Air Passenger Protection Regulations: SOR/2019-150

Canada Gazette, Part II, Volume 153, Number 11

Registration
SOR/2019-150 May 22, 2019

CANADA TRANSPORTATION ACT

P.C. 2019-584 May 21, 2019

Whereas, pursuant to subsection 36(2) of the Canada Transportation Act footnote a, the Canadian Transportation Agency has given the Minister of Transport notice of the annexed Regulations;

Whereas, pursuant to subsection 86.11(1) footnote b of the Canada Transportation Act footnote a, the Canadian Transportation Agency has consulted with the Minister of Transport with respect to the annexed Regulations;

And whereas, pursuant to subsection 86.11(2)footnote b of the Canada Transportation Act footnote a, the Minister of Transport has given the Direction Respecting Tarmac Delays of Three Hours or Less footnote c;

Therefore, the Canadian Transportation Agency, pursuant to subsection 86(1) footnote d, section 86.1 footnote e and subsections 86.11(1)footnote b and 177(1) footnote f of the Canada Transportation Act footnote a, makes the annexed Air Passenger Protection Regulations.

Gatineau, April 30, 2019

Scott Streiner
Chairperson and Chief Executive Officer, Canadian Transportation Agency

Elizabeth C. Barker
Vice-Chairperson, Canadian Transportation Agency

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to subsection 36(1) of the Canada Transportation Act footnote a, approves the annexed Air Passenger Protection Regulations, made by the Canadian Transportation Agency.

Air Passenger Protection Regulations

Definitions and Interpretation

Definitions — Part II of Act

1 (1) The following definitions apply in Part II of the Act.

Definitions — Regulations

(2) The following definitions apply in these Regulations.

Denial of boarding

(3) For the purpose of these Regulations, there is a denial of boarding when a passenger is not permitted to occupy a seat on board a flight because the number of seats that may be occupied on the flight is less than the number of passengers who have checked in by the required time, hold a confirmed reservation and valid travel documentation and are present at the boarding gate at the required boarding time.

Obligations of small carriers

(4) For the purpose of these Regulations, a small carrier has the same obligations as a large carrier towards a passenger that it carries on behalf of a large carrier under a commercial agreement with that carrier.

General

Carrier liability

2 (1) The carrier operating a flight is liable to passengers with respect to the obligations set out in sections 7 to 22 and 24, or, if they are more favourable to those passengers, the obligations on the same matter that are set out in the applicable tariff.

Joint liability

(2) However, if one carrier carries passengers on behalf of another carrier under a commercial agreement, the carriers are jointly and severally, or solidarily, liable to those passengers with respect to the obligations set out in sections 7, 22 and 24, or, if they are more favourable to those passengers, the obligations on the same matter that are set out in the applicable tariff.

Tickets

(3) The issuing carrier of a ticket is liable to passengers for the obligations set out in sections 5 and 6, or, if they are more favourable to those passengers, the obligations on the same matter that are set out in the applicable tariff.

Persons with disabilities

3 (1) These Regulations do not limit a carrier’s legal obligations with respect to persons with disabilities.

Carrier’s right of action

(2) For greater certainty, these Regulations do not remove a carrier’s right of action against any other person.

Other regimes

(3) Subject to subsection 86.11(3) of the Act, a passenger must not be refused compensation in accordance with these Regulations for an event on the grounds that they are also eligible for compensation for the same event under a different passenger rights regime.

Application to charter flights

4 (1) In the case of a charter flight, sections 2 to 24 apply

Licensee obligations

(2) A licensee must include the obligation to comply with these Regulations in its contracts with a charterer with respect to flights referred to in subsection (1).

Simple, clear and concise communication

5 (1) A carrier must make its terms and conditions of carriage that apply in the following circumstances available in simple, clear and concise language:

Means of communication

(2) The terms and conditions referred to in subsection (1) must be made available on all digital platforms that the carrier uses to sell tickets and on all documents on which the passenger’s itinerary appears.

Information on treatment, compensation and recourse

(3) A carrier must provide information on the treatment of passengers and minimum compensation owed by the carrier and the recourse against the carrier available to passengers, including their recourse to the Agency, in simple, clear and concise language on all digital platforms that it uses to sell tickets and on all documents on which the passenger’s itinerary appears.

Hyperlink

(4) For the purpose of subsections (2) and (3), a digital platform or a document that contains a hyperlink is considered to contain the information that is contained on the web page to which that hyperlink leads.

Notice

(5) The following notice must be made available on all digital platforms that the carrier uses to sell tickets and on all documents on which the passenger’s itinerary appears:
“If you are denied boarding or your baggage is lost or damaged, you may be entitled to certain standards of treatment and compensation under the Air Passenger Protection Regulations. For more information about your passenger rights please contact your air carrier or visit the Canadian Transportation Agency’s website.
Si l’embarquement vous est refusé ou si vos bagages sont perdus ou endommagés, vous pourriez avoir droit au titre du Règlement sur la protection des passagers aériens, à certains avantages au titre des normes de traitement applicables et à une indemnité. Pour de plus amples renseignements sur vos droits, veuillez communiquer avec votre transporteur aérien ou visiter le site Web de l’Office des transports du Canada.”

Persons with disabilities

(6) If the information referred to in subsection (1) or (3) or the notice set out in subsection (5) is provided in a digital format, that format must be compatible with adaptive technologies intended to assist persons with disabilities and if that information or notice is provided in a paper format, the carrier must, on request, provide it in large print, Braille or a digital format.

Person authorized to sell tickets

6 The carrier must take reasonable measures to ensure that anyone authorized to sell tickets in the carrier’s name complies with section 5.

Notice at airport

7 (1) A carrier operating a flight to or from an airport in Canada must display, in a visible manner at the check-in desk, self-service machines and boarding gate, a notice containing the following text:
“If you are denied boarding or your baggage is lost or damaged, you may be entitled to certain standards of treatment and compensation under the Air Passenger Protection Regulations. For more information about your passenger rights please contact your air carrier or visit the Canadian Transportation Agency’s website.
Si l’embarquement vous est refusé ou si vos bagages sont perdus ou endommagés, vous pourriez avoir droit au titre du Règlement sur la protection des passagers aériens, à certains avantages au titre des normes de traitement applicables et à une indemnité. Pour de plus amples renseignements sur vos droits, veuillez communiquer avec votre transporteur aérien ou visiter le site Web de l’Office des transports du Canada.”

Persons with disabilities

(2) If the notice is provided in a digital format, that format must be compatible with adaptive technologies intended to assist persons with disabilities and if the notice is provided in a paper format, the carrier must, on request, provide it in large print, Braille or a digital format.

Delay, Cancellation and Denial of Boarding

Tarmac delay obligations

8 (1) If a flight is delayed on the tarmac after the doors of the aircraft are closed for take-off or after the flight has landed, the carrier must provide passengers with the following, free of charge:

Urgent medical assistance

(2) If a passenger requires urgent medical assistance while the flight is delayed on the tarmac after the doors of the aircraft are closed for take-off or after the flight has landed, the carrier must facilitate access to that assistance.

Passenger disembarkation

9 (1) If a flight is delayed on the tarmac at an airport in Canada, the carrier must provide an opportunity for passengers to disembark

Take-off imminent

(2) However, a carrier is not required to provide an opportunity for passengers to disembark if it is likely that take-off will occur less than three hours and 45 minutes after the doors of the aircraft are closed for take-off or after the flight has landed and the carrier is able to continue to provide the standard of treatment referred to in section 8.

Priority disembarkation

(3) A carrier that allows passengers to disembark must, if it is feasible, give passengers with disabilities and their support person, service animal or emotional support animal, if any, the opportunity to disembark first.

Exceptions

(4) This section does not apply if providing an opportunity for passengers to disembark is not possible, including if it is not possible for reasons related to safety and security or to air traffic or customs control.

Obligations — situations outside carrier’s control

10 (1) This section applies to a carrier when there is delay, cancellation or denial of boarding due to situations outside the carrier’s control, including but not limited to the following:

Earlier flight disruption

(2) A delay, cancellation or denial of boarding that is directly attributable to an earlier delay or cancellation that is due to situations outside the carrier’s control, is considered to also be due to situations outside that carrier’s control if that carrier took all reasonable measures to mitigate the impact of the earlier flight delay or cancellation.

Obligations

(3) When there is delay, cancellation or denial of boarding due to situations outside the carrier’s control, it must

Obligations when required for safety purposes

11 (1) Subject to subsection 10(2), this section applies to a carrier when there is delay, cancellation or denial of boarding that is within the carrier’s control but is required for safety purposes.

Earlier flight disruption

(2) A delay, cancellation or denial of boarding that is directly attributable to an earlier delay or cancellation that is within that carrier’s control but is required for safety purposes, is considered to also be within that carrier’s control but required for safety purposes if that carrier took all reasonable measures to mitigate the impact of the earlier flight delay or cancellation.

Delay

(3) In the case of a delay, the carrier must

Cancellation

(4) In the case of a cancellation, the carrier must

Denial of boarding

(5) In the case of a denial of boarding, the carrier must

Obligations when within carrier’s control

12 (1) Subject to subsection 10(2), this section applies to a carrier when there is delay, cancellation or denial of boarding that is within the carrier’s control but is not referred to in subsections 11(1) or (2).

Delay

(2) In the case of a delay, the carrier must

Cancellation

(3) In the case of a cancellation, the carrier must

Denial of boarding

(4) In the case of a denial of boarding, the carrier must

Information — cancellation, delay, denial of boarding

13 (1) A carrier must provide the following information to the passengers who are affected by a cancellation, delay or a denial of boarding:

Communication every 30 minutes

(2) In the case of a delay, the carrier must communicate status updates to passengers every 30 minutes until a new departure time for the flight is set or alternate travel arrangements have been made for the affected passenger.

New information

(3) The carrier must communicate to passengers any new information as soon as feasible.

Audible and visible announcement

(4) The information referred to in subsection (1) must be provided by means of audible announcements and, upon request, by means of visible announcements.

Method of communication

(5) The information referred to in subsection (1) must also be provided to the passenger using the available communication method that they have indicated that they prefer, including a method that is compatible with adaptive technologies intended to assist persons with disabilities.

Standards of treatment

14 (1) If paragraph 11(3)(b) or (4)(b) or 12(2)(b) or (3)(b) applies to a carrier, and a passenger has waited two hours after the departure time that is indicated on their original ticket, the carrier must provide the passenger with the following treatment free of charge:

Accommodations

(2) If paragraph 11(3)(b) or (4)(b) or 12(2)(b) or (3)(b) applies to a carrier and the carrier expects that the passenger will be required to wait overnight for their original flight or for a flight reserved as part of alternate travel arrangements, the air carrier must offer, free of charge, hotel or other comparable accommodation that is reasonable in relation to the location of the passenger, as well as transportation to the hotel or other accommodation and back to the airport.

Refusing or limiting treatment

(3) The carrier may limit or refuse to provide a standard of treatment referred to in subsection (1) or (2) if providing that treatment would further delay the passenger.

Denial of boarding — request for volunteers

15 (1) If paragraph 11(5)(b) or 12(4)(b) applies to a carrier, it must not deny boarding to a passenger unless it has asked all passengers if they are willing to give up their seat.

Passenger on aircraft

(2) The carrier must not deny boarding to a passenger who is already on board the aircraft, unless the denial of boarding is required for reasons of safety.

Confirmation of benefit

(3) If a carrier offers a benefit in exchange for a passenger willingly giving up their seat in accordance with subsection (1) and a passenger accepts the offer, it must provide the passenger with a written confirmation of that benefit before the flight departs.

