Transport Committee on Nov. 28th, 2022

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting number 42 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, February 3, 2022, the committee is meeting to study the Air Passenger Protection Regulations.

Today's meeting is taking place in a hybrid format, pursuant to the House Order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application.

Colleagues, appearing before us today, from the Canadian Transportation Agency, we have Michelle Greenshields, director general, dispute resolution branch; and Tom Oommen, director general, analysis and outreach branch.

From the Department of Transport, joining us virtually, we have Craig Hutton, associate assistant deputy minister, policy; and Colin Stacey, director general, air policy.

In the second half of our meeting, from the National Airlines Council of Canada, we have Jeff Morrison, president and chief executive officer; and from WestJet Airlines, we have Andrew Gibbons, vice-president, external affairs.

I'd like to take this opportunity to inform members that all of today's video conference witness participants have completed the necessary audiovisual checks. Once again, I'll look over to my esteemed interpreters to get the thumbs up to make sure that everything is okay. Fantastic.

We will begin with opening remarks from the Department of Transport, for five minutes.

I turn the floor over to you.

[Craig Hutton, Associate Assistant Deputy Minister, Policy, Department of Transport]

Good afternoon. Bonjour. Thank you, Mr. Chair, for inviting me to speak with you today.

It is my pleasure to join you and the honourable members of this committee.

I welcome this opportunity to share how the Government of Canada has been working to strengthen Canada's air passenger rights regime.

I am pleased to be joined today by Colin Stacey, director general of Air Policy at Transport Canada.

Prior to the Transportation Modernization Act and subsequently the air passenger protection regulations—or APPR, as they are known—passenger rights were not widely understood nor consistently applied across air carriers in Canada, including the fact that rights were different for international and domestic flights.

The APPR fully came into force in December 2019, with the objective of creating a more predictable and balanced approach to ensure that passengers know their rights; air carriers understand their obligations; proper complaint resolution and enforcement mechanisms are provided; and operators don't face an undue burden or lose competitiveness in adhering to these rights, including in a way that could negatively affect ticket prices for consumers.

These regulations were developed based on best practices from the United States and the European Union. The regulations govern the treatment of passengers by air carriers, as well as clarifying minimum standards of treatment and compensation that must be provided to passengers based on the level of control an air carrier has over a flight disruption.

Separately, the mobility rights of persons with disabilities are protected under the accessible transportation for persons with disabilities regulations. These regulations came into force in June 2022.

With the APPR, Canada has a robust set of regulations to protect Canadians when they travel by air. In many instances, passengers are eligible for compensation. The Canadian approach goes above and beyond other jurisdictions in some areas. For example, the APPR provide for compensation for delays and cancellations within a carrier’s control, which does not exist in the United States. Also, carriers are required to re-book passengers on a competitor carrier in certain situations, which is not the case in either Europe or the U.S.

As with any new regulatory regime, we would expect it to be tested by practical experience. In the case of the APPR, this has happened in a way that's beyond what could have been imagined. Indeed, the regime has been tested by the worst crisis in the history of commercial aviation and the difficult pathway to recovery that's followed. The result, as you well know, is a significant number of passenger complaints.

It's important to recall that these complaints are occurring because the passenger rights regime provides Canadians and air carriers with a framework that outlines obligations to passengers. Complaints that go to the agency are the ones where there is doubt about the application of the regulations.

The typical first step is an attempt at resolution directly with the carrier, where a complaint can be resolved without any agency involvement. Where complaints are advanced to the agency, we understand that a large number of these are resolved by facilitation, which means that the agency is often able to provide a resolution for travellers.

In other instances, decisions are adjudicated, which can also provide relief to passengers as well as clarity around how similar situations would be treated in the future. Such possibilities for satisfying passenger complaints would have been much more limited with the system that existed prior to Canada’s air passenger rights regime.

The agency has processed over 25,000 passenger complaints by different dispute resolution methods since the APPR came into full effect in 2019, and additional temporary funds for one year were announced in budget 2022 to increase the agency's complaint processing capacity.

Recognizing that the agency plays an important role in supporting the efficient functioning of the national transportation system, the Government of Canada continues to work with the organization to address its financial requirements to ensure that it is resourced appropriately to carry out all of its mandated functions, including consumer protection for air travellers.

