Vol. 143, No. 4 — February 18, 2009

Registration

SOR/2009-28 February 5, 2009

CANADA TRANSPORTATION ACT

Regulations Amending the Air Transportation Regulations and the Canadian Transportation Agency Designated Provisions Regulations

P.C. 2009-161 February 5, 2009

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 (see footnote a), hereby approves the annexed Regulations Amending the Air Transportation Regulations and the Canadian Transportation Agency Designated Provisions Regulations, made by the Canadian Transportation Agency.

REGULATIONS AMENDING THE AIR TRANSPORTATION REGULATIONS AND THE CANADIAN TRANSPORTATION AGENCY DESIGNATED PROVISIONS REGULATIONS

AMENDMENTS

AIR TRANSPORTATION REGULATIONS

1. Section 113.1 of the Air Transportation Regulations (see footnote 1) is replaced by the following:

113.1 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 direct it to

(a) take the corrective measures that the Agency considers appropriate; and

(b) pay compensation for any expense incurred by a person adversely affected by its failure to apply the fares, rates, charges or terms and conditions set out in the tariff.

2. Subsections 116(1) and (2) of the Regulations are replaced by the following:

116. (1) Every air carrier shall keep available for public inspection at each of its business offices a copy of every tariff in which the air carrier participates that applies to its international service.

(2) Every air carrier shall display in a prominent place at each of its business offices a sign indicating that the tariffs for the international service it offers, including the terms and conditions of carriage, are available for public inspection at its business offices.

3. The Regulations are amended by adding the following after section 116:

Display of Terms and Conditions on Internet Sites

116.1 An air carrier that sells or offers for sale an international service on its Internet site must also display on the site the terms and conditions of carriage applicable to that service and must post a notice to that effect in a prominent place on the site.

CANADIAN TRANSPORTATION AGENCY DESIGNATED PROVISIONS REGULATIONS

4. Items 3.5 and 3.6 of the schedule to the Canadian Transportation Agency Designated Provisions Regulations (see footnote 2) are repealed.

5. The schedule to the Regulations is amended by adding the following after item 4:

Item	Column 1 Designated Provision	Column 2 Maximum Amount of Penalty — Corporation ($)	Column 3 Maximum Amount of Penalty — Individual ($)
4.1	Paragraph 67(1)(a.1)	10,000	2,000

6. Items 39 to 42 of the schedule to the Regulations are repealed.

7. Item 84 of the schedule to the Regulations is replaced by the following:

Item	Column 1 Designated Provision	Column 2 Maximum Amount of Penalty — Corporation ($)	Column 3 Maximum Amount of Penalty — Individual ($)
84	Subsection 116(1)	10,000	2,000
84.1	Subsection 116(2)	10,000	2,000

8. The schedule to the Regulations is amended by adding the following after item 85:

Item	Column 1 Designated Provision	Column 2 Maximum Amount of Penalty — Corporation ($)	Column 3 Maximum Amount of Penalty — Individual ($)
85.1	Section 116.1	10,000	2,000

COMING INTO FORCE

9. These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

The amendments to the ATR focus on improved consumer awareness as it relates to air travel, which will allow consumers to be better informed about international air carriers’ legal obligations.

Both domestic licensees and international air carriers are required to have signs at their business offices, including airport locations, advising the public that the air carrier’s tariff (that is, a carrier’s fares, rates, charges and terms and conditions of carriage) is available for inspection. However, consumers are not readily aware that air carrier tariffs can be inspected. Similarly, a consumer does not necessarily have access to an air carrier’s terms and conditions of carriage.

The current signage provisions that are applicable to international air carriers are more detailed (including requirements such as posting business hours, directing a person to where a carrier’s tariff is located). As a result, air carriers that provide both international and domestic services are required to have two signs, which may be confusing for travellers, and also to incur the cost of having to produce two different signs to satisfy the requirements of both the CTA and the ATR.

Lastly, the ATR currently limits the Agency’s ability to award compensation to a complainant to cases where the air carrier that fails to apply its tariff is licensed. It does not extend to situations where an international air carrier is not a licensee but still provides some part of an international air service to or from Canada. Expanding the Agency’s oversight to all air carriers selling air transportation to and from Canada will provide better protection for the consumer because it will offer a new avenue for the consumer to seek redress with foreign airlines. A change in terminology in the ATR from “licensee” to “air carrier” will broaden the Agency’s oversight and better protect consumers when air carriers fail to apply their tariffs.

The amendments to the DPR will provide a means for enforcing carriers’ obligations and encourage compliance; it will also respond to the recommendation of the Standing Joint Committee for the Scrutiny of Regulations by removing provisions deemed not to be actionable under the Agency’s Administrative Monetary Penalties (AMP) program.