Priority for boarding

(4) If denial of boarding is necessary, the carrier must select the passengers who will be denied boarding, giving priority for boarding to passengers in the following order:

Treatment when boarding is denied

16 (1) If paragraph 11(5)(b) or 12(4)(b) applies to a carrier, it must, before a passenger boards the flight reserved as part of an alternate travel arrangement, provide them with the following treatment free of charge:

Accommodations

(2) If the carrier expects that the passenger will be required to wait overnight for a flight reserved as part of alternate travel arrangements, the carrier must offer, free of charge, hotel or other comparable accommodation that is reasonable in relation to the location of the passenger, as well as transportation to the hotel or other accommodation and back to the airport.

Refusing or limiting treatment

(3) The carrier may limit or refuse to provide a standard of treatment referred to in subsection (1) or (2) if providing that treatment would further delay the passenger.

Alternate arrangements — within carrier’s control

17 (1) If paragraph 11(3)(c), (4)(c) or (5)(c) or 12(2)(c), (3)(c) or (4)(c) applies to a carrier, it must provide the following alternate travel arrangements free of charge to ensure that passengers complete their itinerary as soon as feasible:

Refund

(2) If the alternate travel arrangements offered in accordance with subsection (1) do not accommodate the passenger’s travel needs, the carrier must

Comparable services

(3) To the extent possible, the alternate travel arrangements must provide services that are comparable to those of the original ticket.

Refund of additional services

(4) A carrier must refund the cost of any additional services purchased by a passenger in connection with their original ticket if

Higher class of service

(5) If the alternate travel arrangements provide for a higher class of service than the original ticket, the carrier must not request supplementary payment.

Lower class of service

(6) If the alternate travel arrangements provide for a lower class of service than the original ticket, the carrier must refund the difference in the cost of the applicable portion of the ticket.

Method used for refund

(7) Refunds under this section must be paid by the method used for the original payment and to the person who purchased the ticket or additional service.

Alternate arrangements — outside carrier’s control

18 (1) If paragraph 10(3)(b) or (c) applies to a carrier, it must provide the following alternate travel arrangements free of charge to ensure that passengers complete their itinerary as soon as feasible:

Comparable services

(2) To the extent possible, the alternate travel arrangements must provide services that are comparable to those of the original ticket.

Higher class of service

(3) If the alternate travel arrangements provide for a higher class of service than the original ticket, the carrier must not request supplementary payment.

Compensation for delay or cancellation

19 (1) If paragraph 12(2)(d) or (3)(d) applies to a carrier, it must provide the following minimum compensation:

Compensation in case of refund

(2) If paragraph 12(2)(c) or (3)(c) applies to a carrier and the passenger’s ticket is refunded in accordance with subsection 17(2), the carrier must provide a minimum compensation of

Deadline to file request

(3) To receive the minimum compensation referred to in paragraph (1) or (2), a passenger must file a request for compensation with the carrier before the first anniversary of the day on which the flight delay or flight cancellation occurred.

Deadline to respond

(4) The carrier must, within 30 days after the day on which it receives the request, provide the compensation or an explanation as to why compensation is not payable.

Compensation for denial of boarding

20 (1) If paragraph 12(4)(d) applies to a carrier, it must provide the following minimum compensation:

Payment

(2) The carrier must provide the compensation to the passenger as soon as it is operationally feasible, but not later than 48 hours after the time of the denial of boarding.

Estimated arrival time

(3) If the compensation is paid before the arrival of the flight reserved as part of alternate travel arrangements at the destination that is indicated on their ticket, that compensation is determined based on the flight’s expected arrival.

Written confirmation

(4) If it is not possible to provide the compensation before the boarding time of the flight reserved as part of alternate travel arrangements, the carrier must provide the passenger with a written confirmation of the amount of the compensation that is owed.

Adjustment

(5) If the arrival of the passenger’s flight at the destination that is indicated on their original ticket is after the time it was expected to arrive when the compensation was paid or confirmed in writing and the amount that was paid or confirmed no longer reflects the amount due in accordance with subsection (1), the carrier must adjust the amount of the compensation accordingly.

Compensation for inconvenience

21 A carrier who is required to provide compensation must do so in the form of money, unless

Assignment of Seats to Children under the Age of 14 Years

Assigning seats

22 (1) In order to facilitate the assignment of a seat to a child who is under the age of 14 years in close proximity to a parent, guardian or tutor in accordance with subsection (2), a carrier must, at no additional charge

Proximity to adult’s seat

(2) The carrier must facilitate the assignment of a seat to a child who is under the age of 14 years by offering, at no additional charge,

Difference in price

(3) If a passenger is assigned a seat in accordance with subsection (2) that is in a lower class of service than their ticket provides, the carrier must reimburse the price difference between the classes of service, but if the passenger chooses a seat that is in a higher class of service than their ticket provides, the carrier may request supplementary payment representing the price difference between the classes of service.

Baggage

Lost or damaged baggage

23 (1) If a carrier admits to the loss of baggage, or if baggage is lost for more than 21 days or is damaged, the carrier must provide compensation equal to or greater than the sum of

Temporary loss

(2) If baggage is lost for 21 days or less, the carrier must provide compensation equal to or greater than the sum of

Musical instruments

24 (1) A carrier must establish terms and conditions with regard to

Obligation to carry

(2) A carrier must accept musical instruments as checked or carry-on baggage, unless accepting an instrument is contrary to general terms and conditions in the carrier’s tariff with respect to the weight or dimension of baggage or to safety.

Advertising

Definitions

25 The following definitions apply in this section and sections 27 to 31.

total price means

Subsection 86.1(2) of the Act

26 For the purposes of subsection 86.1(2) of the Act and sections 25 to 31, a prescribed fee or charge is one that is fixed on a per person or ad valorem basis.

Application

27 (1) Subject to subsection (2), sections 28 to 31 apply to advertising in all media of prices for air services within, or originating in, Canada.

Exception

(2) Sections 28 to 31 do not apply to an advertisement that relates to

Medium to advertise

(3) Sections 28 to 31 do not apply to a person who provides another person with a medium to advertise the price of an air service.

Information in advertisement

28 (1) A person who advertises the price of an air service must include the following information in the advertisement:

Third party charges

(2) A person who advertises the price of an air service must set out all third party charges under the heading “Taxes, Fees and Charges” unless that information is only provided orally.

Air transportation charges

(3) A person who makes a reference to an air transportation charge in an advertisement must set the charge out under the heading “Air Transportation Charges” unless that information is only provided orally.

One direction of round-trip service

(4) A person who advertises the price of one direction of a round-trip air service is exempt from the application of paragraph (1)(a) if the following conditions are met:

Readily obtainable information

(5) A person is exempt from the requirement to provide the information referred to in paragraphs (1)(d) to (f) in their advertisement if the following conditions are met:

Total price readily determinable

29 A person must not provide information in an advertisement in a manner that could interfere with the ability of anyone to readily determine the total price that must be paid for an air service or for any optional incidental service.

Distinction — tax and charges

30 A person must not set out an air transportation charge in an advertisement as if it were a third party charge or use the term “tax” in an advertisement to describe an air transportation charge.

Name of third party charge

31 A person must not refer to a third party charge in an advertisement by a name other than the name under which it was established.

Administrative Monetary Penalties

Designation

32 The provisions, requirements and conditions set out in column 1 of the schedule are designated for the purposes of subsection 177(1) of the Act.

Maximum amount payable

33 The maximum amount payable in respect of a contravention of a provision, requirement or condition set out in column 1 of the schedule is the amount

Transitional Provisions

Subsection 2(1)

34 (1) Subsections 2(1) and (2) do not apply in respect of section 22 before December 15, 2019.

Delay and cancellation

(2) Subsections 2(1) and (2), paragraphs 10(3)(b) and (c), 11(3)(b) and (c) and (4)(b) and (c), 12(2)(b) to (d) and (3)(b) to (d) and 13(1)(b) to (d) and sections 17 and 18 do not apply in respect of a delay or cancellation of a flight before December 15, 2019.

Amendments to these Regulations

35 Subsection 5(5) of these Regulations is replaced by the following:

Notice

(5) The following notice must be made available on all digital platforms that the carrier uses to sell tickets and on all documents on which the passenger’s itinerary appears:
“If you are denied boarding, your flight is cancelled or delayed for at least two hours, or your baggage is lost or damaged, you may be entitled to certain standards of treatment and compensation under the Air Passenger Protection Regulations. For more information about your passenger rights please contact your air carrier or visit the Canadian Transportation Agency’s website.
Si l’embarquement vous est refusé, ou si votre vol est annulé ou retardé d’au moins deux heures ou si vos bagages sont perdus ou endommagés, vous pourriez avoir droit au titre du Règlement sur la protection des passagers aériens, à certains avantages au titre des normes de traitement applicables et à une indemnité. Pour de plus amples renseignements sur vos droits, veuillez communiquer avec votre transporteur aérien ou visiter le site Web de l’Office des transports du Canada.”

36 Subsection 7(1) of these Regulations is replaced by the following:

Notice at airport

7 (1) A carrier operating a flight to or from an airport in Canada must display, in a visible manner at the check-in desk, self-service machines and boarding gate, a notice containing the following text:
“If you are denied boarding, your flight is cancelled or delayed for at least two hours, or your baggage is lost or damaged, you may be entitled to certain standards of treatment and compensation under the Air Passenger Protection Regulations. For more information about your passenger rights please contact your air carrier or visit the Canadian Transportation Agency’s website.
 Si l’embarquement vous est refusé, ou si votre vol est annulé ou retardé d’au moins deux heures ou si vos bagages sont perdus ou endommagés, vous pourriez avoir droit au titre du Règlement sur la protection des passagers aériens, à certains avantages au titre des normes de traitement applicables et à une indemnité. Pour de plus amples renseignements sur vos droits, veuillez communiquer avec votre transporteur aérien ou visiter le site Web de l’Office des transports du Canada.”

Consequential Amendments

Air Transportation Regulations

37 The definition passenger in section 2 of the Air Transportation Regulations footnote 1 is repealed.

38 Section 2.1 of the French version of the Regulations is replaced by the following:

2.1 Pour l’application du présent règlement, taxe s’entend des prix, taux ou frais établis par un transporteur aérien pour le transport, l’expédition, la garde, la manutention ou la livraison des marchandises ou pour le transport, le traitement et le soin des passagers, ou pour tout service connexe.

39 The Regulations are amended by adding the following after section 2.1:

2.2 For the purposes of these Regulations, passenger means a person, other than a member of the air crew, who uses an air carrier’s domestic service or international service by boarding the air carrier’s aircraft pursuant to a valid contract or arrangement.

40 (1) Subparagraph 107(1)(n)(i) of the French version of the Regulations is replaced by the following:

(2) Subparagraphs 107(1)(n)(ii) to (xii) of the Regulations are replaced by the following:

41 Section 113.1 of the Regulations is replaced by the following:

113.1 (1) If an air carrier that offers an international service fails to apply the fares, rates, charges or terms and conditions of carriage set out in the tariff that applies to that service, the Agency may, if it receives a written complaint, direct the air carrier to

(2) If the written complaint is with respect to a term or condition of carriage concerning an obligation prescribed by regulations made under subsection 86.11(1) of the Act, it must have been filed by a person adversely affected by the failure to apply the term or condition.

(3) The Agency may make applicable, to some or to all passengers of the same flight as the complainant, all or part of the Agency’s decision respecting a complaint related to any term or condition of carriage concerning any obligation prescribed by regulations made under paragraph 86.11(1)(b) of the Act, to the extent that it considers appropriate.

