TRAN Committee Report

SUPPLIMENTARY REPORT OF THE

NEW DEMOCRATIC PARTY OF CANADA

Air Passenger Protection Regulations

Canada’s New Democrats support many of the recommendations contained in the report of the Standing Committee on Transportation, Infrastructure and Communities, which details the shortcoming of Canada’s Air Passenger Protection Regulations (APPR). These include:

• harmonizing categories of eligibility for compensation with those of the European Union;
• creating a system for automatic compensation;
• grouping of complaints by flight; and
• shifting the burden of proof from passengers to airlines.

However, the report falls short of addressing many of the recommendations made by witnesses that appeared before the Committee.

This supplementary report highlights witness testimony calling for stronger, more specific changes to Canada’s air passenger protection regime than those reflected in the Committee’s report. This witness testimony relates to:

1. financial advantages accrued by airlines that choose not to abide by terms of the Air Passenger Protection Regulations (APPR);
2. compensation for delayed baggage;
3. the need to more clearly and broadly define “denial of boarding” and “flight cancellation”;
4. the need to consider expanding passenger protections to rail passengers; and
5. which party should bear the cost of complaint processing.

Failure to uphold the APPR

While paragraph 69 of the committee’s report mentions witness testimony from Mr. Lawford and Mr. Charbonneau regarding the need for increased maximum administrative monetary penalties, there was additional witness testimony from Mr. Lukacs that adds important illustrative detail:

“Without hefty fines for violations, there is no incentive for airlines to comply with the APPR, or with any other regulation, for that matter. For example, if the odds of an airline being caught not paying a $400 compensation is one out of 100, that being 1%, then any fine of less than $40,000 per violation is ineffective, making it cheaper for the airline to pay the fine than to systematically comply.”

- Gabor Lukacs, TRAN meeting 49, January 26, 2023

This testimony provided an example of the financial incentive for airlines to deny compensation, as well as a solution to the problem of how to ensure that administrative monetary penalties provide a meaningful deterrent. This solution was echoed by Mr. Lawford’s testimony:

“I agree with Dr. Lukács' calculus that if you have a 1% sort of flaunting the regulation rate, you have to put fines on. In other words, if someone doesn't get paid their compensation, they have to have a separate penalty phase or enforcement fine from the CTA, which they have the power to do.”

- John Lawford, TRAN meeting 49, January 26 2023

Protections for temporary loss of baggage

A recommendation in the Committee’s report addresses the lack of protection for delayed baggage, since the Federal Court of Appeal struck down the APPR provision that regulated it. The Committee has recommended the government “…ensure that the protections afforded to passengers in relation to the temporary loss of baggage by that section are maintained in both the short and long term.” The NDP supports the spirit of this recommendation, but wishes to highlight witness testimony from Mr. Lawford which provided a solution for long-term protection for delayed baggage.

“Then—this is two parts—invite cabinet under section 40 of the Canada Transportation Act to pass a new regulation based on the old delayed baggage which was 23(2) of the APPRs and which was wiped out by the Federal Court of Appeal pending eventual amendment by Parliament to fix the Canada Transportation Act and to insert the word “delayed” in subsection 86.11(1)(c).”

- John Lawford, TRAN Meeting 49, January 26 2023

Throughout the study, many witnesses cautioned that only changing the APPR would be insufficient to fix the problem related to delayed baggage, and that amending the Canada Transportation Act would provide a clearer, more long-term solution. Mr.

Lawford’s recommendation to instead amend subsection 86.11(1)(c) of the Canada Transportation Act provides a clear, actionable change the government can, and should, implement.

Defining “Denied Boarding and “Flight Cancellation”

The Committee heard concerns from several witnesses regarding unclear or insufficient definitions in the Canada Transportation Act that have allowed airlines to avoid compensating passengers. Specifically mentioned were the definitions of “flight cancellation” and “denied boarding.”

According to the Canadian Transportation Agency, the current definition of “denied boarding” only applies to instances when an airline overbooks flights:

“Denied boarding occurs when a passenger has a valid ticket for a flight, but is not allowed to occupy a seat on board the aircraft because the number of passengers who have checked in and are at the gate on time is greater than the number of available seats that can be occupied.”

- Denied Boarding: A Guide, Canadian Transportation Agency, 2021, https://otc- cta.gc.ca/eng/publication/denied-boarding-a-guide

Witnesses shared that this definition fails to serve travellers denied boarding for any other reason. Mr. Lukacs provided an example of a couple who were denied boarding – and compensation – when an airline agent mistakenly believed they did not meet travel requirements.

