Transport Committee on Sept. 13th, 2017

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will now go to Marina Pavlovic, assistant professor at the University of Ottawa faculty of law.

[Professor Marina Pavlovic, Assistant Professor, University of Ottawa, Faculty of Law, As an Individual]

Good evening, Madam Chair, and committee members. I would like to acknowledge that we are on unceded Algonquin territory.

Thank you for the opportunity to present and to bring a research perspective to the discussion of Bill C-49, particularly to the section on an air passenger bill of rights, which is undoubtedly an issue of importance to Canadians.

I am an assistant professor at the common law section of the faculty of law at the University of Ottawa, and my area of expertise is consumer rights in the contemporary cross-border network digital economy. My work covers areas such as consumer protection, dispute resolution, and access to justice. I am also a consumer groups' appointed director at the board of the Commission for Complaints for Telecom-television Services, CCST, which is Canada's communications industry ombudsman. However, I appear in my personal capacity, representing my own views.

Most recently, my work has focused on the wireless code, a bill of rights for Canadian wireless consumers, as well as dispute resolution, including ombuds schemes for consumer complaints. It is my expertise in these broad areas of consumer protection, particularly with the wireless code, that I'm bringing to the table.

While the telecommunications and air travel industries are definitely very different, there are significant parallels when it comes to consumer rights and consumer redress. My comments will focus on clauses 17 to 19 of the bill, which deal with the proposed regime to establish an air passenger bill of rights.

I will focus my remarks around three topics: the need for this bill of rights, the passengers' rights or carriers' obligations in the bill, and redress mechanisms related to the rights in the bill.

As to the need for the bill of rights, the current regime of complicated tariffs and related individual carriers' contracts is overly complex and ineffective. Consumer rights regarding air travel are varied and fragmented. They depend on a number of factors, and it is difficult, if not impossible, for consumers to know ahead of time what rights they have and what the appropriate redress mechanisms are. Market forces alone cannot resolve this issue. Canadians need an air passenger bill of rights that will provide uniform, minimum rights for consumers, or conversely, set minimum obligations for the carriers.

Similar regimes for air passenger rights exist in other jurisdictions, and in Canada they exist in other industries as well. As I already mentioned, as an example, the wireless code sets a mandatory code of conduct for the wireless service providers, and a recently established television service provider code sets minimum rights for consumers with respect to television services.

A mandatory code that would apply to the industry as a whole is the appropriate way to set minimum consumer rights. It is to the benefit of consumers, and it is to the benefit of the industry. For consumers, it provides a clear set of rights that are found in a single place. A clear set of rights builds and enhances consumers' trust in the industry. It also promotes competition in the marketplace. It offers the carriers an opportunity to distinguish themselves from the competition by setting higher levels of customer service. The bill of rights is the floor; it is not the ceiling.

This brings me to my next point on the actual passenger rights or carrier obligations in the bill. Bill C-49, in effect, does not establish the bill of rights for consumers. Proposed subsection 86.11(1) would set the broad parameters of issues that the future bill of rights in the form of regulation must cover. It is the foundational step for the bill of rights to come. These parameters, the list of issues that the bill of rights should cover, are thorough but the list is not an exhaustive one. It provides for ministerial discretion, both in breadth and in coverage, as well as in the form of future regulations.

Passenger rights on the list are similar to the rights in other regimes and correspond generally to the most common types of complaints that are increasingly being reported by the media. However, there may be other kinds of disputes about which we have not yet heard. It is therefore imperative that the list stay as is or be expanded. Similarly, the committee should not decrease the list. By doing so, certain rights would be chipped away, creating a multi-tier system, which is what we have today. That also includes the geographical scope to cover claims that include flights to, from, and within Canada.

Proposed subsection 86.11(4) provides that the rights form part of the carriers' tariff, unless carriers offer more advantageous terms. The spirit of this provision is that the bill of rights would set the minimum standards, and that the carriers may adopt a suite of rights that goes beyond this.

