Transport Committee on Nov. 21st, 2022

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair.

I'm intrigued by this idea of banning overbooking. That hasn't been part of the broader conversation about air passenger rates, which has focused on delays and cancellations.

Ms. De Bellefeuille, I wonder if you could share with the committee how you feel that could be achieved. Is it a legislative change? Is it a regulatory change? Where would that ban on overbooking be instituted?

[Sylvie De Bellefeuille]

As for implementation, it's rather difficult to say. I've never really looked into it, but it might be possible within the regulations or the act.

I understand that these kinds of events might lead to more expensive tickets. If there was more promotion of tickets without a reservation, consumers would know ahead of time that they might not be able to get on the plane, thus lowering the possibility of a nasty surprise. However, that's not what happens at the moment. People buy a ticket, and at the last minute, find themselves high and dry, which makes no sense at all.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

You pointed to challenges with the underlying legislation that made the APPRs possible. To what extent were the APPRs built on a faulty foundation legislatively?

[Sylvie De Bellefeuille]

Our view is that it's not just the air passenger protection regulations that place obligations on air carriers. There are also provincial statutes.

Unfortunately, we saw during the pandemic d that a restrictive interpretation of the federal act and regulations was applied, and from the very outset airlines were allowed not to give refunds to passengers.

Other acts can also apply, including Quebec's Consumer Protection Act.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I'm quite struck by the comparison with Europe and the way that other jurisdictions are protecting air passengers. Are there any ways that you can think of in which Canada outperforms the EU and the U.S. when it comes to consumer protections for air passengers?

[Sylvie De Bellefeuille]

I'm not very familiar with European regulations, but based on what I've heard, we are unfortunately lagging behind the Europeans in terms of best practices.

[The Chair, Liberal, Peter Schiefke]

Thank you once again, Ms. De Bellefeuille.

Thank you very much, Mr. Bachrach.

Next we have Mr. Strahl.

Mr. Strahl, the floor is yours. You have five minutes.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Thank you very much, Mr. Chair.

My question is for Mr. Lawford.

You mentioned earlier that compensation is not particularly designed to change the behaviour of airlines; it's designed to compensate travellers. I was interested in the minimum levels of compensation between large airlines and small airlines. Large airlines are airlines that have transported a worldwide total of two million passengers or more during each of the two preceding calendar years.

If this is about compensating passengers, why are there two different levels of compensation based on whether an airline is considered large or small?

[John Lawford]

That was a method the Department of Transportation used to try to balance out a lot of problems for the smaller airlines and a lot of complaints when this was being brought forward in negotiations over the regulations. For example, regarding what we heard before about crew and staffing shortages—and the airlines in the north do have fewer crew; it's true—the idea is that we still want them to follow these regulations, but we recognize that they might have some other challenges, and therefore they only have to pay half. They really only have to pay half. It's a very blunt instrument, but it's meant to cover a lot of categories and situations.

You could come up with a more fine-grained rule for various carriers and various areas of the country, but then it gets complicated. Or you could say that there's no difference. Fortunately, or maybe unfortunately, we have this very practical rule, which is little airlines pay half. That's a good way to split the difference between them and, say, an Air Canada. However, this is now being attacked in the Federal Court of Appeal. Some are saying we're creating a difference between airlines and that gets rid of our jurisdiction to have these regulations because the Chicago Convention says you treat all airlines the same. It's a no-win situation. I don't know where to go with it.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

There are other differences in penalties between large and small airlines, like a large airline has to book.... If a WestJet flight gets cancelled, at some point they might have to buy a passenger an Air Canada ticket.

[John Lawford]

Yes.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

That does not apply to small airlines. Is that correct?

[John Lawford]

The regulations were just changed at the start of September. I wouldn't swear to that, but it used to be that way; you're correct.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

Okay.

My next question is again for you, Mr. Lawford.

You're talking about reforming the system. Do you believe that with the current exemptions, if I can call them that, and the airline being able to say something is outside of their control...? If the system is reformed as you envision it and is put into something like OSFI, can those exemptions remain? Would you have to deal with the exemptions and the system, or would the system you're proposing eliminate the need to get into the exemption discussion?

[John Lawford]

I still think you have to fix the “in the control of” problem, because that's a factual ground you have to establish and the airlines will fight it on every case. Just take it away unless there are exceptional circumstances. It's all within your control.

For the other stuff, 80% of the claims are going to go through. What I'm really here today trying to get is the vast majority of delays and cancellations paid out quickly. Then we should be fixing the control problem. Safety is a little more touchy.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I'll go back to Mr. Lukács.