The term “flight cancellation” is not defined in either the Canada Transportation Act or the APPR. Testimony from Mr. Lukacs, reiterated by Mr. Charbonneau and Mr. Lawford, expressed that this lack of a definition allows airlines to deny compensation for flights that are re-scheduled, even if the re-scheduling renders a passenger’s trip useless.

Witnesses recommended defining “flight delay” and “flight cancellation” in the same way the European Union does, which would address the shortcomings of the Canadian definitions. While the Committee’s report recommends adopting the European Union’s categories for flight delays and cancellations, that recommendation does not cover the other changes witnesses recommended to align Canada’s APPR with the European Union, such as defining “flight cancellation” and “denial of boarding.”

“The first change is incorporating in the Canada Transportation Act a clear definition of “denial of boarding” and “cancellation” that mirrors the European Union's definition. We often hear, for example, that a flight was not cancelled; it was just a schedule change. The airline refuses to pay compensation on that basis.”

- Gabor Lukacs, TRAN Meeting 40, November 21, 2022

Protections for rail passengers

Though only minimally referenced in its report, the Committee heard testimony from witnesses regarding disruptions to VIA Rail service during the 2022 holiday season. This testimony included a discussion about the potential need for passenger protections for rail passengers. The rail disruptions during the holiday season showed rail passengers can be just as inconvenienced by travel disruptions as air passengers. In his testimony, the President and CEO of VIA Rail indicated he is open to the idea of passenger protection for rail services, but that the regulations would have to be substantially different from the APPR. This, he stated, is because the relationship between VIA Rail and host railways creates an operational ecosystem very different from that of air travel:

“We'd welcome a discussion around better passenger protection for rail passengers, but I think for it to be relevant it would be important to have the host railways as part of this process. As we are so dependent on the host railways to deliver our service”

- Martin R. Landry, TRAN meeting 48, January 26, 2023

Mr. Hayman indicated that in the same way witnesses recommended aligning Canada’s air passenger protections with those of the European Union, a similar approach could be taken with rail passenger protections, and that the European Union’s protections could serve as a starting point in determining a Canadian approach:

“I would also encourage on that front, there's been talk here about looking to the EU for passenger protection standards around air passengers, there's also some good existing standards there for rail passengers as well, so I think we wouldn't be reinventing the wheel here. Obviously, it's a slightly different situation in the Canadian context than in Europe, but there's definitely some good baselines there I think to start form.”

- Tim Hayman, TRAN meeting 49, January 26 2023

Cost of processing air passenger complaints

The Committee’s report recommends that when the Canadian Transportation Agency reverses an airline’s decision to deny compensation, the cost of investigating and resolving that APPR complaint be borne by the airline. This is meant as a way of incentivizing better customer service and fewer complaints. While the NDP agrees incentivizing airlines to pay compensation is important, we feel the Committee’s recommended approach has several flaws. As such, the NDP does not support it.

The committee did not hear any testimony calling for such an approach. Mr. Lawford recommended the creation of a regulatory body, funded by industry rather than taxpayers, and based on existing Canadian models like the Commission for Complaints for Telecom-television Services (CCTS) or the Ombudsman for Banking Services and Investments (OBSI). His stated intent was to simplify the complaints resolution process. However, no witnesses suggested airlines bear the costs of processing air passenger complaints in the way the Committee’s recommendation describes.

The NDP is concerned making airlines financially responsible for processing air passenger complaints in certain circumstances could undermine the independence and public accountability of the CTA’s complaints process. The NDP prefers the use of administrative monetary penalties as a simpler deterrent, rather than requiring airlines to pay processing costs.

If, as recommended by the Committee, the categorization of flight disruptions is simplified and airlines are required to automatically compensate passengers, the cost of resolving complaints should dramatically decline.

Recommendations

Further to the recommendations contained in the Committee’s report, the NDP recommends the following:

Recommendation 1- Long-term Protections for Delayed Baggage

That the Government of Canada amend section 86.11(1)(c) of the Canada Transportation Act to read “prescribing the minimum compensation for lost, delayed or damaged baggage that the carrier is required to pay”

Recommendation 2- Definition of “denied boarding”

That the Government of Canada amend the Canada Transportation Act to define “denial of boarding” to include reasons for refusal to carry a passenger unilaterally, and without consent, beyond only over-booking of the flight.

Recommendation 3- Definition of “flight cancellation”

That the Government of Canada amend the Canada Transportation Act to define “flight cancellation” to include any failure to operate a scheduled flight.

Recommendation 5- Passenger Protections for Rail Transit

That the Government of Canada study the viability of developing passenger protection regulations for other forms of mass transit, such as rail services, while respecting provincial jurisdiction.