42 (1) Subparagraph 122(c)(i) of the French version of the Regulations is replaced by the following:

(2) Subparagraphs 122(c)(ii) to (xii) of the Regulations are replaced by the following:

(3) Section 122 of the Regulations is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

43 Part V.1 of the Regulations is repealed.

Canadian Transportation Agency Designated Provisions Regulations

44 The Schedule to the Canadian Transportation Agency Designated Provisions Regulations footnote 2 is amended by adding the following in numerical order:

Item

Column 1



Provision, Requirement or Condition

Column 2


Maximum Amount Payable — Corporation
($)

Column 3


Maximum Amount Payable — Individual
($)

85.5

Paragraph 122(d)

25,000

5,000

45 Items 96.1 to 96.92 of the schedule to the Regulations are repealed.

Coming into Force

July 15, 2019

46 (1) Subject to subsections (2) and (3), these Regulations come into force on July 15, 2019.

December 15, 2019

(2) Sections 14, 19, 22, 35 and 36 come into force on December 15, 2019.

Schedule

(3) Items 28 to 30, 54 to 62 and 70 to 72 of the schedule come into force on December 15, 2019.

SCHEDULE

(Sections 32 and 33)

Administrative Monetary Penalties

Item

Column 1


Provision, Requirement or Condition

Column 2

Maximum Amount Payable — Corporation
($)

Column 3

Maximum Amount Payable — Individual
($)

1

Subsection 4(2)

25,000

5,000

2

Paragraph 5(1)(a)

25,000

5,000

3

Paragraph 5(1)(b)

25,000

5,000

4

Paragraph 5(1)(c)

25,000

5,000

5

Subsection 5(2)

25,000

5,000

6

Subsection 5(3)

25,000

5,000

7

Subsection 5(5)

25,000

5,000

8

Subsection 5(6)

25,000

5,000

9

Section 6

25,000

5,000

10

Subsection 7(1)

25,000

5,000

11

Subsection 7(2)

25,000

5,000

12

Paragraph 8(1)(a)

25,000

5,000

13

Paragraph 8(1)(b)

25,000

5,000

14

Paragraph 8(1)(c)

25,000

5,000

15

Paragraph 8(1)(d)

25,000

5,000

16

Subsection 8(2)

25,000

5,000

17

Paragraph 9(1)(a)

25,000

5,000

18

Paragraph 9(1)(b)

25,000

5,000

19

Subsection 9(3)

25,000

5,000

20

Paragraph 13(1)(a)

25,000

5,000

21

Paragraph 13(1)(b)

25,000

5,000

22

Paragraph 13(1)(c)

25,000

5,000

23

Paragraph 13(1)(d)

25,000

5,000

24

Subsection 13(2)

25,000

5,000

25

Subsection 13(3)

25,000

5,000

26

Subsection 13(4)

25,000

5,000

27

Subsection 13(5)

25,000

5,000

28

Paragraph 14(1)(a)

25,000

5,000

29

Paragraph 14(1)(b)

25,000

5,000

30

Subsection 14(2)

25,000

5,000

31

Subsection 15(1)

25,000

5,000

32

Subsection 15(2)

25,000

5,000

33

Subsection 15(3)

25,000

5,000

34

Subsection 15(4)

25,000

5,000

35

Paragraph 16(1)(a)

25,000

5,000

36

Paragraph 16(1)(b)

25,000

5,000

37

Subsection 16(2)

25,000

5,000

38

Subparagraph 17(1)(a)(i)

25,000

5,000

39

Subparagraph 17(1)(a)(ii)

25,000

5,000

40

Subparagraph 17(1)(a)(iii)

25,000

5,000

41

Paragraph 17(1)(b)

25,000

5,000

42

Paragraph 17(2)(a)

25,000

5,000

43

Paragraph 17(2)(b)

25,000

5,000

44

Subsection 17(3)

25,000

5,000

45

Subsection 17(4)

25,000

5,000

46

Subsection 17(5)

25,000

5,000

47

Subsection 17(6)

25,000

5,000

48

Subsection 17(7)

25,000

5,000

49

Subparagraph 18(1)(a)(i)

25,000

5,000

50

Subparagraph 18(1)(a)(ii)

25,000

5,000

51

Paragraph 18(1)(b)

25,000

5,000

52

Subsection 18(2)

25,000

5,000

53

Subsection 18(3)

25,000

5,000

54

Subparagraph 19(1)(a)(i)

25,000

5,000

55

Subparagraph 19(1)(a)(ii)

25,000

5,000

56

Subparagraph 19(1)(a)(iii)

25,000

5,000

57

Subparagraph 19(1)(b)(i)

25,000

5,000

58

Subparagraph 19(1)(b)(ii)

25,000

5,000

59

Subparagraph 19(1)(b)(iii)

25,000

5,000

60

Paragraph 19(2)(a)

25,000

5,000

61

Paragraph 19(2)(b)

25,000

5,000

62

Subsection 19(4)

25,000

5,000

63

Paragraph 20(1)(a)

25,000

5,000

64

Paragraph 20(1)(b)

25,000

5,000

65

Paragraph 20(1)(c)

25,000

5,000

66

Subsection 20(2)

25,000

5,000

67

Subsection 20(4)

25,000

5,000

68

Subsection 20(5)

25,000

5,000

69

Section 21

25,000

5,000

70

Subsection 22(1)

25,000

5,000

71

Subsection 22(2)

25,000

5,000

72

Subsection 22(3)

25,000

5,000

73

Subsection 23(1)

25,000

5,000

74

Subsection 23(2)

25,000

5,000

75

Paragraph 24(1)(a)

25,000

5,000

76

Paragraph 24(1)(b)

25,000

5,000

77

Paragraph 24(1)(c)

25,000

5,000

78

Subsection 24(2)

25,000

5,000

79

Paragraph 28(1)(a)

25,000

5,000

80

Paragraph 28(1)(b)

25,000

5,000

81

Paragraph 28(1)(c)

25,000

5,000

82

Paragraph 28(1)(d)

5,000

1,000

83

Paragraph 28(1)(e)

5,000

1,000

84

Paragraph 28(1)(f)

5,000

1,000

85

Subsection 28(2)

5,000

1,000

86

Subsection 28(3)

5,000

1,000

87

Section 29

5,000

1,000

88

Section 30

5,000

1,000

89

Section 31

5,000

1,000

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: Currently, Canada does not have a standardized passenger protection regime for air travel. While the Air Transportation Regulations (ATR) establish the terms and conditions that air carriers operating in Canada must address in their tariffs, air carriers are permitted to establish their own policies in these areas. This approach has not always resulted in transparent, clear, fair, and consistent policies regarding the treatment of passengers. Regulations are required to establish air carrier obligations that achieve these objectives.

Description: The Air Passenger Protection Regulations (APPR) define requirements with respect to clear communication, delayed or cancelled flights, denied boarding, tarmac delays, the seating of children under the age of 14, damaged or lost baggage, and the transportation of musical instruments. These regulations ensure clearer, more consistent passenger rights by establishing minimum requirements, standards of treatment, and in some situations minimum levels of compensation that all air carriers must provide to passengers. The regulations also address other consumer-related issues such as the transportation of minors and a housekeeping change related to air services price advertising.

Rationale: The Canada Transportation Act (Act), as amended in May 2018, requires the Canadian Transportation Agency (CTA) to create new air passenger protection regulations and sets a framework for these regulations. In order to develop regulations that are robust, fair and balanced, the CTA considered feedback from the public and stakeholders, as well as best practices and lessons learned in other jurisdictions.

Issues

The CTA, in consultation with the Minister of Transport, is defining in regulations air carriers’ requirements to communicate clearly, as well as obligations toward passengers when issues arise, such as delayed or cancelled flights, denied boarding, tarmac delays, and damaged or lost baggage. The regulations also establish requirements regarding the seating of children under the age of 14 and require policies on the transportation of musical instruments. The new regulations ensure clearer, more consistent passenger rights by establishing minimum requirements, standards of treatment, and in some situations minimum levels of compensation that all air carriers must provide to passengers. The regulations also address other consumer-related issues such as the transportation of minors and a housekeeping change related to air services price advertising.

Background

Air travel is an integral part of modern life. While typically it goes to plan, when there is a problem, the experience can be disruptive. It is important that passengers receive key information, are aware of their rights and know where to turn for assistance or recourse.

Currently, air carriers are required to set out their terms and conditions of carriage in documents called “tariffs.” While there are requirements regarding the topics that must be addressed in these documents, air carriers are permitted to establish their own policies in these areas. The CTA ensures that air carriers have tariffs, apply their tariffs, and, in certain circumstances, determine whether tariff terms are reasonable. Without regulations, this approach has not always resulted in a transparent, clear, fair, and consistent regime.

The CTA’s mandate to create the regulations comes from the amendments to the Act, which received royal assent on May 23, 2018, and from a Ministerial Direction that was registered on April 26, 2019.

The parameters for the regulations are as follows:

In addition to the obligations set out in the Act, the development of the new regulations provides an opportunity for the CTA to address other consumer-related issues.

The CTA undertook a consultation process to receive input from the public, consumer advocates, the air industry and other interested parties. The consultations began on May 28, 2018, and were completed on August 28, 2018.

Objective

The objective of this initiative is to create new air passenger protection regulations that

Description

Scope

The Air Passenger Protection Regulations (APPR) apply to all flights to, from and within Canada, including connecting flights. This includes certain charter flights on which one or more seats are for resale to the public, namely charter flights within Canada and flights to and from Canada that are a part of a charter that originated in Canada.

In certain elements of the regulations, there is a distinction made between large and small carriers. For these purposes, large carriers are considered to be carriers that have transported at least two million passengers worldwide in each of the two preceding years. All other carriers are considered to be small. Carriers will have to identify themselves in their tariffs as large or small for the purposes of the APPR. A smaller carrier transporting a passenger on behalf of a large carrier will be subject to the obligations of a large carrier.

The requirements regarding flight disruptions (flight delays, cancellations, tarmac delays and denied boarding) will be the responsibility of the carrier operating the affected flight. The carrier issuing the ticket will be responsible for providing the passenger with the required information on travel documents and on the platforms it uses to sell tickets. Joint and several liability among carriers will only be applied to the remaining APPR requirements in cases where a carrier is transporting a passenger on behalf of another carrier (e.g. a code-share).

Clear communication

The regulations ensure that passengers are aware of their rights and are kept informed during a flight disruption (delay, cancellation or denial of boarding). Carriers are required to provide passengers with information on key terms and conditions of carriage on all digital platforms they use to sell tickets, and on all itinerary-related documents the carrier issues to the passenger. They must also include a written notice with prescribed text regarding standards of treatment and compensation under the APPR and directing passengers to the carrier or the CTA’s website. Information other than the prescribed text may be provided through hyperlinks. Carriers are also expected to ensure third parties selling tickets on their behalf provide passengers with this information, where feasible. For flights to and from Canada, the carrier must post the written notice described above at certain key locations in the airport.

In the event of a delay, cancellation or denial of boarding, carriers must notify passengers as soon as possible and provide regular status updates (every 30 minutes following the original scheduled departure time until a new takeoff time is confirmed or an alternative travel arrangement is booked). They are also required to advise the passengers of the applicable standards of treatment and compensation in these cases through the method that the passenger indicated that they preferred, as well as through an auditory announcement and, upon request, a visible announcement.

Air carriers must ensure that communication is accessible. All electronic or digital communication must be accessible to persons with disabilities using adaptive technology. If information is provided in physical format, the carrier will have to, upon request, provide it in large print, Braille or digital format.

Delays, cancellations and denied boarding

The Act stipulates that a carrier’s obligations toward passengers are dependent on the level of control the carrier has over the situation, as outlined below:

Flight disruption categories

Completion of itinerary, rebooking and refund

Under the Act, for all delays and cancellations, the carrier is required to complete the passenger’s itinerary. More specifically, under these regulations, the carrier must rebook the passenger after a delay of three hours or more and also after a cancellation. The passenger will be entitled to be rebooked on the carrier’s next available flight from the airport indicated on the ticket using a reasonable route.

