Navigating the Proposed Amendments to the Air Passenger Rights Regime

It’s not just aircraft that undergo regular maintenance — Canada’s air passenger rights regime is set for yet another major tune-up with Bill C-47, the Budget Implementation Act, 2023. The new bill proposes several important amendments to the Canada Transportation Act (Act).

We first discussed this regime in our September 2019 Aviation Finance Newsletter and again when it was amended in our November 2022 Aviation & Aerospace Group Newsletter.

The more significant amendments to the Act would include:

• Adopting a new complaint-management process before the Canadian Transportation Agency (Agency)

• Providing the Minister of Transportation (Minister) with the power to amend the Air Passenger Protection Regulations (APPR) and increase fines for non-compliance

• Encouraging air-carriers’ compliance by way of increasing penalties

Other, smaller changes would impact provisions related to tariffs, fees and charges. The above proposed amendments are discussed in more detail below.

Legal Landscape

Canada’s air passenger rights and complaints regimes are primarily set out in the Act and the APPR enacted thereunder. The Act establishes the Agency, which is the independent tribunal and regulator with a mandate to ensure the efficient operation of the national transportation system and protect consumer and passenger rights. The APPR, a relatively new piece of legislation in Canada, establishes the minimum obligations of air carriers towards passengers.

Bill C-47 received its second reading in the House of Commons on May 2, 2023.

A New Complaints Process

The first notable proposed amendment is the implementation of a new process for handling complaints. The current complaints regime provides minimal guidance and specifies only that that the Agency or its designate shall review and attempt to resolve any complaints. The Agency has 120 days to finalize a resolution, and procedural steps are not set out.

Disruptions caused by the COVID-19 pandemic and subsequent surge of travel has led to a significant backlog of complaints. Currently, there are approximately 45,000 unresolved complaints before the Agency, and complaints take an average of 18 months to resolve.

To remedy this, Bill C-47 includes a complete overhaul of the complaints process. Under the proposed new scheme:

• Air carriers would be required to establish an internal process for dealing with complaints and claims. Decisions must be communicated to claimants within 30 days of the carrier receiving the request.

• If the carrier fails to resolve the complaint within 30 days, a complaint may be filed with the Agency. A designated complaint resolution officer from the Agency will then attempt to mediate the complaint, with the mediation starting no later than the 30th day after the complaint was filed. If no agreement is reached via mediation, the officer (or, in complex cases, a panel of at least two members of the Agency) must make a decision no later than the 60th day after the start of mediation.

• Once a decision is made, the Agency must publish (1) the flight number to which the order relates; (2) the date of the flight in question; (3) any decision as to whether the delay, cancellation or denial of boarding was within the carrier’s control, within the carrier’s control but required for safety reasons or outside the carrier’s control; and (4) a statement setting out whether the carrier was ordered to provide compensation or a refund. In the case of a decision made by a panel, the entire order is to be made public.

More Consumer-Friendly Passenger Rights

While the amendments to the Act in Bill C-47 do not directly change the APPR, they give the Agency the power to do so. The Minister has already announced an intention to use these new regulatory powers in order to provide consumers with added compensation options. In a news release on April 24, the Minister announced that the Agency would:

• Modify regulations to make compensation mandatory for all fight disruptions, except in “very limited circumstances”

• Remove exemptions based on broad categories of flight disruptions (e.g., disruptions outside air-carriers’ control or within their control but required for safety) that are contemplated under the current regime

• Establish regulations compensating passengers for delayed baggage (currently, the APPR deals only with lost or damaged baggage)

• Create minimum standards of passenger treatment (e.g., the provision of food and water) for all flight disruptions regardless of the cause

• Establish regulations requiring air carriers to refund passengers if flights are cancelled due to a Government of Canada travel advisory

Significantly, where the cause of the disruption remains relevant, the new changes to the Act would shift the burden of proving this cause to the air carrier. The amended Act would create an automatic presumption that a delay, cancellation or denial of boarding is within a carrier’s control. This presumption would only be rebutted if the carrier proves the contrary.

Encouraging Compliance With Increased Penalties

The government further hopes to encourage compliance with the newly strengthened air passenger rights regime by imposing a tenfold increase on the maximum administrative monetary penalty the Agency can impose on air carriers. Under the current version of the Act, the maximum penalty for a carrier found to violate passenger rights rules is C$25,000. If Bill C‑47 is assented to, the maximum amount would increase to C$250,000.

As an alternative to a penalty, the proposed changes would also provide the Agency with the authority to enter into compliance agreements with air carriers that set out how the carrier will ensure it complies with the passenger protection regime. A breach of a compliance agreement carries a penalty of up to twice the amount of the initially assessed penalty, to a maximum of C$500,000.

Other Notable Proposed Amendments

The changes outlined above are the most significant for the relationship between air carriers and passengers, but the following changes proposed in Bill C-47 are worth noting from an aviation law perspective:

• Under the new rules, airlines would be required to publish on their websites a record of all tariffs that had been in effect in the preceding three years. Currently, air carriers are required to retain records for all such tariffs but are required to publish only active tariffs on their websites.

• The Agency would receive expanded powers to suspend or disallow unreasonable or unduly discriminatory terms or conditions of carriage, even where no complaint is made.

• The Agency would have a greater ability to make rules respecting the fees and charges payable in relation to the administration or enforcement of the Act and regulations made thereunder.

Conclusion

The proposed amendments in the Canadian regime came a few months before the International Air Transport Association criticized, on May 9, 2023, the U.S. Department of Transportation and the Biden Administration’s decision to mandate airlines to provide additional financial compensation to travellers for flight delays and cancellations.

These developments on both sides of the border point to an overarching trend in the regulatory world towards enhancing the protection and compensation available for air passengers.

Given that Bill C-47, however, has not yet been proclaimed into law, the impact on airlines, consumers and the Agency is still to be determined.

For more information, please contact:

Auriol Marsco             +1-416-863-2788
Jason MacIntyre         +1-416-863-2507
Eric Goneau                +1-416-863-2721

or any other member of our Aviation & Aerospace group.