Objectives

The objectives of the amendments to the ATR are

• to offer better transparency to consumers so that they can exercise their rights as air travellers;
• to reduce air carriers’ administrative burdens; and
• to ensure that all air carriers selling air transportation to and from Canada are subject to the same legal obligations with respect to tariffs.

The objective of the amendments to the DPR is to ensure carrier compliance with the legislative changes made to the CTA as a result of Bill C-11 and the amendments to the ATR described here, to clarify intent and to respond to the concerns of the Standing Joint Committee.

Description

The amendments to the ATR will

• require an international air carrier selling services to and from Canada through the Internet to post its terms and conditions of carriage on its Web site;
• revise the posting of signage provisions for international carriers to harmonize them with similar provisions of the CTA pertaining to domestic carriers. While each air carrier could have their own sign, a common usage sign would be acceptable in the case of shared offices. This common usage sign could be posted where individual air carriers have their business offices located and the sign would indicate to travellers that air carrier tariffs are available upon request for public inspection at the air carrier’s business offices; and
• expand the circumstances where the Agency can order corrective measures to be taken to include all international air carriers, not just licensees.

The DPR list the provisions of the CTA and its related regulations that may be subject to an AMP and set their maximum penalties. The amendments to the DPR will

• set the maximum monetary penalty for certain violations to be $2,000 for individuals and $10,000 for corporations, which amounts are consistent with those currently applicable to similar provisions in the CTA and ATR;
• increase the penalty for contravening subsection 116(1) of the ATR to match the penalty for contravening paragraph 67(1)(a) of the CTA. This will harmonize the DPR provisions applicable to international and domestic air service providers; and
• repeal from the DPR paragraphs 84(1)(a) through (d) of the ATR as the language in the Regulations “…an air carrier may...” has been declared to be permissive in nature by the Standing Joint Committee for the Scrutiny of Regulations, and therefore not actionable under the AMP program.

Regulatory and non-regulatory options considered

Without these regulatory amendments, a consumer travelling on an international itinerary would not have the same access to their terms and conditions of carriage as a consumer travelling on a domestic itinerary. This situation is undesirable as it creates an imbalance in the protection provided to consumers travelling domestically and internationally.

Voluntary compliance is not a reasonable alternative as it would leave no redress avenue to the consumer.

Benefits and costs

Air carriers offering international service to and from Canada may incur annual administrative costs associated with ensuring the terms and conditions of carriage, as posted on their Web sites, remain current. These costs should not be significant as carriers currently have and maintain their tariffs for public inspection. While carriers may choose to pass on these costs to the consumer as an additional fee or increase to fares, the overall cost to the consumer is expected to be negligible.

The harmonization of the domestic and international provisions related to signage will ease any cost associated with this requirement since a single sign would be required, thereby not requiring a duplication of efforts on domestic and international fronts. One sign for all carriers whose business office is shared may result in less cost to the carriers and will convey to consumers one message.

It should be noted that some carriers are already complying with the above provisions. For example, WestJet has posted tent cards at their business offices advising consumers that their tariff is available for public inspection. Also, to date, Air Canada and WestJet, amongst other carriers, have posted their international terms and conditions on their respective Web sites.

The cost to carriers associated with the expanded Agency mandate would only be incurred if the Agency concludes that the carrier had failed to apply its tariff and had ordered that carrier to pay compensation to a consumer as a result. An air carrier who had met its legal obligations to a consumer would not be ordered by the Agency to pay compensation and accordingly would not incur any costs.

While there will be some minor administrative costs to Government in terms of resources required to educate air carriers about the change in legislation and also to enforce the Regulations, these are expected to be minimal and will be absorbed as part of the regular duties of the Agency.

It has been observed that a number of United States’ carriers currently post their terms and conditions of carriage, as found in their tariffs, on their Web sites. Since most airline ticket transactions are carried out online, it is the most obvious location to post information about a carrier’s terms and conditions of carriage. The actual posting of this information will not disadvantage a carrier’s competitiveness since all carriers who sell transportation via the Internet will be subject to the same obligations.

Similar signage requirements currently exist in both the United States and European markets. The United States Department of Transportation requires signs in all airports part of which indicates the availability of the airline tariffs for public inspection. These signs are in the United States departure terminals of all Canadian airports. The European Commission (EC) passed regulations in 2004 to establish common rules on compensation and assistance to passengers. The EC has placed a poster in all member states’ airports to ensure consumers are made aware of their rights and where to seek assistance. Similarly, the Agency, with the cooperation of the air carriers themselves, hopes to have posted throughout major airports single common use signs advising passengers that terms and conditions of carriage are available for public inspection.

Change to the terminology in the ATR to include all air carriers will provide a fairer approach to dispute resolution when the Agency deals with a complaint from a consumer involving an international air carrier, other than a licensee, selling international air transportation to or from Canada. Should the Agency determine that the air carrier has failed to apply its tariff, the Agency would be able to order corrective measures to be taken by that carrier. Licensees would no longer be the only carriers subject to this adjudicative tool. The amendment will put all carriers on a level playing field.