For delays and cancellations within a carrier’s control, if the next available flight would depart nine hours or more after the original scheduled departure time, large carriers will have to rebook the passenger on another (competing) carrier. If the carrier is unable to rebook the passenger on its own or a competitor’s flight leaving the airport on the ticket within 48 hours of the original departure time, it will have to transport the passenger to a nearby airport, where available, and book them on a flight from that airport using a reasonable route.

Rebooking must be done under comparable conditions (e.g. same class of service). If the rebooking is made in a lower class of service, the carrier must refund the difference in the cost of the applicable portion of the ticket. If the rebooking is made in a higher level of service, the air carrier cannot request any supplementary payment.

If the offered rebooking does not meet the passenger’s travel needs, the passenger will be entitled to a refund. The passenger will, in addition to a refund, also be entitled to a lump sum payment reflecting the applicable minimum compensation for delays of at least three hours but less than six hours (see “Minimum levels of compensation” below).

For delays or cancellations outside the carrier’s control, if the carrier’s next available flight would not depart within 48 hours, large carriers will have to rebook the passenger on another (competing) air carrier, including those departing a nearby airport.

Standards of treatment

The APPR establish minimum standards of treatment for all flight delays and cancellations that are either (1) within the carrier’s control, or (2) within the carrier’s control but required for safety purposes, where the passenger has been informed of the delay fewer than 12 hours before departure time.

First, once a departure has been delayed by two hours, air carriers must provide access to a means of communication. They must also provide passengers with food and drink in reasonable quantities taking into account the length of the delay, time of day, and the location of the delay.

If a delay is expected to extend overnight, the air carrier is required to provide, free of charge, hotel or other reasonable accommodation, if needed, and free transportation to and from the accommodation.

Minimum levels of compensation

Under the legislation, compensation for inconvenience must be required for delays and cancellations in situations within the carrier’s control that are not required for safety. More specifically, where a passenger is informed of a delay or cancellation 14 days or fewer before departure, the regulations set the amount payable by the carrier operating the disrupted flight to the passenger based on the length of the delay upon arrival at the passenger’s destination.

Large carriers are subject to the following compensation requirements:

This will cover the vast majority of passengers travelling to, from and within Canada, including those being transported by a small carrier on behalf of a large carrier.

Small carriers are subject to the following compensation requirements:

Compensation must be offered in cash or equivalent, but passengers could choose to accept other forms of compensation, which must be of greater value and cannot expire.

Upon receipt of a passenger’s claim for compensation (made within one year of the incident), the air carrier that operated the disrupted flight has 30 days to respond and to pay the compensation owed or explain why compensation is not owed. A carrier may not refuse a passenger’s claim based on the passenger’s eligibility for compensation under a different passenger rights regime. However, passengers would only be able to receive compensation under these regulations if they have not already received compensation for the same event under a different regime.

Denied boarding

Denied boarding occurs in situations when a passenger is not permitted to occupy a seat on the plane because the number of passengers who checked in by the required time, hold a confirmed reservation and valid travel documentation and are present at the boarding gate in time for boarding is greater than the number of seats that may be safely occupied.

If denial of boarding is necessary due to situations within the carrier’s control or within the carrier’s control but required for safety purposes, the carrier must first ask all passengers if any of them would be willing to give up their seat in exchange for mutually agreed-upon benefits, which must be presented to the passenger in writing.

If a volunteer cannot be found, passengers denied boarding for reasons within the carrier’s control and within the carrier’s control but required for safety purposes are entitled to the same standards of treatment for delays and cancellations in general. They are also entitled to the rebooking and refund requirements immediately (at the passenger’s choice).

If the denial of boarding is within the carrier’s control and not required for safety, carriers must pay compensation to the passenger based on delay at arrival, as follows:

The compensation must be issued as soon as is operationally feasible, but no later than within 48 hours after boarding is denied. If the carrier cannot provide compensation before the passenger’s new departure time, it must provide written confirmation of the amount owed. The carrier must adjust the amount of compensation accordingly, should the passenger arrive at their destination later than anticipated.

If a denial of boarding is necessary, carriers must establish and follow a priority boarding list (including persons with disabilities and their support person, service animal or emotional support animal; families; anyone previously denied boarding on the same ticket; and unaccompanied minors).

Finally, these regulations prohibit carriers from subjecting passengers already on the aircraft to denial of boarding other than for safety reasons.

Tarmac delays

In addition to the standards of treatment outlined above (which apply to any delay within the carrier’s control or within the carrier’s control but required for safety), the regulations establish robust standards of treatment in respect of tarmac delays. These include access to working lavatories, proper ventilation, heating and/or cooling; the provision of food and drink in reasonable quantities; the ability to communicate with people outside of the aircraft free of charge; and access to medical assistance, if needed.

The APPR also require that for tarmac delays at Canadian airports, the carrier provides an opportunity for disembarkation after three hours and to give the opportunity for persons with disabilities to disembark first, where operationally feasible.

In order to prioritize the objective of ensuring passengers reach their destination, the regulations allow air carriers the discretion to stay on the tarmac for one additional 45-minute window, should takeoff be imminent and the air carrier be able to continue providing standards of treatment. This will help mitigate the risk of avoidable flight cancellations that could result from a rigid disembarkation rule and, in turn, minimize further passenger inconvenience.

Lost or damaged baggage

The Montréal Convention sets the maximum liability for damages for baggage lost, damaged or delayed during international travel at 1 131 special drawing rights (approximately CAN$2,100). However, these provisions do not currently apply to domestic travel.

The APPR extend the application of this regime to domestic travel covered in these regulations. In addition, the regulations require the reimbursement of any baggage fees.

Transportation of musical instruments

The APPR require carriers to establish terms and conditions of carriage regarding the transportation of musical instruments in its tariff. The topics that the tariff must address include the acceptance of musical instruments as carry-on and checked baggage in accordance with weight, dimension and safety restrictions, as well as additional fees.

Seating of children under the age of 14 years

The regulations require air carriers to facilitate, at the earliest opportunity, the seating of children under the age of 14 in close proximity to their parent, guardian, or tutor at no extra cost. The proximity requirement depends on the age of the child, as follows:

Unaccompanied minors

For international travel, Canada is a signatory to the Convention on International Civil Aviation, which is managed and administered by the International Civil Aviation Organization (ICAO). New standards regarding the transportation of unaccompanied minors have been incorporated into the Convention. These standards specify that aircraft operators must establish a program for the transportation of unaccompanied minors, and that they cannot allow minors under the age of 5 to travel without an accompanying adult.

The regulations incorporate into the ATR the new standards regarding the transportation of unaccompanied minors for international travel that Canada, as a signatory to the Convention, is required to adopt. Air carriers will be required to establish a policy for unaccompanied minors and prohibit minors under the age of 5 from travelling without an accompanying person.

Air services price advertising

In 2012, regulatory requirements with respect to air services price advertising (ASPAR) were introduced to help consumers easily determine the total price of advertised air services and the components of the total price, and encourage fair competition among advertisers of air services. The rules state that air price advertising directed at the public must include the total price, inclusive of all taxes, fees and charges that a consumer must pay to obtain the air service, as well as charges for optional services. These regulations move these requirements from the ATR to the APPR to reflect their consumer focus.

Enforcement

Contravention of any of the APPR requirements will be subject to administrate monetary penalties (AMPs). These could reach $5,000 per offence for individuals and $25,000 for corporations, depending on the type of penalty and contravention. The regulations also account for the power given to the CTA (through the May 2018 amendments to the Act) to apply an APPR-related decision (in response to a written complaint about an international flight) to all passengers on that flight. This aligns with the CTA’s existing powers related to domestic flights.

Regulatory development

Consultation

The CTA conducted extensive consultations with the public, consumer advocates, the air industry and other interested stakeholders to inform the development of the draft APPR and during the comment period following prepublication of the regulations.

Consultations – May to August 2018

On May 28, 2018, the CTA launched its public consultations with the public and key stakeholders. The consultation process provided multiple channels for input and resulted in extensive engagement by Canadians and stakeholders. There was a dedicated, air passenger protection website that included a discussion paper, questionnaire and platform to upload comments. There were eight public consultation sessions that took place across Canada — Toronto, Winnipeg, Vancouver, Calgary, Yellowknife, Halifax, Montréal and Ottawa. A survey was conducted in 11 Canadian airports. There were also bilateral consultation meetings with consumer advocacy groups, air carriers and industry associations, officials from other governments, and other experts.

At the conclusion of the consultations, the CTA had received 30 874 website visits; 4 923 completed online questionnaires; 534 comments submitted online; 203 registrants for the in-person/call-in consultations; 930 completed airport surveys; 39 bilateral consultation meetings; and 104 formal written submissions. The input was summarized in a What We Heard report which was published on the CTA’s website on October 16, 2018.

There is general consensus among individual travellers that

Consumer advocates generally agree that

The following are key views and comments generally raised by air carriers and their representatives:

All input provided was taken into account in the development of the draft regulations, which are meant to provide robust passenger protection, while taking into account the operational realities of air carriers.

Prepublication in the Canada Gazette, Part I — December 2018

On December 22, 2018, draft regulations were published in the Canada Gazette, Part I (CGI), with a 60-day comment period to allow interest persons and stakeholders to submit comments. The CTA received thousands of comments from individuals, 62 written submissions from stakeholders, and met with 20 key stakeholders, including industry and their representatives, and consumer advocates. Key comments on the CGI proposal include:

1. Implementation

Many air industry stakeholders have indicated that, due to the systems and operational changes required, they would not be able to comply with all of the new requirements by the July 1, 2019, coming-into-force date. Some consumer advocates have also expressed concern that the timeline for implementation is too short and could result in non-compliance.

In light of this feedback, these regulations will be implemented in two stages. Requirements related to communication, tarmac delays, denied boarding, lost and damaged baggage and the transportation of musical instruments provisions (along with applicable AMPs) will come into force on July 15, 2019. The more complex requirements related to seating, delays and cancellations (along with applicable AMPs) will come into effect December 15, 2019.

2. Scope and application

a) Scope

Air industry stakeholders have expressed concerns about the broad scope of the regulation, as established in the legislation — specifically the application of the regulations to flights that did not originate in Canada. They indicate that because this approach does not align with other air passenger protection regimes, it would create confusion by allowing multiple regimes to apply to the same flight and could not be practically implemented.

The regulations apply the scope set out in the legislation approved by Parliament.

b) Joint and several liability

Carriers also indicated that the application of joint and several liability for the regime among all carriers on a passenger’s itinerary would compound the issues identified regarding scope by making it possible for a carrier to be held responsible for a disruption on a flight it did not operate. Carriers believe this would create a disincentive for commercial arrangements such as interlining, which are meant to help passengers.

Considering the potential unintended consequences of the CGI proposal, the CTA has specified in the regulations that the carrier operating the affected flight is responsible for all obligations related to flight disruptions (delay/cancellation/denial of boarding/tarmac delays). The carrier issuing the ticket will be responsible for providing the passenger with the required information on travel documents and platforms it uses to sell tickets. Explicitly establishing the responsible carrier will ensure that there is clarity for the passenger and that they will receive the treatment and/or compensation owed. Joint and several liability among carriers will only be applied to the remaining APPR requirements in cases where a carrier is transporting a passenger on behalf of another carrier (e.g. a code-share).

c) Northern operations

Northern air carriers submitted that they should be exempted from the regulations due to their unique operations.

The CTA has considered the comments provided and believe that the regulations recognize the unique operating realities of northern and remote air carriers while still ensuring passengers have robust and consistent passenger rights. Instead of limiting the scope of the regulations to mitigate norther carriers’ concerns, the regulations establish lower compensation levels and re-booking requirements for small air carriers and flexible requirements concerning food, drink, accommodation and communication that take into account the location of the delay.