My concern, however, is with the drafting, which leaves a lot of discretion and does not provide information on who will assess—and when, how, and how frequently—whether individual carriers' terms meet the obligations of the bill of rights, exceed them, or are actually below them. The wireless code uses wording that in my view is clearer and more precise and does not leave room for discretion. It is a mandatory code of conduct for providers of certain regulated services.

My view is that this provision ought to be redrafted to ensure that the rights under the bill are always included in the tariff, so as to avoid case-by-case assessment, as well as that consumers cannot waive those rights by contract.

You may have heard or will hear concerns about the form and process by which the bill of rights will come into existence, from a broad list of topics in Bill C-49 to a detailed set of rights. I believe the Canadian Transportation Agency is best placed to lead this. However, it is imperative that the process be open and inclusive and offer an opportunity to all stakeholders, including individual consumers and public interest organizations, to participate in creating the bill of rights. A similar process before the CRTC, the Canadian Radio-television and Telecommunications Commission, has been used for both the wireless code and the TV service code, and it has worked very well.

I also believe that regulations, rather than an act, provide a more appropriate mechanism for the bill of rights. I have, however, some concerns about the timelines and the feasibility of getting a broad list of topics into the actual bill of rights. It is subject to political will, and sometimes priorities shift. There have certainly been instances in which the legislation required a regulation of this type and there have been years if not decades without it. I'm not suggesting a specific timeline, but I invite committee members to consider the impact of any delays.

Lastly, I would like to briefly address consumer redress under the new regime.

A bill of rights and an effective redress mechanism are essential components of a robust consumer protection regime. A set of rights without an effective redress mechanism is ineffective, in the same way that a redress mechanism without a clear set of guiding principles leads to different outcomes and creates different rights.

Under the proposed regime, the CTA retains its role as dispute resolution provider for air passenger claims. It will not be able to do that effectively without a significant change of its processes and staffing. While this is not on the table before you right now, I also invite you to consider whether there are aspects of Bill C-49 that may actually relate to this.

I strongly believe that proposed section 67.3, which provides that only an affected person can file a complaint, is very limiting. There is a significant body of empirical research that it is consumers themselves who pursue claims, mainly because the value of the complaint does not justify the transaction costs. Actually, very commonly the transaction cost is much higher than the value of the complaint itself. However, there is also research in consumer literature that provides that it is important to allow other parties, such as public interest organizations, to have standing to file complaints, perhaps as a mechanism to challenge systemic problems. I strongly believe that proposed section 67.3 should be amended to allow third parties to file claims.

Concerning the collective aspects of consumer claims, there are complaints that will be highly fact-specific to a single consumer but that there are events that will affect a number of consumers, most commonly all of those who were in the affected aircraft. Proposed section 67.4 gives CTA discretion to apply the decision to all of those affected, but it is not clear whether there will be a specific mechanism to trigger it or whether they would do so on their own.

Finally, proposed subsection 86.11(3) provides what is a common provision in other jurisdictions and other dispute resolution schemes, that consumers cannot double dip and obtain compensation for the same events through different compensation schemes.

In its brief, Air Canada proposed that this provision be significantly limited. My strong view is that the provision as it stands is broad enough to allow CTA to craft a rule to avoid this. For example, CCTS, the Canadian communications ombudsman, has a rule along those lines in its procedural code.

I hope that these comments and recommendations will be useful to the committee. I would be pleased to provide to the members a policy brief summarizing my key points and recommendations and any relevant documentation that may help you navigate—no pun intended—these issues and understand them from not only the industry's perspective but from the perspective of consumers who are your constituents.

Thank you for this opportunity. I will be happy to answer any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much. Thank you to all of you.

We will now open it up for questions, starting with Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Madam Chair, and thank you to our witnesses for joining us here this evening. It's good to change our focus now and discuss Bill C-49 within the context of our aviation industry.

Similar to our earlier hearings, we do appreciate your being here to provide your comments to the committee and ensure that we have the information we need to reach our goal, which I think is a shared goal, of ensuring that Bill C-49 strikes the right balance in meeting the needs and concerns of both the airlines and the customers they serve. I'm going to dig in quickly to the questions I have, because I know that the five or six minutes I have goes by very quickly.

