Canadian airlines asked a Federal Court of Appeal panel Wednesday to quash rules that bolster compensation for passengers subjected to delayed flights and damaged luggage.
Air Canada and Porter Airlines Inc., along with 16 other appellants that include the International Air Transport Association—IATA has about 290 member airlines—argue that the country’s three-year-old passenger rights charter violates global standards and should be rendered invalid for international flights.
Launched in 2019, the legal action states the new provisions exceed the Canadian Transportation Agency’s authority. They also contravene the Montreal Convention, a multilateral treaty, by imposing heftier compensation requirements for flight cancellations or lost baggage. For example, the rules demand higher damages based on the length of a delay and regardless of “the actual damage sustained by each individual passenger,” according to the appellants.
An earlier filing said nullifying the regulations “would avoid the confusion to passengers” who could be subject to travel regimes from multiple jurisdictions on flights abroad.
“Justices, the solution cannot be for state parties to individually chip away at the Montreal Convention by adopting piecemeal domestic solutions that depart from the principles accepted by all state parties,” appellant lawyer Pierre Bienvenu told the panel.
Under the federal rules, passengers have to be compensated up to $2,400 if they were denied boarding—so-called flight bumping—because a trip was overbooked, and receive up to $2,100 for lost or damaged luggage. Delays and other payments for cancelled flights warrant compensation of up to $1,000.
The issue came to the forefront after a 2017 incident in which two Montreal-bound Air Transat jets were diverted to Ottawa because of bad weather and held on the tarmac for up to six hours, leading some passengers to call 911 for rescue.
It took on renewed relevance to thousands of Canadians starting in March 2020 as the COVID-19 pandemic and travel restrictions grounded fleets and prompted mass flight cancellations.
The hearings, which pit airlines against the federal government and the Canadian Transportation Agency, are slated to run Wednesday and Thursday.
Ottawa argues that there is no conflict between the passenger protections and the Montreal Convention.
More than 70 signatories to the treaty have adopted schemes around compensation for cancellations, delays and denied boarding.
“In the European Union, a regime similar to the regulations has been in force since 2004 and the Court of Justice of the European Union (the CJEU) has declared it compatible with the Montreal Convention, despite challenges from the airline industry,” the attorney general writes in the factum.
“No regime analogous to the regulations has been invalidated on the ground of incompatibility with the Montreal Convention.”
In 2020, the Federal Court of Appeal dismissed an attempt by airlines to freeze the country’s new passenger bill of rights until an appeal of the regulations was heard.
Air Passenger Rights president Gabor Lukacs, an intervener on the case, argues that compensation rules on flights into and out of the country are entirely Canada’s right.
“As part of its sovereignty, Canada has the freedom to decide what conditions it attaches in exchange for the privilege to operate airlines or commercial flights to and from Canada,” he said in a phone interview.
“This appeal, I view it as an attack in disguise on the validity of the entire Canadian regulatory scheme for transportation of passengers to and from Canada.”
He and other consumer advocates also say the rules should go further, arguing that airlines’ exemption from compensating customers in situations “outside of the airline’s control” uses too broad a definition and amounts to a loophole.
The regulations impose no obligation on airlines to pay customers for delays or cancellations if they were caused by mechanical problems discovered in day-to-day maintenance or a pre-flight check, rather than during scheduled maintenance—more thorough inspections required after 100 hours cumulatively in the air.
AirHelp, a Berlin-based passenger rights company, has said the exemptions for weather or mechanical malfunctions fail to encourage airlines to avoid “so-called undiscovered issues” and allows them to sidestep compensation by pointing to malfunctions on the tarmac.