3. Two-tier approach

a) Distinction between large and small carrier obligations

Some consumer advocates and air industry stakeholders disagree with establishing different requirements for small and large carriers, arguing that these do not support the objective of consistency and could give certain airlines an unfair advantage over their competition. The CTA has considered these views, but has determined that the two-tier approach is an important feature of the regime that strikes an important balance between establishing robust passenger protection and ensuring small carriers are still able to provide diverse service offerings to passengers (including ultra low-cost travel, and transportation to and from remote, regional and northern areas).

b) Definition

Low-cost carriers indicated that setting a one million passenger threshold will not allow new market entrants sufficient time to develop before subjecting them to “large carrier” obligations. After assessing stakeholder comments and industry data, it has been determined that the policy intent to address viability concerns for new market entrants would be best achieved by increasing the threshold in the definition of “large carrier” from 1 million to 2 million passengers in each of the preceding two years.

4. Clarity regarding categorization of flight disruptions

Some stakeholders would like there to be greater specificity and clarity in the regulations as to the situations that would be considered “required for safety purposes” and “outside the carrier’s control.” As it is not possible or desirable to be completely prescriptive in regulation, CTA will address these comments using a combination of regulatory adjustments and guidance materials for air carriers.

a) Definition of “required for safety purposes”

Many stakeholders believe that the definition of “required for safety purposes” does not provide sufficient certainty as to the type of disruptions that it would cover. The wording of this definition is meant to be broad enough to include any flight disruption that a carrier must incur in order to ensure the safe operation of the aircraft. The CTA will provide further guidance through guidance material.

Air industry stakeholders expressed concern that the definition’s focus on legal requirements would exclude safety decisions made by the pilot based on Safety Management Systems (SMS). This was not the intent, and to address this concern, the CTA has clarified the definition for “required for safety purposes” to include SMS and pilot discretion.

b) Manufacturing defects

Stakeholders have questions why, unlike the EU regime, the CGI proposed regulations did not recognize that safety issues identified by the manufacturer or government authority that ground the aircraft are outside of the carrier’s control, as they are not inherent in the normal exercise of the carrier’s activity (e.g. manufacturer recall).

In considering the stakeholder comments, the CTA has included “manufacturing defects” and instructions from state officials to the list of situations outside of the carrier’s control.

c) Labour disruptions

Air industry stakeholders feel that the regulations should explicitly indicate that labour disruptions within an airline are “outside the carrier’s control” to avoid influencing collective bargaining processes. The CTA agrees that it would be appropriate to give clarity in this area and has adjusted the regulations to specify that disruptions resulting from labour disruptions within the carrier or at an essential service provider (e.g. an airport) are considered outside the carrier’s control.

d) “Crew time out”

Many stakeholders requested that the CTA explicitly state the category of flight disruption a crew time out would fall into. It is not possible to do so in regulation; however, as the root situation that brought about the crew hitting their duty time limit would have to be considered. These could vary greatly — e.g. crew illness, adverse weather events, poor scheduling by the carrier. The CTA will instead offer guidance for carriers on this subject in an interpretation note.

e) Knock-on effects

Many industry stakeholders indicated that the CGI regulations do not reflect the impacts a weather delay has on the next flight(s) scheduled to use the delayed aircraft (situations outside of the carrier’s control). In particular, northern carriers and industry associations expressed a significant concern regarding impacts on multi-leg journeys that frequently occur in the north. Consumer advocates feel that the regulations should be more explicit regarding the extent to which knock-on effects could be attributed to categories in which no compensation is owed by carriers, viewing this as a potential loophole.

In considering the significant concern regarding knock-on effects, the CTA has added greater clarity in the regulations — recognizing knock-on effects but creating reasonable limits. The APPR indicate that when a flight is disrupted for safety reasons or situations outside the carrier’s control, these designations could also be applied to a disruption experienced on a subsequent flight. However, this could only be done if that subsequent disruption is directly attributable to the first one and if the carrier took all reasonable measures to recover its schedule after the original flight disruption.

5. Tarmac delays

The enabling legislation required the CTA to make regulations respecting the carrier’s obligations in the case of tarmac delays over three hours, in addition to standards of treatment for general delays and cancellations. The public and many consumer advocates feel that it is unreasonable not to require certain standards of treatment for passengers during a tarmac delay before the three-hour mark. The feedback received suggests that the enabling legislation may lack clarity on the issue of standards of treatment for passengers during tarmac delays under three hours. The Minister of Transport has addressed this through a directive to the CTA to apply standards of treatment to all tarmac delays. The CTA welcomed this direction, and has made adjustments to the regulations to implement it. Standards of treatment during tarmac delays include access to means of communication, lavatories, ventilation, heating and cooling, food and drink in reasonable quantities, and medical attention, where needed.

6. Denied boarding

a) Definition

Consumer advocates and members of the public expressed concerns that the definition of denied boarding implies that the onus would be on the passenger to prove that they had been denied boarding by a carrier. They also indicated that this concept should not be limited to instances of overbooking by the airline.

The CTA has determined that no change to the regulations is required. As written, the definition of denied boarding covers any instance when there are more passengers present for boarding than seats available. This could be due to overbooking, issues with seating or aircraft weight requirements, or a carrier switching to a smaller aircraft. The carrier will be expected to follow the requirements for denied boarding and will bear the burden of proof.

b) Removal of passenger on board

Stakeholders expressed confusion as to whether the requirement prohibiting carriers from denying boarding to a passenger already on board would preclude a carrier from exercising obligations to remove a passenger from the plane for safety reasons. This is not the intent and the CTA has clarified in the regulations that the provision does not preclude a carrier from removing a passenger from the aircraft for safety reasons.

c) Volunteers

Consumer advocates and members of the public expressed concern that the CGI proposal did not provide enough consumer protection in the volunteer negotiation process. The CTA has identified this as a gap that can be addressed by these regulations and has added a requirement that, prior to departure, a carrier must present mutually agreed-upon terms of compensation in writing and the volunteer must willingly accept these in exchange for relinquishing their confirmed reserved space.

7. Compensation for inconvenience

a) Levels

Many air industry stakeholders believe the compensation levels are punitive, and that the levels should reflect the fare paid by the passenger instead of being linked to compensation levels in the European Union.

The CTA acknowledges industry concerns related to the cost associated with the minimum compensation levels; however, the intent of these regulations is to establish a world-leading passenger protection regime. It is therefore important to ensure that passengers in the Canadian regime are entitled to levels of compensation that are similar to those in other jurisdictions. Basing compensation amounts on the length of delay achieves the objective of compensating passenger inconvenience, as inconvenience does not change depending on the fare a passenger paid or the distance of their flight. Finally, the payment of compensation only being required for situations within the carrier’s control means that carriers will be able to avoid this additional cost.

b) Time limits

Consumer advocates have expressed concern with the 120-day time limit for passengers to file a request for compensation with the carrier. They have indicated that it would not allow sufficient time for passengers to consult flight data that will be made public by Transport Canada. In order to account for their comments, the CTA has increased the time limit to one year. Having one year to file a claim allows passengers sufficient time to access necessary flight data while also providing carriers with certainty.

c) Indexation

Some air industry stakeholders are of the view that the CGI proposal to index compensation amounts to inflation is a punitive measure that does not recognize that air fares are generally stagnant (or decreasing). Instead of automatically indexing the minimum compensation amounts to inflation, the CTA will undertake a review of the APPR, including compensation provisions, after a three-year period.

8. Rebooking

Air industry stakeholders were concerned that the APPR requirements to rebook a passenger on the airline’s next available flight or, after 9 hours, on the flight of a competitor, would extend to flights out of another airport, or flights using circuitous routes. Carriers expressed concern about the undue burden associated with this, which would particularly affect carriers with low flight frequency.

The CTA acknowledges that the regulations should be clear on this point and should balance the operational needs of carriers with the overall objective of ensuring the passenger reaches their destination as soon as possible after a delay. The final regulations specify that, for the first 48 hours, the rebooking must be on a reasonable route out of the same airport as on the original ticket. If the carrier is unable to rebook the passenger on a flight leaving the same airport within 48 hours of the original departure time, the carrier should offer rebooking out of an airport within reasonable proximity.

9. Communication

a) Communication on travel documents

Air carriers expressed concern that the requirement to provide information regarding standards of treatment, compensation and passenger recourses on travel documents (e.g. tickets and boarding passes) will make those documents unwieldy.

The intention was to permit carriers to provide this detailed information via a hyperlink, a fact that the CTA has clarified in the regulations. The combination of standardized notices, digital platforms and itinerary related documents and hyperlinks to more detailed information will ensure that passengers have access to all key information when booking a flight.

b) Third party resellers

Carriers indicated that while they support the policy intention of ensuring third-party ticket resellers provide passengers with key information, putting the onus of ensuring this on the carrier does not recognize that carriers have little or no control over the practices of third party resellers. They indicate it would not be fair to punish a carrier for the inaction of a third party.

The CTA has taken this into account by requiring carriers to take all reasonable measures to ensure that third-party resellers share information with passengers.

c) Communication on tarmac

Air industry stakeholders indicated the CGI proposal requiring carriers to provide access to communication during a tarmac delay is too strict, as carriers may be unable to provide means of communication (e.g. Wi-Fi) during a tarmac delay for safety reasons.

The APPR are not intended to preclude any safety requirements or measures. The CTA has therefore clarified in the regulations that the air carrier must provide access to communication where feasible during a tarmac delay.

10. Seating of children

a) Interpretation

Some stakeholders expressed concern with the wording of the seating of children provision, as it could be interpreted as requiring seat selection free of charge for child and parent (e.g. selection of a seat in a particular area of the aircraft). In order to clarify the interpretation, the CTA has adjusted the wording to make it clear that carriers are required to facilitate, free of charge, the seating of a parent and child in close proximity. This does not include having to offer seat selection free of charge.

b) Compensation

Consumer advocates expressed that the seating of children requirements are unclear, are too heavily reliant on volunteers to change seats, and/or represent a step backward from airlines’ current policies. Some have indicated that there should be compensation required if a carrier cannot seat a child and parent together.

The seating of children provisions align with the legislative framework by requiring airlines to facilitate the seating of children in close proximity to parents. The legislation does not indicate that the regulations should absolutely require carriers to seat children with their parents. Ensuring best efforts is appropriate, given the differing seat selection and assignment processes carriers have. There is also no legislative authority to require compensation related to the seating of children.

11. Musical instruments

The Canadian Federation of Musicians expressed concern that the wording of the provision regarding the transportation of musical instruments could permit a carrier to refuse carriage of musical instruments. Recognizing this gap, the regulations have been adjusted to reinforce that carriers will be required to carry musical instruments as checked or carry-on baggage unless prevented by safety, weight or dimension requirements.

12. Cost-benefit analysis

Many carriers and industry representatives believe that the cost-benefit analysis (CBA) does not appropriately capture the cost to carriers associated with the APPR. Specific concerns include the following:

Instrument choice

The Act, as amended in May 2018, provides a framework for the APPR and requires the CTA to develop the specific regulatory provisions within the established parameters, including standards of treatment and minimum compensation levels. Therefore, no other instruments were considered.

The input provided during consultations, and best practices and lessons learned from other jurisdictions were considered in developing the regulations.

Regulatory analysis

Costs and benefits

The cost-benefit analysis estimates the incremental net benefit to society of the APPR. The incremental benefit is determined as the difference between the net benefit of the regulation scenario and the baseline scenario. The APPR are estimated to result in present value costs to Canadian carriers and the CTA of $1.424 billion, present value benefits to Canadian passengers of $1.510 billion and a net present benefit of $86.10 million, expressed in 2012 Canadian dollars, over a 10-year period following the coming into force of the regulations. On an annualized basis, the cost to carriers represents around $2.73 per passenger segment.