On the issue that Mr. Lawford has raised, I'd be interested in your perspective. Do you believe there needs to be systemic reform in the type of...? He agrees with you on the need to reform exemptions. Do you agree with him on the need to reform the way these complaints or this compensation is adjudicated? He said parking tickets versus a prolonged investigation. Do you agree with that? Can it be done that way?

[Dr. Gábor Lukács]

I would say that in order to achieve that type of system, we need to change how clearly the rules are written. Right now, to verify eligibility for a $400 claim means a thousand pages of documents and possibly a legal argument.

In the European Union, typically a passenger's eligibility for compensation can realistically be verified in a couple of minutes, because it requires so little information. If the rules are changed accordingly and are enshrined in the act and not some regulations, as they should be and as they were in the European Union, then the system might be amenable to a more fast-tracked process.

Having said that, there also have to be provisions for hefty fines for airlines that break the laws and rules. It's not enough to provide compensation to passengers.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Lukács.

Finally, for our last line of questions today, we have Ms. Koutrakis.

Ms. Koutrakis, the floor is yours. You have five minutes.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

Thank you to all our witnesses for your very important and interesting testimony this afternoon.

My first question is for Mr. Gradek.

I want to talk a bit more about reforms. In your opinion, who should be consulted with regard to a potential reform of the APPR rules? More importantly, how do we prevent airline lobbyists from having an inordinate influence and, at the same time, not create rules that have unintended effects?

[John Gradek]

That's a great question.

I think what you're looking at is a way to have a balanced view of the APPRs. In the session this afternoon and going on for months, we've all said that the airlines had much too great a say in what these regulations ought to look like. The question you have to ask yourself is this: Is it worthwhile to have some other groups in that negotiation to temper the way the airlines are looking at adjusting these rules?

I don't know what the right mechanism is and whether we have more consumer groups or more representation via the organizations you have around the table here today in those sessions. However, there has been an inordinate amount of influence by the airline industry in these APPRs, and that has to change the next time around.

[Annie Koutrakis, Liberal, Vimy, QC]

My next question is for Mr. Lawford.

We talk a lot about the process being somewhat difficult, and a lot of passengers don't end up filing complaints. For all the complaints that do not go to the CTA and go to the airlines, what data do we have about those cases? Do we know if airlines collect it? Do they share it, and should they be required to do so?

[John Lawford]

My understanding is that we don't generally have what I'll call the internal complaint numbers. I'll note that in the banking industry, the regulations were just changed to require internal complaints to be logged and then provided to the Minister of Finance so that groups like ours and folks like you can keep an eye on whether internal complaints are being handled. Companies always claim that they're doing a good job with their own customers, so let's see it.

You can also impose a standard internal complaints process so we don't have different processes. If you're at WestJet or Air Canada, you can expect two levels, and then you get referred automatically to CTA rather than having to ask.

[Annie Koutrakis, Liberal, Vimy, QC]

My final question can go to any witness.

Everything is about dollars and cents at the end of the day, so I'm wondering if any of you have information on how well funded the CTA process is—compared to similar systems in the U.S. or the EU—to address passenger complaints. If anybody has some information on that, I'd greatly appreciate it.

[Dr. Gábor Lukács]

The Canadian Transportation Agency recently received an additional $10 million in funding, if I recall the figure correctly. That would need to be verified. It is not a question of money, though. It is a question of how this money is being spent and whether the procedures and regulations are amenable to the efficient processing of complaints to begin with.

The other part is whether there are processes to ensure that for each complaint that is caught, there are 10 that are prevented by enforcement actions. That's an area where the Canadian Transportation Agency is sorely wanting.

We cannot have a police officer or an enforcement officer in each corner or at each airport. What we can do when violations are caught is have such severe financial consequences—like we have seen in the United States with a $7-million fine—that the airlines will think twice before they break the law.

Ultimately, the problem with the CTA is its lack of independence. We can give it as much money as we want, but it will still not be able to do justice. We know that the CTA sometimes has encrypted emails exchanged with Transport Canada behind the scenes. They are not adjudicating matters and dealing with matters in a fair manner.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Ms. Koutrakis.

On behalf of all committee members, I would like to thank all of our witnesses for joining us either virtually or in person today for our study on air passenger protection regulations. For those joining online, I invite you now to log off at your leisure.

As we do that, I'll turn the floor to Mr. Strahl to present a motion.