We are improving the APPRs based on experience. When a gap in the APPR was revealed at the onset of the pandemic—namely that carriers were not required to provide refunds for cancellations that were not within their control and where no alternative travel was possible due to the pandemic—the Government of Canada quickly acted to close this particular gap.

Based on direction from the Minister of Transport, the agency’s new regulations ensure that even when cancellations and lengthy delays occur that are outside the airline’s control, passengers can receive a refund if the airline cannot complete a passenger’s itinerary within 48 hours, regardless of the type of ticket that was purchased. These new regulations came into force in September and provide greater clarity around timing, cost coverage, method of payment and deadlines to refund travellers.

Furthermore, Transport Canada continues to work in close collaboration with the agency to examine further opportunities to improve the functioning of our air passenger rights regime to ensure that it continues to be world-leading and meet passenger needs, including those of passengers with disabilities, and that air carriers abide by the spirit of the regulations. This includes examining recent experience in the face of the challenges presented by the pandemic to consider whether additional changes to the regime are required.

Furthermore, Transport Canada continues to work in close collaboration with the agency to examine further opportunities to improve the functioning of Canada's air passenger rights regime to ensure that it continues to be world leading, meets passengers' needs, including passengers with—

[The Chair, Liberal, Peter Schiefke]

I'm sorry. Mr. Hutton, but I'm going to have to cut you off there. I gave you an extra 30 seconds.

We will be able to get that from you, perhaps in writing, to add to your contribution today. Thank you very much.

Next we have the Canadian Transportation Agency.

The floor is yours. You have five minutes for your opening remarks.

[Tom Oommen, Director General, Analysis and Outreach Branch, Canadian Transportation Agency]

Mr. Chair, I would like to thank the committee for the invitation to appear today.

As you noted, I am accompanied by my colleague Michelle Greenshields.

Chair, if it's okay with you, we'll share our five minutes of opening remarks.

First, as a regulator, the Canadian Transport Agency develops regulations in accordance with legislation, implements regulations, issues licences and determinations, and enforces regulations.

Second, as an administrative tribunal, the agency resolves complaints using informal dispute resolution, facilitation and mediation, as well as through a formal adjudication process, in which it has all the powers of a superior court.

The agency has a mandate for the federally regulated transportation system—air, rail and marine—as well as for protecting the human rights of persons with disabilities to an accessible transportation network.

A core component of our mandate is providing consumer protection for air passengers, most significantly through the Air Passenger Protection Regulations, or APPR.

In 2018, the Transportation Modernization Act amended the Canada Transportation Act and gave the agency the authority to make regulations defining airlines' minimum obligations toward passengers.

Before the development of the APPR, each airline set out its own terms and conditions of carriage in a legal document known as a tariff—which is in effect the contract between the passenger and the airlines. After the coming into force of the APPR, in addition to the terms and conditions set out in their tariff, each airline is required to follow the obligations as set out in the APPR. These regulations create more consistent passenger rights across airlines.

Developed following a comprehensive public consultation exercise, the APPR addresses fundamental entitlements of passengers including receiving clear communications, and being treated fairly in the case of delays, cancellations and denied boarding.

These minimum obligations differ, based on the extent to which the causes of a flight disruption are within an airline's control or not. Obviously for situations that an airline can control, airlines are held to a higher standard of treatment toward the passengers, for example, for flight disruptions that are wholly within airline control, airlines are required to provide compensation for inconvenience. Even when events occur that are outside of their control, airlines must still ensure that their passengers get to their destination as quickly as possible.

Whether an event is outside of an airline's control, within their control, or within the airlines' control but required for safety can sometimes be difficult to determine. It can be even more difficult for a passenger, as the information that would enable the passenger to determine how the flight disruption is categorized and what their entitlements are, is within the hands of the airlines.

[Michelle Greenshields, Director General, Dispute Resolution Branch, Canadian Transportation Agency]

As you're aware, in 2020, three months after the APPR came into force, the COVID-19 pandemic caused a collapse in global air travel. As the events of the pandemic unfolded, it became clear that there was a gap in Canada's air passenger protection framework relating to the situation where flights were cancelled or delayed for reasons outside of the airline's control and there was no possibility of a passenger completing their itinerary within a reasonable time. Because the law did not require airlines to include refund provisions in their tariffs for such situations, what a passenger was entitled to depended on the particular tariff of the airline.