The regulations establish minimum standards for the following:

Table 1: Regulatory provisions
Provision Compensation Standard of Treatment Establish Process/Policy

Delay

Yes (WCC)

Yes

Yes

Cancellation

Yes (WCC)

Yes

Yes

Denied boarding

Yes (WCC)

Yes

Yes

Assignment of seats to children under the age of 14

N/A

N/A

Yes

Tarmac delay

Yes (WCC)

Yes

Yes

Lost and damaged baggage

Yes

N/A

N/A

Musical instruments

N/A

N/A

Yes

Unaccompanied minors

N/A

N/A

Yes

Communication

N/A

N/A

Yes

(WCC): Passenger is only entitled to compensation if the disruption is within the carriers control.

Affected stakeholders

The following stakeholders will be impacted by the APPR:

Baseline scenario

Currently, carriers set out the terms and conditions of carriage in their tariffs. These tariffs form the contract between a passenger and a carrier when a ticket is purchased. A carrier’s tariff will cover its obligations in all types of events including delays, cancellations, tarmac delays, lost or damaged baggage and seating of children, among other things.

Because each carrier is, for the most part, responsible for setting its own tariff, there can often be differences in the treatment of passengers in different types of events. The objective of the APPR is to normalize the minimum standard across all carriers operating in Canada to ensure that the obligations on carriers are clear, concise and easily understood by carriers and passengers.

In order to establish the baseline for this CBA, the tariffs of carriers operating in Canada were analyzed on an issue-by-issue basis. Further, responses to the CTA’s CBA survey to industry were taken into account. It is assumed that in the absence of the APPR, carriers would continue operating according to their current tariffs for the duration of the study period.

As there are hundreds of Canadian carriers in Canada, a sample of carriers was analyzed for this study and was assumed to be representative of the population. The baseline for non-Canadian carriers was assumed to be similar to that of Canadian carriers flying internationally. While this assumption may be wrong in any given instance, it is expected to be realistic on average, as some jurisdictions ensure consumer protection in the form of compensation, while others do not. Furthermore, it is expected that in many instances, Canadians flying into jurisdictions with compensation schemes similar to that of the European Union are often unaware that they are entitled to compensation and would therefore often not claim it. Carriers were categorized into large, medium and small based on the number of employees. Markups were applied to the sample costs of each carrier category in order to arrive at the total cost to industry.

The number of passengers from 2017 was used as the starting point for the baseline. That number is expected to increase at an average annual rate of 3.1% over the 10-year study period. The growth rate is assumed to be the same under both the baseline and the regulation scenarios.

Methodology, data sources and assumptions

Study period

This analysis examines costs and benefits over a 10-year period (2019–2028). A real discount rate of 7% is used to establish the net present value of the regulations for non-compensation provisions. A nominal discount rate of 9% (the real discount rate plus an assumed inflation rate of 2%) is used to establish the net present value of compensation provisions. Values are expressed in 2012 constant dollars.

Number of passengers

The number of passengers for 2017 is estimated using the number of enplaned and deplaned passengers. footnote 3 The number of domestic enplaned and deplaned passengers is divided by two to arrive at an estimate of the number of passenger segments on domestic flights.

Table 2: Enplaned and deplaned passengers in 2017
Passengers Enplaned and Deplaned Passengers Estimated Number of Passengers
Domestic 88 229 824 44 114 912
International 61 411 848 61 411 848
Total 149 641 672 105 526 760

Source: Air passenger traffic at Canadian airports, annual, Statistics Canada, Table: 23-10-0253-01 (formerly CANSIM 401-0044).

Use of U.S. data

Air carriers do not currently report data in Canada for many of the provisions covered by the regulations, such as rates of involuntary denied boarding, delayed or cancelled flights, lost or damaged baggage or tarmac delays. Therefore, for the purpose of this CBA, these values were extrapolated from data reported by U.S. carriers and published by the U.S. Department of Transportation. footnote 4 In circumstances where carriers provided estimates of their own operations, these estimates were used to adjust the average rates reported by U.S. carriers.

Further, in instances where the United States introduced similar consumer protections, potentially altering carrier behaviour, data prior to the introduction of such protections were considered to inform the baseline scenario, and data post-introduction of such protections were considered to inform the APPR scenario.

Carrier market shares

Market shares are determined on the basis of available seat-miles from 2017 using data purchased from Flight Global. As many of the small carriers do not report flight movement records to Flight Global, small carriers are assumed to make up 1% of market shares.

Cost of accommodation

The cost of accommodation for one passenger (2018 CAN$/night) is $145.56. This amount was determined by taking an average of nightly rates from hotels within close proximity to airports across Canada and applying an assumed corporate discount of 15%.

Proportion of passengers accepting accommodation

It is assumed that 55.5% of passengers eligible for accommodation (in both the baseline and APPR scenarios) will not accept accommodation as they would choose to stay at home or with friends or family or share a room with a travel companion.

Cost of food and drink

The value of a meal voucher (2018 CAN$) is assumed to be between $8 (the price of a combo at a fast food establishment found in many Canadian airports) and $25 (the highest level of food voucher reported to be provided by carriers for a single meal), with an expected value of $16.50.

Valuation of passengers’ travel time

In this analysis, the value of time refers to the dollar amount associated with the opportunity cost of the time spent travelling by air. The value of time depends on the passenger’s travel purposes, which are broadly categorized as either for non-business or business purposes. Non-business purposes account for leisure and other personal motives for travelling. Typically, business travellers’ value of time is based on their hourly wage (the median wage is used in this study), whereas non-business travellers’ value of time is based on their revealed and stated preferences. footnote 5 However, for a matter of simplicity, the methodology prescribed by the “Revised Departmental Guidance on Valuation of Travel Time in Economic Analysis” of the United States Department of Transportation (USDOT) is used to determine the value of time of a Canadian passenger. Based on this methodology, the value of one hour of air travel of a Canadian passenger (VOT) is estimated at $18.49 in 2017 dollars ($17.25 in 2012 Canadian dollars).

Premiums for enhanced quality of passengers’ time

Flight disruptions (e.g. flight delays, cancellations and lost baggage) can be stressful and uncomfortable for passengers. footnote 6 The APPR will improve passengers’ experience during air travel by imposing obligations on carriers that will reduce stress and discomfort during flight disruptions. Together, reduction in anxiety levels and improved sense of comfort during extended wait periods are fostered by the design of the APPR, which will create benefits to passengers. For instance, awareness of clear procedures in case of flight disruptions will decrease the level of anxiety to passengers, while the obligation to ensure passengers a minimum level of standard of treatment guarantees a better flight quality experience, increasing comfort.

Similar to the methodology employed by the USDOT’s cost and benefit analysis on the “Final Rule — Enhancing Airline Passenger Protections,” the estimates of decreased anxiety and increased comfort to the passengers are based on a premium applied to the value of passengers’ time. footnote 7

Proportion of passengers considered to be Canadian

Based on Statistics Canada data, footnote 8 the percentage of Canadian residents travelling on international flights is 64.91%. There are currently no data on passenger nationality for domestic flights; therefore, the percentage of passengers considered Canadian residents on domestic flights is assumed to be 82.5%. This is the mid-point between the percentage of Canadians travelling on international flights and 100%.

Claim rates

For the purposes of this CBA, the claim rates of compensation by individuals in various scenarios are assumed to be the following:

Table 3: Claim rates of compensation
Passenger Type Claim Rate
Canadian, baseline 30%
Foreign, baseline 30%
Canadian, APPR 80%
Foreign, APPR 70%
Denied boarding 100%

Details of the costs and benefits for each regulatory provision can be found in the full CBA document, which is available from the CTA upon request. The following provides a brief description of the incremental benefits and costs of the regulations.

Altering scheduled flight times

It should be noted that it is possible that carriers could extend their scheduled flying times to reduce the probability of paying compensation on chronically delayed flights. However, this analysis does not take this into account. It is assumed that carriers’ scheduled flight times will remain unaltered in the APPR scenario.

Benefits

Compensation

Currently, passengers are compensated for flight disruption within a carrier’s control either based on criteria described in a carrier’s tariff or at the discretion of a carrier. The APPR establishes minimum levels of compensation, tied to the length of delay to a passenger, to be paid in the event of flight delays, delays to passengers resulting from cancellations and denied boarding. Further, carriers will be required to compensate passengers for lost or damaged baggage on domestic flights, commensurate with the value of lost or damaged baggage, and refund baggage fees.

In both the APPR and baseline scenarios, the benefit of compensation is determined by first estimating the number of Canadian passengers that would be expected to be entitled to compensation and claim compensation under each scenario and then multiplying the number of passengers by the amount of compensation due under each scenario. Summing this compensation yields the total benefit of compensation to Canadian passengers under both the baseline and APPR scenarios. The difference represents the incremental benefit to Canadian passengers of the regulatory provisions.

The present value of the incremental benefits to compensation under the APPR scenario is $1.228 billion, with an annualized benefit of $191 million.

Increased comfort — Food and drink

Currently, passengers are provided with food and drink (or food vouchers for use in an airport) during flight disruptions either based on criteria described in a carrier’s tariff or at the discretion of a carrier. The APPR set a time threshold according to which carriers must provide passengers with food and drink during a flight disruption.

In both the APPR and baseline scenarios, the benefit to passengers of being provided with food and drink is determined by first estimating the number of Canadian passengers who would be delayed under the various passenger delay scenarios for which carriers provide food and drink. Based on the number of passengers estimated to be experiencing delay, the average delay to passengers can be determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours of delay during which passengers would have the benefit of waiting with food and drink by the value of a traveller’s time and the premium for increased comfort (food and drink).

The present value of the incremental benefits to “Increased comfort — Food and drink” under the APPR scenario is $93 million, with an annualized benefit of $13 million.

Increased comfort — Accommodation

Currently, passengers are provided with accommodation during flight disruptions either based on criteria described in a carrier’s tariff or at the discretion of a carrier. The APPR require carriers to provide passengers with accommodation during a flight disruption when the delay is expected to occur overnight.

In both the APPR and baseline scenarios, the benefit to passengers of being provided with accommodation is determined by first estimating the number of Canadian passengers who would be delayed under the various passenger delay scenarios for which carriers would be required to provide accommodation. Based on the passengers estimated to be experiencing delay, the average delay to passengers can be determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours of delay during which passengers would have the benefit of waiting in an accommodation by the value of a traveller’s time and the premium for increased comfort (accommodation).

The present value of the incremental benefits to “Increased comfort — Accommodation” under the APPR scenario is $166 million, with an annualized benefit of $24 million.

Increased comfort — Disembarkation

Currently, passengers are provided with the opportunity to disembark during a tarmac delay based on criteria described in a carrier’s tariff or at the discretion of a carrier. The APPR generally require carriers to return to the gate to disembark after three hours of delay on a tarmac.

In both the APPR and baseline scenarios, the benefit to passengers of deplaning is determined by first estimating the number of Canadian passengers who would be expected to experience tarmac delays greater than three hours. Based on this number, the average delay to passengers can be determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours of delay during which passengers would have the benefit of waiting in an airport, rather than in an airplane, by the value of a traveller’s time and the premium for increased comfort (disembarkation).

The present value of the incremental benefits to “Increased comfort — Disembarkation” under the APPR scenario is $3.97 million, with an annualized benefit of $0.57 million.

Decreased anxiety

Under the APPR scenario carriers will be required to provide updates on causes of disruptions, type of disruption and expected length of disruption. Further, carriers will be required to communicate the recourse available to a passenger in the event of a disruption. Having a clear understanding of what is going on and of what recourse is available is expected to reduce anxiety for passengers experiencing flight disruptions.

