Written By Noriko Shimura and Dane Patton

On April 24, 2023, the Canadian government introduced Bill C-47, the Budget Implementation Act, 2023, No. 1 (the Bill), which includes proposed amendments to provisions of the Canada Transportation Act (the CTA) relating to air transport. If passed, the Bill will likely result in future amendments to the Air Passenger Protection Regulations (APPR) made under the CTA. The Bill proposes several changes which carriers should take note.

The APPR were implemented in July 2019 and impose minimum compensation and treatment obligations on carriers with respect to tarmac delays, flight cancellations, flight delays, denial of boarding, and damage or loss of baggage. The APPR apply to both domestic and international flights.

If a passenger feels that a carrier has not complied with the treatment or compensation obligations set out in the APPR or the carrier's tariff, the CTA provides complaint resolution options with the Canadian Transportation Agency (the Agency). The CTA does not currently set out detailed procedures or timelines for the Agency to resolve air passenger complaints.

The Federal Government repeatedly promised amendments to the CTA and APPR in response to public dissatisfaction with the Agency taking up to 18 months to process air passenger complaints amid a backlog of over 33,000 complaints filed with the Agency.¹

Key Proposed Changes to the CTA

Publishing Prior Tariffs

Carriers are presently required to publish their current tariffs on their website. The Bill would require that all domestic tariffs in effect over the past three years be posted online. Carriers should consider compiling past tariffs in advance of the Bill coming into force.

Passenger Treatment and Compensation Obligations

The APPR currently sets out a carrier's minimum standards of treatment of, and compensation for, passengers in the event "delay, cancellation or denial of boarding is within the carrier’s control". The Bill proposes to remove these specific mitigating factors from the CTA and, in the case of passenger treatment obligations, replace these mitigating factors with "exceptions" where reduced treatment obligations will continue to apply. Transport Canada indicates these exceptions will be "very limited".² An amended APPR would likely specify these exceptions.

For compensation obligations, the Bill could amend the APPR to specify minimum compensation payable for passenger "inconvenience". The Bill does not specify exceptions when "inconvenience" compensation is payable. While Transport Canada announced that current exceptions will be removed from the CTA, the Bill does not preclude a future amended APPR from indicating eligible exceptions or inconvenience 'events'.³ The Bill also adds delayed baggage as eligible grounds for passenger compensation. The APPR could be amended to specify time thresholds when compensation is payable for baggage delay.

Carriers should consider preparing for these broadened scope of circumstances where treatment and compensation obligations are owed to passengers.

Further, the Bill would require that carriers ensure passengers complete their itineraries "within a reasonable time", else a passenger may be entitled to a refund. It is yet unknown what will constitute completing an itinerary "within a reasonable time", as 'reasonable' implies assessing the circumstances affecting an itinerary, which likely includes the mitigating factors currently specified in the CTA. This would result in a similar practical analysis for carriers to determine whether compensation or a refund is payable regardless of the Bill's revisions.

Travel Advisories

The Bill would require carriers to refund passengers if a flight is cancelled due to a Government of Canada travel advisory. While this addition has a clear link to flight cancellations during the early stages of the COVID-19 pandemic, Government of Canada travel advisories extend to other geopolitical events outside a carrier's control that arise with little notice. If the Bill becomes law, geopolitical circumstances could have greater implications for carriers considering new destinations.

Carriers Required to Establish Complaints Resolution Processes

The Bill would require carriers to establish a formal process to review passenger complaints, and to communicate the complaint decision within 30 days. These changes would likely require carriers to update their tariffs to set out their dispute resolution processes. As the Bill requires that carriers first review passenger complaints before any further Agency review, the Bill would transfer the balance of complaint processing efforts onto carriers from the Agency. Carriers should consider positioning resources for this significant shift.

Expedited Agency Complaint Review

The Bill establishes procedures for Agency complaint review. Notably, the Bill proposes that the Agency will only review complaints if a carrier took longer than 30 days to issue its decision. Such a framework could incentivize carriers to issue prompt decisions within 30 days.

If a complaint is eligible for review, the Agency must commence mediation between the complainant and the carrier within 30 days. The Bill proposes to shift the onus onto carriers to prove that a mitigating factor initially claimed to be beyond the carrier's control, or within the carrier's control but required for safety reasons, was in fact the case. If the Bill passes, carriers should prepare for this new expedited process.

Administrative Penalties and Compliance Agreements

The Bill proposes to increase the maximum administrative penalty from $25,000 to $250,000 if a carrier violates the APPR's requirements.

If the Agency penalizes a carrier, the Bill proposes that a carrier may instead enter into a "compliance agreement" whereby the carrier outlines how it will comply with the APPR's requirements going forward. This could be an attractive option for carriers if faced with a large penalty.

If a carrier breaches a "compliance agreement", the Bill proposes to double ($500,000) the maximum administrative penalty that a carrier could be liable for.

Continued Exemptions for Charters

The CTA currently excludes domestic charters from many of the CTA and APPR's requirements. The Bill proposes to continue to exempt domestic charters from the Bill's new complaint resolution processes.

We will continue to monitor this Bill as it proceeds through the House of Commons and the Senate. If you have any questions about the proposed amendments, please contact the authors.

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