First, to Air Canada, regarding the cost of screening at airports, are you concerned that the proposals in Bill C-49 amount to what we could call an extra tax on the flying public?

[David Rheault, Senior Director, Government Affairs and Community Relations, Air Canada]

My name is David Rheault. I'm the senior director of government relations for Air Canada.

In our brief, we have expressed concern about the precedent that this change opens. In the current system, passengers already pay a fee for security, charged when they purchase a ticket. Right now, the amount collected from passengers exceeds the budget of CATSA. In the past year, the number of passengers has significantly increased, the amount collected from passengers has increased, yet CATSA's budget remains relatively stable. The consequence of that is that you have more traffic and fewer resources to screen the traffic, which causes delays and waiting times, which ultimately causes Canadian hubs to be less competitive than foreign hubs. This is an opening for CATSA to have an agreement with airports to buy more services.

The concern we raise in that respect is that passengers already pay for that, so you open the door to a system that is user-pay plus. Passengers pay when they buy their tickets, airports will charge airlines, and ultimately this will have an impact on the cost of travel. We say, if you want to open a door to the possibility of buying extra screening for extra service, you must set a service level standard that would be guaranteed by the actual funding from passengers. If airports want to do more, they could buy from CATSA, but at least the public floor should be clear and standards should be set.

Does that answer your question?

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

I could pose that very same question to WestJet, and I will.

[Mike McNaney]

In a very rare occurrence, I completely agree with Air Canada. It doesn't happen very often.

In all seriousness, yes, I fully agree with that answer. It all goes back to what David was saying in terms of the funding that's provided. From time to time, we get to periods such as Christmastime and the summertime. When we as an industry—the air carriers, CATSA on the ground, the airport authorities—know we're going to have a crunch time, we all work like heck to expedite those lines and get through that glut and the problem that has occurred.

To be honest, I've often questioned why we do that because, again being honest, if I'm looking for a means of creating public pressure to actually get all the funds that are raised for the ATSC, the air travellers' security charge, to actually go to that service, we need to stop fixing the problem on a regular basis. We will never do that, because we have to deal with our guests and we have to make those connections, but we hold flights and we'll pull people out of the line. You've all seen it when you travel during the summer and winter months. We all do our best to actually overcome those issues, and frankly, from time to time, I think that's defeating to us in the long term.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

In my last minute and a half, I'll pose this question, and if you don't get time to answer it fully, I'll come around to it in another round of questioning. I'll pose it to both of you.

With an eye on the consumer, what other measures could the government have included in Bill C-49 that would have helped or lowered the overall cost of flying in Canada?

[Mike McNaney]

The most straightforward thing, and it's a debate as to whether it would actually be germane to what this legislation is attempting to achieve, is the broader issue of aeronautical charges and how we deal with AIFs, airport improvement fees, in Canada, which gets into a broader issue of airport governance. I'm not convinced that necessarily would be germane to this legislation, but in terms of your broader question, that is the next big issue.

A component of that, which I alluded to in my comments, is that as far as I can tell, information will be requested of all these other elements or organizations of the supply chain: CATSA, CBSA, airport authority operations, baggage handling, and so on. The question becomes what gets done with it, and then who's accountable in the end. At this point, all I see is the point of the spear pointed at the air carrier in terms of financial penalties, and so on. If an airport has taken over sole responsibility for de-icing and the air carrier is not engaged in the contract or the management of de-icing, when the de-icing process goes down and we end up with delays, from what I see in this legislation, everyone is still going to be pointing at me in terms of paying money for it when it's something clearly not in my control.

On the expansion of this notion of accountability, yes, you can request constant repetition of the information, but we have to have something other than just pointing at one entity when these things go wrong. Again, to be somewhat direct on it, a number of these entities, frankly, derive their mandate from this institution.