Passengers travelling with children would be expected to experience less anxiety since the regulations require the seating of children within close proximity to a parent or guardian, free of charge. Finally, domestic passengers experiencing lost or damaged baggage are expected to experience less anxiety as a result of the clear expectations for compensation.

In the APPR scenario, the benefit to passengers of decreased anxiety is determined by first estimating the number of Canadian passengers who would be expected to experience reduced anxiety as a result of the regulations. The average time during which a passenger is expected to experience reduced anxiety is then determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours during which passengers would be expected to experience reduced anxiety by the value of a traveller’s time and the premium for decreased anxiety.

The present value of the incremental benefits to “Decreased anxiety” under the APPR scenario is $15.4 million, with an annualized benefit of $2.2 million.

Time savings

In the case of involuntary denied boarding, the amounts of compensation are designed to help encourage carriers to seek volunteers. This expected reduction in involuntary denied boarding is expected to translate into time savings for Canadian passengers.

The time savings (in hours) to Canadian passengers are determined by multiplying the difference between the number of passengers expected to be involuntarily denied boarding in the baseline and APPR scenarios by the average delay to a passenger involuntarily denied boarding. The benefit is determined by multiplying the total time savings by the value of a passenger’s time.

The present value of the incremental benefits to time savings under the APPR scenario is $1.1 million, with an annualized benefit of $0.162 million.

Non-monetized benefits

Requiring carriers to facilitate the seating of children near their parent or guardian could result in a safety benefit in the event of an evacuation, as parents would not be trying to locate their children when the plane is being evacuated. The APPR also benefit musicians, as carriers will be required to state their policy for carrying musical instruments in their tariffs. This would help provide more certainty to musicians travelling with musical instruments.

Costs

Compensation

The cost to carriers of compensation is determined in the same manner as the benefit of compensation. However, instead of multiplying by the number of Canadian passengers entitled to and expected to claim compensation, the multiplication is done by the total number of passengers travelling with Canadian carriers who are entitled to compensation and who would be expected to claim compensation. The incremental cost is determined as the difference between compensation costs in the baseline and APPR scenarios.

The present value of the incremental costs to compensation under the APPR scenario is $1.220 billion, with an annualized cost of $190 million.

Providing food and drink

The cost to carriers of providing passengers with food and drink in both the APPR and baseline scenarios is determined by multiplying the number of passengers travelling on Canadian carriers who would be entitled to food and drink in the various scenarios by the cost of providing food and drink under each scenario.

The present value of the incremental costs to providing food and drink under the APPR scenario is $78 million, with an annualized cost of $11 million.

Providing accommodation

The cost to carriers of providing passengers with accommodation in both the APPR and baseline scenarios is determined by multiplying the number of passengers travelling on Canadian carriers who would be entitled to accommodation in the various scenarios by the cost of providing accommodation under each scenario.

The present value of the incremental costs of providing accommodation under the APPR scenario is $70 million, with an annualized cost of $10 million.

Tarmac delay — Disembarkation

The only cost estimated in the case of deplaning is the fuel cost. Under both the baseline and APPR scenarios, the estimated number of Canadian carriers’ flights being delayed on the tarmac for more than three hours that would be expected to taxi back to the gate is multiplied by the average fuel cost per minute and the average number of minutes for taxiing back to the gate. Further, only half of international flights are considered, as the majority of tarmac delays occurring in other jurisdictions would be subject to the disembarkation requirements of that jurisdiction.

The present value of the incremental costs of deplaning under the APPR scenario is $111,000, with an annualized cost of $16,000.

Training

The regulations require carriers to invest in developing and offering training to their employees to ensure that the carrier is operating within the requirements of the regulations. The cost of training is expected to be fully assumed in the first year of the coming into force of the regulations.

The cost of developing training programs is estimated by multiplying the number of hours of each employee type involved in the development of the training by the average wage for each employee type. The hours estimated to be required to develop training programs are assumed to be higher for large carriers than for small carriers.

The cost of having the required employees take the training is estimated by multiplying the number of employees in the pilot and co-pilot, other flight personnel, management and administration and other carrier personnel categories employed in Canada by their respective hourly wages and the assumed number of hours required for training.

The present value of the incremental costs of developing and providing training under the APPR scenario is $18.5 million, with an annualized cost of $2.6 million.

Communication

The regulations require carriers to clearly communicate certain information to passengers at the time of reservation and in the event of a flight disruption. The costs to carriers to meet the requirements of the communication aspects of the regulations include upfront implementation costs and ongoing operating costs. Since the ongoing costs of communicating with passengers would be assumed in both the baseline and APPR scenarios, carriers are not expected to require any additional employees to perform communication in the APPR scenario. Ongoing costs are therefore assumed to be negligible and only one-time implementation costs are monetized.

To estimate the costs of implementing the provisions, the IT, legal and business administrative costs are calculated for each communication provision. Since it is assumed that the resources required to estimate costs for large, medium and small carriers are different, costs are estimated for each carrier type. They are then totalled to estimate the one-time implementation costs of the communication provision.

The present value of the incremental costs of communication under the APPR scenario is $24.9 million, with an annualized cost of $3.5 million.

Changes to reservation systems

The provision requiring carriers to seat children within close proximity to a parent or guardian was estimated based on responses from carriers to the CTA’s CBA survey and is expected to result in one-time, upfront costs related to changes to carriers’ reservation systems. Costs were only considered for carriers that do not already guarantee seating within close proximity to a parent or guardian, free of charge.

The present value of the incremental costs of making changes to reservation systems under the APPR scenario is $260,000, with an annualized cost of $37,000.

Administrative costs to industry

The regulations are likely to result in an administrative cost to carriers in issuing compensation, meal vouchers and accommodation, and rebooking passengers in the event of flight disruptions. The APPR also rely on the carrier to make an initial determination of the cause of cancellations and delays. In many cases, there may be multiple causes, which could be the subject of a dispute between passengers and air carriers.

However, these additional costs are expected to be minimal. Currently, carriers offer various forms of compensation in the event of a breach of tariff. The regulations may result in increased volumes of passengers claiming compensation; however, the uniform nature of the compensation requirements are expected to streamline the issuing of compensation for carriers. For the purpose of this CBA, these costs were not monetized.

Cost to Government

The CTA is responsible for the consumer protection of air travellers. It discharges this mandate by facilitating, mediating and adjudicating disputes between air travellers and air carriers. It also has a responsibility for ensuring that carriers’ tariffs are reasonable.

The CTA is also responsible for issuing licences to scheduled and chartered air carriers operating in Canada and for the monitoring and enforcement of the carriers’ obligations and adherence to CTA orders and decisions. The CTA anticipates an initial increase in all of these activities after the coming into force of these regulations.

The present value of the incremental costs to Government of administering the APPR is $9.7 million, with an annualized cost of $1.4 million.

Cost-benefit statement

Table 4: Quantified impacts (base year 2018)

A. Quantified impacts (2012 price level)
Cost-Benefits First Year 2019 ($, Millions) Final Year 2028 ($, Millions) Total Present Value ($, Millions) Annualized Average ($, Millions)
Benefits to Canadians 209.0 264.9 1,509.6 231.1
Costs to air carriers 238.3 241.3 1,413.8 217.3
Costs to the Government of Canada 2.8 0.4 9.7 1.4
Net benefits     86.1 12.4
B. Qualitative benefits

Note: Costs and benefits are analyzed over a 10-year period (2019–2028) at a 7% discount rate. Compensation for inconvenience costs and benefits are analyzed at a discount rate of 9%.

Sensitivity analysis

Uncertainty has been taken into account in this cost-benefit analysis by assigning probability distributions to several variables. The results of the cost-benefit analysis summarized in Table 4, above, is the middle value calculated using the median of probabilistic inputs. The low and high values were determined by changing one variable at a time to determine the lowest and highest possible combination of outcomes. It should be noted that the lowest/highest possible net benefit is not derived by taking the difference between the lowest/highest possible costs and benefits, as in some cases, the value of an input that generated the lowest/highest cost may not be the same value that generates the lowest/highest benefit.

Finally, it should be noted that the extreme outcomes, determined through this sensitivity analysis would be extremely unlikely to occur as they would require several already unlikely outcomes to occur simultaneously. The probability of all extreme values occurring simultaneously is 0.220 = 1.04858E-14.

The percentage of passengers on domestic flights who are Canadian, the percentage of passengers who claim compensation under the APPR scenario, and the value of a traveller’s time have the largest impact on the net present value (NPV). Setting all of these variables to their maximum probable values increases the NPV by $348 million. Setting them all at their minimum probable values decreases the NPV by $302 million.

The table below summarizes the highest, lowest and most likely outcomes derived through the sensitivity analysis.

Table 5: Low, middle, and high values based on the sensitivity analysis
Cost-Benefit Low
($, Millions)		 Middle
($, Millions)		 High
($, Millions)
Benefits to Canadian public 987.5 1,509.6 2,254.8
Costs to carriers 928.7 1,413.8 1,957.4
Costs to the Government 9.7 9.7 9.7
Total cost to all stakeholders (including the Government) 938.7 1,413.8 1,967.1
Net benefit −48.7 86.1 287.7

Note: Values in this table are presented as the present value using a real 7% discount rate. Compensation for inconvenience costs and benefits are analysed at a nominal discount rate of 9%.

Small business lens

Although most of the Canadian commercial air operators do not meet the definition of the small and medium business category when using the gross revenue criteria to determine whether a business is small, the CTA has determined that 378 air carriers are considered small businesses using the criteria of having 100 employees or fewer.

Costs to small businesses are associated directly with compliance with the regulations, including compensation paid to passengers in the event of flight disruption, expenses (e.g. IT systems) assumed to comply with communication provisions, and costs related to developing new training programs and delivering training to all relevant employees on the new processes and provisions.

The estimated total annualized increase in cost is $4,324,986 (in 2012 dollars) for all affected small businesses and the average cost per small business is $11,442 (in 2012 dollars). The estimated present value of total costs and cost per small business over the 10-year period are valued at $30,376,893 (in 2012 dollars) and $80,362 (in 2012), respectively.

In the initial option, the APPR requirements would be applied to air carriers equally, regardless of their business size. However, to take into account concerns regarding impacts on the viability of small carriers, the CTA has put forward a flexible option in which small carriers would be subject to lower compensation requirements and would not be required to rebook using competing carriers.

Initial option

Short description: Apply the APPR to carriers regardless of their business size

Number of small businesses impacted: 378

Table 6: Initial option costs and risks

Costs/Risks

Annualized Average ($)

Present
Value ($)
Compliance costs 4,848,419 34,053,268
Administrative costs 0 0
Total costs
(all small businesses)		 4,848,419 34,053,268
Total cost per small business 12,827 90,088
Risk considerations N/A N/A

Flexible option

Short description: Two-tiered approach to compensation and rebooking requirements

Number of small businesses impacted: 378

Table 7: Flexible option costs and risks

Costs/Risks

Annualized Average ($)

Present
Value ($)

Compliance costs

4,324,986

30,376,893

Administrative costs

0

0

Total costs
(all small businesses)

4,324,986

30,376,893

Total cost per small business

11,442

80,362

Risk considerations

N/A

N/A

“One-for-One” Rule

As the regulations do not impose incremental administrative costs on businesses, the “One-for-One” Rule does not apply.

Regulatory cooperation and alignment

The EU has put in place a passenger protection regime including communication requirements, minimum standards of treatment, rebooking and reimbursement, and in some cases minimum compensation for flight disruptions. Current U.S. rules to strengthen air passenger rights address communication with passengers, set standards of treatment and disembarkation requirements during tarmac delays, and establish compensation for denied boarding due to overbooking. These requirements are in addition to those under the Montreal Convention, an international treaty to which the EU, the United States and Canada are all party.