Given the implications of this gap in the framework, on December 18, 2020, the Minister of Transport issued a direction to the agency providing the authority to develop a regulation respecting the airline's obligations to a passenger in case of flight cancellation or lengthy delays due to situations outside their control that prevent them from ensuring that passengers complete their itinerary within a reasonable time frame.

The final regulations amending the APPR were published in part 2 of Canada Gazette on June 22, 2022, and came into force on September 8, 2022. The new regulations require airlines to provide a passenger affected by a cancellation or a lengthy delay due to a situation outside the airline's control with a confirmed reservation on the next available flight that's operated by them or a partner airline leaving within 48 hours of the departure time indicated on the passenger's original ticket.

If the airline cannot provide the confirmed reservation within a 48-hour period, it must provide the passenger with a choice, a refund or a re-booking. A refund must be provided within 30 days.

Following the coming into force of APPR, we saw a significant influx of complaints, with an incoming monthly complaint volume that was quadrupled. To put this in perspective, in 2018-19, we received about 7,600 complaints. During the year that APPR came into force, 2019-20, we received 19,000 complaints, even though the APPR was only fully enforced for three months prior to the onset of the pandemic.

More recently, as air travel volumes have rebounded and the air industry has grappled with the speed of recovery, we've witnessed a big jump in complaints, which have only recently started to slow down. While we had been receiving an average of 1,500 complaints per month in April, May and June of this year, complaint volumes jumped to more than 3,000 in July and 5,700 in August.

Despite processing more complaints than before, in 2021-22, we processed over 15,000 complaints, which is more than three times the number of complaints that we were processing annually before the APPR and the pandemic. We still had a significant number of complaints, and that has led to a backlog.

We're working on addressing the backlog by further increasing our complaint processing capacity through identifying and implementing procedural improvements, modernizing our processes and adding capacity where possible.

Finally, although today's study is focused on the APPR, I should mention that the agency has a key human rights mandate for accessibility of the federally regulated transportation system. I would note that, when we receive cases regarding accessibility, they are prioritized and, as a result, we have no backlog in this area.

Thank you, Chair. We'd be happy to respond to any questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much for your opening remarks.

We will begin our round of questioning today with Dr. Lewis.

Dr. Lewis, the floor is yours. You have six minutes.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Thank you so much, Chair.

I want to thank the witnesses for their testimony today. It's essential that we resolve some of the angst that travellers are experiencing, especially because we've had unprecedented disruptions in flights, delays and cancellations over the last few years. With things such as the mandatory ArriveCAN app, I'm sure there were a lot of complaints about that, too, and the COVID protocols, but that's not the area of concentration I'll be focused on today.

Today I'll be dealing specifically with the area of compensation. My first question goes to Mr. Craig Hutton.

You stated that compensation is provided for delays that are within the carriers' control. How is it determined whether or not it is within the carriers' control?

[Craig Hutton]

With regard to determinations, there is a process by which, as you know, the agency undertakes to determine the degree of control that is applied in any specific complaint that has been filed with the agency. Typically, situations of control can pertain to operational issues that the airline may face with respect to their network, and where it's determined that they did have a degree of control over that, it is determined to be within their control.

I can turn to my colleague Mr. Stacey for some more specifics on that control issue, which was also addressed in the most recent regulations that came into force on September 8.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Would “operational issues” mean labour shortages? Would those be operational issues, or are you speaking about safety issues?

[Craig Hutton]

As you and other committee members are aware, there is currently a labour issue before the court with respect to staffing, or the degree to which claims of staff shortages could be considered a safety issue. It would be inappropriate to comment on that specific case.

That is why, as well, the agency is there to adjudicate—to make sure rights are respected. Passengers are encouraged to seek recourse. The agency can provide clarity where there's doubt about the application or interpretation of the regulations.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Mr. Hutton, wouldn't the airlines know what the labour shortage is up front? Wouldn't they be able to plan for that?

[Craig Hutton]

The degree to which that is interpreted as a safety issue is currently the subject of court proceedings. It would be inappropriate for me to comment on the specifics of those proceedings until that is resolved.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Are there any lists that enumerate what a safety issue is, and what is in the carrier's control?

