Bumped travellers to be compensated under proposed air passenger rights rules - EcoFinBiz Blog

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Bumped travellers to be compensated under proposed air passenger rights rules

Large airlines could be forced to pay up to $2,400 per passenger bumped from overbooked flights and forced to endure long delays, under the federal government’s proposed air passenger protection regulations.

The Canadian Transportation Agency on Monday released an outline of the rules it developed after Parliament passed the Transportation Modernization Act in May. The bill followed several high-profile incidents of passenger mistreatment, including the notorious removal of a doctor from an overbooked United Airlines Inc. flight that sent the company’s stock plummeting.

Despite pushback from the airline industry, the proposed regulations would impose minimum levels of compensation for delays within an airline’s control, such as commercial overbooking or scheduled maintenance. Air Canada and WestJet have argued that higher compensation levels will increase costs and could force them to raise fares.

Should the new rules pass, compensation would range from $125 for a small airline for a three-hour delay to $1,000 for a large airline for delays longer than nine hours. Airlines would be forced to pay up to $2,400 if a passenger is denied boarding.

The rules also govern the transportation of musical instruments, hold airlines liable for up to $2,100 for lost or damaged baggage and require airlines to seat parents near children under age 14.

Passengers would not be compensated for incidents beyond airlines’ control, such as snowstorms or unexpected mechanical problems. The government aims to implement the rules by summer 2019 following a second consultation period.

The CTA’s proposed rules aimed to find a balance between basic entitlements for passengers and airlines’ operating realities, CTA chair and chief executive Scott Streiner said in an interview. It calculated the cost of the new rules at $2.75 per passenger.

“Even if that flows through to passengers, we think that’s a price most Canadians will be willing to pay,” Streiner said.

The CTA modelled its compensation for flight delays and cancellations on compensation in the European Union, where minimum standards of treatment have been in place since 2004. Unlike Europe, compensation will be based on the amount of time delayed instead of the distance of the flight.

The proposed compensation for overbooking was modelled on U.S. rules, which came into effect in 2009. Compensation is higher for bumping, where there are more passengers with tickets at the gate than seats on the plane, than it is for regular delays, to discourage airlines from bumping people against their will, Streiner said.

Overbooking isn’t illegal, he said, but the new rules were designed to encourage airlines to work hard to find volunteers who don’t mind leaving on a later flight.

Major carriers and the International Air Transport Association have argued that fixed compensation violates the Montreal Convention, a multilateral treaty signed in 1999 that calls for compensation based on damage suffered. Streiner countered that the legislation was carefully written to compensate people for inconvenience and thus does not violate the treaty.

The official wording of the draft regulations will be released in the Canada Gazette on Dec. 22.

In a statement, the International Air Transport Association noted it has not yet seen the exact regulations, but said it will consider its options once it has studied the language.

“However, we would note that any fixed delay compensation provision would be inconsistent with Canada’s international treaty obligations, specifically the MontrĂ©al Convention,” the IATA stated.

Air Canada and WestJet both said they will review the regulations once they’re released and participate in the 60-day consultation period.

“Air Canada is well recognized as an industry-leading global carrier, and as one of the consistent top airlines in North America, we note that we already meet or exceed some regulations released today by the government,” spokeswoman Isabelle Arthur said in an email.

In a press release, WestJet said it will work to “ensure the draft regulations achieve the appropriate balance sought by the Minister of Transport.

“Taking care of our guests is central to our brand and fundamental to our business,” vice-president Mike McNaney said in the statement.

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