All money collected will be deposited into the Consolidated Revenue Fund, which is the general pool of all income of the federal government, such as taxes, tariffs, and licence fees.

Rationale

Overall, consumers will benefit from the Regulations with little additional cost to the industry or Government.

Improved transparency and access to an international air carrier’s tariff and terms and conditions of carriage will assist consumers by making them more aware of their legal rights.

Harmonization of domestic and international signage provisions will allow a carrier to have a single sign that satisfies the requirements of both the CTA and the ATR. This will avoid confusion in the minds of travellers and would reduce costs to carriers.

Expanding the Agency’s oversight to all air carriers selling air transportation to and from Canada will provide better protection for the consumer because it will offer a new avenue for the consumer to seek redress with foreign airlines.

The amendments are expected to motivate air carrier compliance and, by providing a sanction more proportionate and appropriate to the contravention, assist in the enforcement of the new provisions of the CTA and the ATR.

Consultation

Extensive consultation took place prior to the coming into force of the amendment to the CTA (Bill C-11). Interested parties were made aware of the changes proposed by the Government on both the domestic and international perspective at that time. During the legislative process, stakeholders were made aware that regulatory changes would follow the passage of the Bill. Little or no adverse comments were expressed in relation to these provisions that are the subject of this regulatory initiative.

Nonetheless, a notification letter was circulated amongst the most interested stakeholders who would be affected by or would be interested in learning more about the proposed changes to the ATR and DPR. These interested parties included air carriers (e.g. Air Canada, WestJet, Air Transat, American Airlines, United Airlines, Air France, British Airways, KLM), the Air Transport Association of Canada (ATAC), the International Air Transport Association (IATA), and consumer advocacy groups (e.g. the Public Interest Advocacy Centre [PIAC]), travel agent groups (e.g. the Association of Canadian Travel Agencies [ACTA]), and provincial government (e.g. the Travel Industry Council of Ontario [TICO]). A short comment period (i.e. one week) was offered in consideration of the extensive consultations that took place in 2007. The Agency received four replies from the Air Transport Association of Canada (ATAC), Transport 2000 (advocates for efficient transportation), the Airline Training Council (travel industry training organization) and Cathay Pacific Airways (Hong Kong-based airline). No comments in opposition to the proposed amendments were received. Transport 2000 indicated that it had no objection to the proposed amendments and Cathay Pacific Airways advised that it is already largely compliant. However, ATAC did express its dissatisfaction with the notification period provided. ATAC indicated that it was not afforded enough opportunity to comment. A conference call with ATAC was arranged by Agency staff to discuss the association’s concerns. Through the course of the conversation with ATAC, its concerns were addressed and resolved. Also, the Airline Training Council offered recommendations where the Government could further enhance its oversight over domestic and international travel, such as requiring air carriers to make available their terms and conditions of carriage at the gate while the passenger is waiting to board their flight with the aim to facilitate access to and inspection of tariffs. The suggested recommendations offered by the Airline Training Council regarding domestic travel are beyond the scope of the Agency’s regulation making powers.

These Regulations were pre-published in the Canada Gazette, Part I, on September 27, 2008 and a 30 day period was provided for comments. No comments were received.

Implementation, enforcement and service standards

The Agency will be required to monitor compliance through its Enforcement Program. Enforcement officers will routinely conduct air carrier inspections and ensure that carriers have in place appropriate signage and are posting their tariffs on their Web sites. This will be done on an ongoing basis as part of the Enforcement Program’s regular duties.

Consumers have recourse through the Agency’s various dispute resolution mechanisms that are in place. In a case where an international air carrier has failed to apply its tariff, a consumer should first attempt to resolve their dispute with the air carrier directly. If the air carrier does not resolve the complaint to the consumer’s satisfaction, the consumer may seek help through the Agency’s informal complaints resolution process. Alternatively, the consumer may choose to have the Agency deal with the matter through its formal dispute resolution process. The formal process usually involves a written exchange of arguments (pleadings) between the complainant and the air carrier. If circumstances warrant, the Agency may choose to hold a public hearing. The Agency has 120 days to consider and weigh the evidence and to make its formal decision unless the parties agree to an extension. Should the Agency determine that an air carrier has failed to apply its tariff, it can require the air carrier to pay for any out-of-pocket expenses (such as overnight hotel stays, meals, etc.) which the consumer may have incurred.

Contact

Ghislain Blanchard
Director General
Industry Regulation and Determinations Branch
Canadian Transportation Agency
15 Eddy Street, 15th Floor
Gatineau, Quebec
K1A 0N9
Telephone: 819-953-4657
Fax: 819-994-8807

Footnote a
 S.C. 1996, c. 10

Footnote 1
 SOR/88-58

Footnote 2
 SOR/99-244