I would think the passenger would see something of a power imbalance, because the carrier determines what information to give the passenger. That is what the passenger will use to seek the remedy.

What incentive would there be for a carrier to provide information that would incriminate them and compel them to pay damages?

[Craig Hutton]

There are, of course, a number of cases where it's clear there isn't a dispute. The passenger is encouraged to work with the airline first, in order to ensure their complaint can be addressed by the carrier. When there isn't a resolution with the carrier directly, it goes to the agency for interpretation around the facts in that specific situation.

There can be facilitation to arrive at that conclusion, or there can be adjudication. It will depend on the specific set of facts that a carrier and traveller may find themselves with, in order to make a determination as to what the specific cause was—whether or not it was within control or had a linkage to safety.

[Leslyn Lewis, Conservative, Haldimand—Norfolk, ON]

Perhaps I'll ask Mr. Oommen, through the chair, about this imbalance.

In such cases, does the agency get a list of things that the airline would potentially have done wrong? How does the passenger correct for this imbalance? How can we expect the public to be protected, when airlines have all the information passengers need to defend themselves or bring forth their cases?

[Tom Oommen]

Mr. Chair, there's a question about power imbalance.

In fact, the agency plays an important role in facilitating the interaction between the passenger and airline.

First of all, through our informal facilitation process, an agency facilitator sits down with the passenger and a representative of the airline, in order to air out the issues in dispute and try to come to a resolution. That includes the details of the events surrounding a flight disruption. In facilitation, it's the agency facilitator who asks for information from the airline, not the passenger. The vast majority of complaints are, in fact, dealt with through facilitation.

For cases that proceed to adjudication, the agency provides its services free of charge. No lawyer is required. The agency provides extensive guidance material to assist passengers in understanding the regulatory framework. It clearly explains to passengers what is required for each step in the adjudication process.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Oommen, and Dr. Lewis.

Next, we have Mr. Iacono.

You have six minutes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses for being with us today.

Mr. Hutton, when the airlines claim that flights are delayed or cancelled due to circumstances beyond their control, how is that verified?

[Craig Hutton]

I'll defer to my colleague from the agency on the details of this. For the specific details around a given situation, it's up to the agency to ask carriers for information pertaining to the incident. They're able to work with the airline to determine what the specific circumstances were around any specific incident.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.

My next question is for Mr. Stacey or Mr. Oommen.

Why have you been reluctant, apparently, to fine airlines for their systematic failure to comply with the APPR?

[Colin Stacey, Director General, Air Policy, Department of Transport]

I think the issue of fines is more a matter for the Canadian Transportation Agency.

[Tom Oommen]

Thank you, Chair.

The main way by which the agency oversees compliance with the APPR is through the resolution of complaints made by passengers against airlines. This is because complaint resolution is helpful individually to the complaining passenger since it can result in the passenger obtaining a remedy from the airline. Also, the complaint process allows a panel of members to interpret the regulations.

The other way in which the agency oversees compliance with the APPR is through compliance monitoring and enforcement activities. To that end, the agency does have a small number of designated enforcement officers. Our team of enforcement officers has several roles.

First, they support complaint resolution by following up on agency decisions and orders pursuant to the resolution of complaints. They make sure that the airlines comply with the orders following a complaint decision. They also conduct targeted enforcement blitzes and issue notices of violation and administrative monetary penalties.

A concrete example, really quickly, of how this works together is a relatively small number of AMPs were issued for airlines not responding to passengers within 30 days of a request for compensation. You will see on our website that we have posted those notices of violations and the amounts of the administrative monetary penalties. However, while the enforcement officers were having those conversations with the airlines, that also resulted in the airlines, in many cases, changing their categorization of the flight disruption to “within control” and paying the passengers the compensation.

There is that dual role of investigating and issuing administrative monetary penalties and also having those discussions with the airlines to ensure, ultimately, the goals of compliance and changing behaviour.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.

How much time do I have left, Mr. Chair?

[The Chair, Liberal, Peter Schiefke]

You have two minutes, Mr. Iacono.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.

If we want to change the CTA model, could the CTA do that on its own or would it require legislative changes?