Supreme Court Will Hear Airlines’ Challenge Over Passenger Compensation Rules

A passenger looks for his luggage among a pile of unclaimed baggage at Pierre Elliott Trudeau airport in Montreal on June 29, 2022. Ryan Remiorz/The Canadian Press

Canada’s Supreme Court has consented to hear airlines’ legal challenge to compensation rules for international flights. A lower court had earlier dismissed the airlines’ assertion that Canadian regulators lacked jurisdiction over flights that take off or land outside the country.

Initially in December 2022, Justice Yves de Montigny of the Federal Court of Appeal rejected the airlines’ complaint, according to Blacklock’s Reporter.

“The Canada Transportation Act requires that any person operating an ‘air service’ in Canada have a license issued by the Canadian Transportation Agency,” wrote Justice de Montigny. “An ‘air service’ is either domestic or international.”

“It is clear that a flight departing from or arriving on Canadian soil, whether operated by a Canadian or foreign carrier, has a sufficient connection to this country to ground an exercise of its jurisdiction,” he said. “This connection arises from the permission granted to the carrier by the Canadian Transportation Agency to operate in Canada.”

The Supreme Court subsequently granted approval to consider a last appeal submitted by 17 international airlines and industry associations, comprising Air Canada, British Airways, Cathay Pacific, Delta, Lufthansa, and United Airlines. A hearing date has yet to be scheduled.

In 2018, Bill C-49, titled “An Act to Amend the Canada Transportation Act,” was passed in Parliament and put Canada’s first air passenger rights code into practice. The European Union has been enforcing a minimum compensation policy for substandard service since 2004.

“We are going to make it happen,” then-transport minister Marc Garneau said at the time. “Canada requires an effective air passenger rights regime. Canada can no longer maintain the status quo.”

In 2019, the Canadian Transportation Agency concluded the Air Passenger Protection Regulations, which guaranteed prescriptive compensation figures for passengers. These included a minimum of $400 for a flight delay lasting three hours, $900 for boarding denial due to overbooking, up to $2,100 for lost or damaged luggage, and a maximum compensation of $25,000 for incurred damages.

The Act was amended in June and mandated that airlines publish performance data on their websites and also settle passenger complaints within 30 days of submission. Those changes followed a backlog of more than 46,000 complaints at the Transportation Agency.

Amendments also forbid airlines from denying compensation due to “any situation the airline knew about” including staff shortages.

In its 2022 decision upholding the regulations, the Federal Court of Appeal said they are a “consumer protection scheme,” the purpose of which was to “enhance clarity and to better protect passengers” throughout Canada, regardless of the airline or travel destination.

In June, the International Air Transport Association (IATA) argued that consumer protection regulations must address the responsibility shared by all stakeholders when passengers experience disruptions. It released survey data showing that most passengers trust airlines to treat them fairly when they are delayed or cancelled.

“The aim of any passenger rights regulation surely should be to drive better service. So it makes little sense that airlines are singled out to pay compensation for delays and cancellations that have a broad range of root causes, including air traffic control failures, strikes by non-airline workers, and inefficient infrastructure,” Willie Walsh, IATA’s director general, said in a June 23 press statement.

“We urgently need to move to a model of ‘shared accountability’ where all actors in the value chain face the same incentives to drive on-time performance,” Mr. Walsh said.

The Epoch Times reached out to IATA for comment regarding the court case, but did not hear back in time for publication.