be such that it is not worth it for me to engage in unlawful conduct," said Lukacs.
"Otherwise it's just another cost of doing business."
In its 2020-21 annual report, the transportation agency recommended that the government raise the penalty cap to $250,000 for corporations from the current $25,000, which is "outdated as it was set in 1996," the document states.
The agency also said it lacks the power to deal with a violation that continues day after day, calling for an amendment that lets officers issue multiple violation notices.
"This will act as a deterrent to ongoing non-compliance and ensure service providers are solving issues without delay," the report says.
Lukacs deemed the call for a 10-fold increase to the penalty ceiling "smoke and mirrors," noting the agency had yet to issue a fine against airlines that approaches the current limit of $25,000 in the past three years.
As for compensation claims filed by individuals, the agency said it aims "to resolve the matter quickly and informally through facilitation or mediation," with 97 per cent of cases settled that way.
"If facilitation or mediation don't work, the complaint may, at the passenger's request, then go through adjudication, a court-like process where a decision will be issued based on the elements of proof submitted."