[The Chair, Liberal, Judy Sgro]

Mr. Sikand.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you, Madam Chair, and thank you to everyone for being here today. My questions are going to be directed toward the airlines. I appreciate your opening remarks and welcome them.

That said, do the airlines, Air Canada and WestJet, understand why passengers are frustrated with the level of service they sometimes receive from your airlines? Do you understand why they feel powerless or lacking in rights?

[Lucie Guillemette]

I'm happy to answer that. First and foremost, we have to recognize that for any airline, and I'll speak for Air Canada, the level of customer service that we provide is critical for us. As in any business, we always aim to do better. It would be wrong of me to try to convince you that we don't have those types of issues, but what we need to recognize is that the airline industry is a very complex one, and at times we do get into situations where we fail from a customer service point of view. What is really important is how we recover.

In our opening statement, I was suggesting the fact that we are investing in better tools for us to be able to provide compensation faster or to get to customers faster, to be able to respond more quickly to inquiries.

We carry 45 million passengers a year. There's no doubt that issues will occur. To echo the earlier comment, when we talk about the different stakeholders in any process, if we really want to improve the process for customers, it's best for all of us to understand really where the choke points or the failures are. If we understand that better, we can aim to improve it, but yes, of course, we understand that customers can be frustrated.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

For sure. Thank you.

[Mike McNaney]

Last week I had an opportunity to help with check in at one of our bases out west, a relatively small base. We do these base visits on a regular basis. We meet with WestJetters and our guests. I had a chance to talk to probably 20 or 30 guests over the course of the day. In answer to your question, based on the conversations I was having with them, although I never actually posed that specific question to them, there's a fundamental thing that occurs and it was quite obvious as I was watching people coming into the airport. When you enter into commercial aviation travel, you lose control from the very moment you step into the airport.

As we were saying, we have service failures. We recognize that. We have 700 flights a day. Part of the issue, and it's a challenge for us that we have to deal with, is that regardless of how seasoned a traveller you are, when you step into this process of commercial aviation, you lose control of where you can go, when you can go, and how you can go, and that creates a frustration that we certainly understand.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Again this question is for both airlines. Do you think it's reasonable for passengers to expect the same compensation and service levels across all carriers?

[Lucie Guillemette]

When it comes to expecting the same service levels across all carriers, we all compete with each other. We hope that we have differentiators, but I would expect that Canadians would be able to be confident in understanding that if there is a service failure, what it is that an airline provides. I would expect that we should make those competition levels clear to customers. We should post them adequately. We should make it easy and timely for customers to be able to be compensated.

When it comes to whether the compensation should be equal, even in an environment today where there is no legislation, we still compensate customers for service failures. If, for example, flights are delayed, even if there is no legislation, we still do compensate passengers who are travelling within Canada.

So the expectation is—

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Just to follow up on that, is it reasonable for them to expect to have the same rights and compensation across all carriers?

[Lucie Guillemette]

Are you asking whether they would expect to have the same level of compensation?

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Yes, and rights.

[Lucie Guillemette]

Yes, but the airline should also be able to expand a compensation if they choose to.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Can I get a quick “yes” or “no” from WestJet?

[Mike McNaney]

Yes.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Thank you.

With the remaining time I have, I'm going to switch gears here a bit.

In Canada, 2.5 million people suffer from allergies. What have your airlines done to implement some policy or safety standards for those who suffer from anaphylaxis?

[Lorne Mackenzie, Senior Manager, Regulatory Affairs, WestJet Airlines Ltd.]

I can speak to that. I'm Lorne Mackenzie from WestJet.

It depends on the nature of the allergy. There are a variety of animal allergies versus foods and peanuts. For each type of allergy, there's a different response. The bottom line is to ensure safety for all guests, of course, and for the individual who has a severe allergy, as well as providing a buffer zone from the source. There's guidance from CTA decisions that give clarity around what those expectations are. We have to put that language in our policies and procedures and in our tariffs to ensure that people with allergies have an understanding of what they can expect when they fly with us.

[Gagan Sikand, Liberal, Mississauga—Streetsville, ON]

Air Canada?