Airlines to pay up to $1,000 for delays as part two of passenger protection rules take effect
Travellers will be entitled to compensation of up to $1,000 for late or cancelled flights when Canada’s second wave of air passenger protection rules comes into force on Dec. 15, just in time for the busy holiday travel season.
But passengers shouldn’t expect to receive cash if, say, a snowstorm snarls airports on Christmas Eve. Airlines must only compensate passengers for delays within their control and that are not related to safety.
The new regulations stem from an overhaul to the Canada Transportation Act, amended in May 2018 to standardize airlines’ obligations to passengers on any flight to, from or within Canada. Also coming into effect Sunday are rules around seating children under 14, with airlines no longer allowed to charge parents a fee to select seats next to their kids.
“Up until now, we haven’t had clear and consistent rules in Canada,” Canadian Transportation Agency (CTA) chief executive Scott Streiner said in an interview.
Under the previous regime, each airline had its own long, legalistic tariff. That didn’t work very well, Streiner said, noting complaints against airlines have been rising since 2015.
“Passengers didn’t know their rights,” he said. “There was so much inconsistency.”
Airlines criticized the CTA’s rules — the International Air Transport Association (IATA), alongside Air Canada and Porter Airlines and 14 other carriers, even tried to overturn the rules in federal court — arguing the regulations were implemented too quickly, contradicted international rules and set compensation rates too high. The case has not yet been heard in court and, until then, the IATA said airlines will follow the rules.
“Unfortunately, airlines cannot absorb these punitive costs without serious impact to their bottom line,” the IATA said. “They will have to consider ways to recoup these costs by either route cancellations or raising fares, which will in turn decrease the number of travellers and eventually the Canadian economy.”
Streiner countered that the rules were necessary to meet the high expectations of the flying public, adding the CTA pushed the deadline until December for rules that were more complicated to implement so airlines had more time to update their systems.
“We think it was a fair balance between passengers’ expectations and airlines’ operational realities,” he said.
As of Sunday, passengers on large airlines will be entitled to $400 for three- to six-hour delays, $700 for six- to nine-hour delays and $1,000 for delays of more than nine hours. Smaller airlines must compensate passengers $125, $250 and $500 for the same time periods.
Compensation kicks in if, for example, an airline decides to cancel a half empty flight and rebook the passengers on a fuller flight later in the day. It also applies for a mechanical issue that could have been fixed during routine maintenance.
Airlines are also expected to provide passengers with food, drink and access to free Wi-Fi for delays of over two hours. If passengers must be rebooked, large airlines are required to book them on a competing airline if they can’t find them a seat on one of their own planes within nine hours.
Rules around overbooking, lost baggage, tarmac delays and communication came into effect in July. Since then, passengers have been entitled to receive up to $2,100 for lost luggage and up to $2,400 if they can’t get on an overbooked plane, depending on the situation.
The rollout went “relatively smoothly,” Streiner said. Since July, the CTA has fined Air Transat A.T., Delta Air Lines Inc., United Airlines Inc., Air France, WestJet Airlines Ltd., Air Canada and Porter for compliance failures, mostly about rules related to inadequate signage. The airlines were charged a collective $61,200.
From July to November, complaints against airlines skyrocketed 49 per cent over the same period last year. Some of the jump could be attributed to passengers’ increased awareness around their rights, Streiner said. The CTA receives about 10,000 complaints per year and resolves about 99 per cent of them through facilitation, he said.
We will follow the rules the government set. A lot of work and energy has gone in to achieving compliance for stage two
Mike McNaney, CEO, National Airlines Council of Canada
It’s not clear how much airlines have spent so far on compensation under the new rules, but the regime has certainly added costs.
“The one thing that everyone is in agreement on is that the new regulations will increase costs for the airlines,” said Mike McNaney, chief executive of the National Airlines Council of Canada, the trade association representing the country’s largest air carriers.
Still, the airlines will comply with the rules by Dec. 15, McNaney said.
“We will follow the rules the government set,” he said. “A lot of work and energy has gone in to achieving compliance for stage two.”
Airlines had to update IT systems while keeping them active 24 hours a day and train frontline staff to ensure they operate within the rules.
Whether the higher costs will ultimately be passed on to passengers as higher ticket prices will be up to individual airlines, McNaney said. (Fares rose in 2019 regardless thanks to high demand and tighter capacity due to the global grounding of the Boeing 737 Max fleet.)