The CTA considered best practices and lessons learned from these other jurisdictions, while tailoring the regulations to Canadian needs. As a result, the APPR ensure that passengers travelling to, from and within Canada have rights that are comparable to those in other jurisdictions and that unintended consequences experienced in other jurisdictions can be mitigated.

In addition, the requirements related to the transportation of minors are intended to implement in Canadian regulation the new ICAO standards in this area. This is a requirement, as Canada is a signatory to the Convention on International Civil Aviation.

Gender-based analysis plus (GBA+)

The regulations are intended to benefit the travelling public generally. The only targeted regulation relates to the seating of children under 14 years of age next to their parent or guardian at no additional cost. These regulations will result in a positive impact for travelling parents in general and, potentially to a greater extent, for women. Based on information from Statistics Canada, women are four times more likely to be lone parents (1.26 million) than men (0.35 million).

During consultations, some carriers indicated that compliance with the new regulations could involve financial requirements that hamper the viability of smaller airlines and those with already thin financial margins, including ultra-low-cost airlines serving a wide range of travellers and those serving northern and remote areas.

These risks are mitigated in the regulations through the two-tier approach to compensation and rebooking requirements. Requirements related to hotel accommodations, provision of food and communication take into account the operating environments of carriers serving northern and remote communities (where amenities are often limited).

Rationale

The CTA has developed these regulations in alignment with statutory requirements and the framework set out in the Act.

The CTA considered all input received through the consultations and CGI comment period to develop and finalize the regulations. The CTA has also considered best practices and lessons learned from air passenger protection regimes in other jurisdictions, including the European Union (EU) and the United States, as well as the Montreal Convention, an international treaty to which Canada is party (along with the United States and the EU).

Scope and application

The scope of the regulations aligns with Parliament’s intent that the regulations apply to “all flights to, from and within Canada, including connecting flights.” The regime applies as broadly as possible to travellers in Canada to ensure as much consistency as possible.

Identifying the operating carrier as responsible for the requirements related to flight disruptions achieves the objective of ensuring a passenger understands where they can turn for redress without exposing carriers to undue liability or disincentivizing commercial arrangements between carriers.

The scope and application recognize viability concerns of small carriers and new market entrants. Instead of limiting the scope of the regulations by carving certain carriers out, the regulations set different compensation and rebooking requirements for large and small carriers and creates flexibility within standards of treatment requirements (food, drink, accommodation) that account for unique operating environments. In this way, the regulations strike a balance between establishing robust passenger protections and ensuring Canada’s small carriers are still able to provide diverse service offerings to passengers, including ultra-low-cost travel, and transportation to and from remote, regional and northern areas.

The CTA will monitor the effects of these regulations on the growth of small and medium-sized carriers and new entrants into the market and reassess if needed.

Clear communication

The regulations reflect the general agreement among the public, consumer advocacy groups, and industry stakeholders that passengers should be given clear information — regarding terms and conditions of carriage and during flight disruptions — in plain language through a range of methods.

The regulations are aimed at maximizing opportunities for passengers to receive key information throughout the travel process by, for example, requiring different methods of communication, and by requiring carriers to ensure information is shared by third parties authorized to sell tickets in the carrier’s name. It is also designed to ensure that the needs of persons with disabilities are met.

The regulations also take into account some operational issues raised by air carriers, such as their limited control of signage at airports and third party resellers, and potential difficulty for front-line staff in immediately determining the precise cause of a delay.

Standards of treatment

The standards of treatment and rebooking requirements are comparable to those established in the EU regime, and generally align with comments provided by the public and consumer advocates. Specifically, requiring standards of treatment to be provided starting two hours after the delay at departure aligns with the EU regime.

Avoiding prescribed dollar values for food and drink requirements reflects the wide range of possible delay circumstances and operational realities of different airport locations. The food and drink requirements are dependent on the time of day, duration of the delay and location to take into account cost variances at different airport locations and limited amenities in some remote areas. Accommodation requirements are similarly linked to the location of the delay.

Completion of itinerary

The requirements related to rebooking and refunds protect the interests of passengers, while taking into account the operational considerations of carriers. Rebooking parameters reflect the aim of ensuring that the passengers arrive at their destination as soon as possible by rebooking them on the carrier’s next possible flight or, in the case of large carriers, rebooked on a competitor flight if the carrier does not have an available flight leaving within nine hours of the original departure time.

Starting the rebooking and refund requirements after a flight delay of three hours allows time for a carrier to recover the flight from the delay before having to rebook, which can be a complex process that diverts resources from delay recovery.

Large carriers are also allowed a reasonable opportunity to make other arrangements for the affected passengers before having to take on the financial implications of last-minute rebooking on a competing carrier or transporting a passenger to another airport. Setting the threshold for rebooking on another carrier at nine hours reflects the lower frequency of certain flights, as well as hours of operation restrictions at some airports.

Exempting small air carriers from the requirement to rebook passengers on other carriers takes into account that many small air carriers have infrequent flights and/or do not have commercial or partnership arrangements with other air carriers.

Minimum compensation levels

The CTA received a range of suggestions regarding the appropriate amount of compensation for delays and cancellations — from $0 to $9,000. The amounts for large carriers are comparable to those established in the EU regime (which range from EUR 250 to EUR 600, or approximately CAN$375 to CAN$900). These amounts also reflect input from public and consumer advocacy groups that compensation amounts should reflect inconvenience. They also reflect the policy intent that the Canadian regime be world leading.

Certain air carriers are of the view that compensation should be linked to the price of the ticket purchased or at least not surpass it. However, the objective of the regulations is to compensate for the inconvenience experienced by the passenger, which does not change depending on the price of a ticket. Basing compensation amounts on the length of delay instead of the individual fare (or flight distance, as is used in the EU) achieves that objective. This is also the clearest and most administratively straightforward option and reflects input received from the public during consultations.

Some stakeholders and members of the public recommended that the same compensation requirements apply to all carriers, regardless of size. However, the two-tier approach takes into account concerns that costs could impact the viability of small carriers, many of which serve remote communities, and ensures that air travel is accessible for Canadians.

The specific time frames for compensation (three or more hours, but less than six hours; six or more hours, but less than nine hours; and nine or more hours) align with the EU regime, in which compensation for delays is required for delays of three hours or more.

The regulations reflect consumer views that it is important to be offered compensation in the form of cash. It also provides the flexibility, supported by both carriers and consumers, to offer other forms of compensation (e.g. travel vouchers, seat upgrades, and points towards loyalty programs). Making cash the primary form of compensation, with passenger discretion to accept other forms of greater, non-expiring compensation, ensures that carriers can tailor compensation to passenger needs, provided passengers are aware of all options.

Denied boarding

During consultations, the public expressed particular concern regarding denied boarding due to factors entirely within carrier control, such as overbooking. While carriers advised against punitive compensation requirements, establishing compensation that is significantly higher than general delay and cancellation compensation — while also leaving carriers with flexibility to negotiate with potential volunteers — is intended to reduce the number of passengers moved to later flights against their will. The APPR will not prevent carriers from innovating in their methods of seeking volunteers (e.g. through an auction). Specifying that negotiated terms are mutually agreed upon and provided in writing to the passengers will protect consumer interests in this process.

The regulations establish requirements for immediate compensation (i.e. starting at a delay of 0 hours) for denied boarding, reflecting the heightened inconvenience associated with being denied boarding against one’s will. Immediate payment for denied boarding aligns with the U.S. regime and reflects the low administrative complexity of processing these payments.

Tarmac delays

The regulations increase passenger comfort during any tarmac delay by requiring that carriers provide a range of necessities recommended by the public and consumer advocates during consultations.

At airports in Canada, carriers will generally return to the gate for disembarkation after three hours — the earliest time permitted by the Act. The timing of disembarkation also draws from international best practices, namely the tarmac delay rules in the United States.

However, in order to mitigate further delay and passenger discomfort, the regulations allow air carriers the discretion to stay on the tarmac for one additional 45-minute window, should takeoff be imminent. While there may be public objections to allowing a plane to stay on the tarmac for longer than three hours, this is intended to account for operational considerations and lessons learned expressed by air carriers, in particular the increase in flight cancellations experienced in the United States following the implementation of a strict disembarkation rule.

Lost or damaged baggage

Under the regime, liability limits (and related processes, timelines and exceptions) established under the Montreal Convention for international travel will also apply to domestic flights, which will ensure consistency for travellers. This approach also recognizes that the regime cannot conflict with the Montreal Convention, which provides an exclusive scheme for international travel, a consideration that was emphasized by stakeholders generally. The regulations also reflect the view expressed by many members of the public that baggage fees should be reimbursed in instances of damage, loss or temporary loss.

Seating of children under the age of 14

Some members of the air industry are of the view that the seating of children free of charge is not an area in which government intervention is needed. However, this is clearly mandated by the legislation. It is important to note, however, that the regulations do not require carriers to offer seat selection free of charge. The airline will be required to facilitate the seating of a child near their parent or guardian at no additional charge.

The regulations reflect public and consumer advocate views that children should be seated near their parent or guardian at no extra charge, and, generally, that proximity should depend on the age of the child. In the CTA’s public survey at airports, 79% of respondents indicated that children under 5 years of age should be seated adjacent to their parent, guardian or tutor. Results also suggest that it would be reasonable to allow for slightly greater separation between older children and their parent, guardian or tutor, with the greatest latitude for children aged 12 to 14.

By basing seating requirements on the age of the child and requiring that air carriers facilitate the seating of children at the earliest opportunity, the regulations recognize the complexity of assigned seating processes while ensuring that carriers take measures at every point to facilitate the seating. Facilitation could be done at the time of booking, at check-in, at the gate, and on the aircraft.

Transportation of musical instruments

Generally, stakeholders support providing clear policies on the transportation of musical instruments. The regulations also reflect musician advocate views that carriers should transport musical instruments as carry-on or checked baggage in accordance with the same safety, dimension and weight policies as other baggage.

Air carriers, however, believe that competition in this area generates the best results. The regulations align with the legislation, which stipulates that regulations must require carriers to establish terms and conditions for the carriage of musical instruments without being prescriptive in terms of the content of the requirements.

Other consumer-related provisions

The provisions relating to the transportation of unaccompanied minors are intended to incorporate into the ATR the new standards regarding the transportation of unaccompanied minors, which Canada is required to adopt, as a signatory to the Convention on International Civil Aviation.

Moving the ASPAR into the APPR is a logical step, given that they are both oriented toward consumers.

Implementation, compliance and enforcement, and service standards

Requirements related to communication, tarmac delays, denied boarding, lost and damaged baggage, and the transportation of musical instruments provisions (along with applicable AMPs) will come into force on July 15, 2019. The more complex requirements related to seating, delays and cancellations (along with applicable AMPs) will come into effect December 15, 2019.

The CTA’s ongoing monitoring of the air industry includes inspections and investigations, and the CTA’s existing air passenger complaints processes and dispute resolution services would apply to the new obligations. Enforcement officers conduct periodic inspections of air carriers to ensure that operating requirements are met, and they would do targeted investigations if they suspect an air carrier is not meeting their operating requirements.

Following an application for air passenger travel dispute resolution under the existing tariff-based regime, timelines are 65 business days for facilitation, 20 business days for mediation (when no extension has been requested), and 85 business days for adjudication (for complex cases, 65 business days after close of pleadings).

Once the regulations are registered, the CTA will issue guidance and tools for the public and air carriers to help ensure that this new regime is implemented smoothly and that passengers know their rights.

Contact

Caitlin Hurcomb
Manager
Regulatory Affairs Division
Analysis and Outreach Branch
Canadian Transportation Agency
15 Eddy Street, 19th Floor
Gatineau, Quebec
K1A 0N9
Telephone: 819‑997‑6667
Email: Caitlin.Hurcomb@otc-cta.gc.ca