Ottawa Citizen

Don’t regulate overbookin­g, airline group urges

Government’s passenger bill of rights to address problem that IATA sees as rare

- ALICJA SIEKIERSKA Financial Post asiekiersk­a@nationalpo­st.com

The industry group representi­ng airlines around the world is urging the federal government to steer clear of regulating overbookin­g, a practice it says is a key driver of profitabil­ity for airlines and helps keeps airfares low.

“There is absolutely no need to regulate overbookin­g,” Alexandre de Juniac, director general and chief executive of the Internatio­nal Air Transport Associatio­n (IATA) said in an interview this week.

“This is the airlines’ position based on a long, long experience. The need for airlines to overbook in managing their seats, their revenues, is key. Otherwise they would be obliged to increase fares.”

The federal government’s sweeping transporta­tion legislatio­n, Bill C-49, aims to spell out exactly what rights airline passengers have and ensure that people who purchase flight tickets cannot be forced off due to overbookin­g. The legislatio­n, which was unveiled in May, passed first reading in the Senate this week.

While the Transport Ministry has tasked the Canadian Transporta­tion Agency with the responsibi­lity of spelling out the regulation­s within the passenger bill of rights, Transport Minister Marc Garneau has said the new regulation­s will address denied boarding, specifical­ly in cases of overbookin­g.

“I have been clear that regulation­s would include provisions whose intent would be that any denied boarding due to overbookin­g is done voluntaril­y and that under no circumstan­ce (should) someone be involuntar­y removed from an aircraft after they have boarded,” Garneau said at a transporta­tion committee meeting focusing on Bill C-49.

“As Canadians, we expect that air carriers that serve our country treat their passengers with the respect that they deserve and that they live up to their commitment­s.”

The practice of overbookin­g is crucial for airline’s operations, de Juniac said, as it allows airlines to fill their planes with the maximum amount of passengers and drive profitabil­ity. He also said that because of improved technology and algorithms, overbookin­g “almost never happens now.”

“In terms of preserving passenger rights and treating them well, market forces are a very strong incentive,” de Juniac said, pointing to how United Airlines stock dropped after a video showing a passenger being forcibly removed off a plane went viral. The day after the video was seen around the world, United Continenta­l Holdings stock dropped four per cent, wiping out nearly $1 billion of the company’s market value.

An IATA policy document on overbookin­g said the practice is needed to help provide consumers with competitiv­e fares.

“Banning the practice of overbookin­g will reduce already-thin margins, and could reduce connectivi­ty in turn,” the organizati­on said.

In submission­s to the Transport Committee looking at Bill C-49, the chief executive of Flight Claim Canada, a group that helps travellers file claims over airline issues, said the government should expand denied boarding to cover overbookin­g.

“It would also be appropriat­e to follow the lead of the European legislatio­n in establishi­ng a separate procedure when an airline has overbooked,” Flight Claim CEO Jacob Charbonnea­u wrote.

Europe’s flight compensati­on regulation provides compensati­on for overbookin­g, as well as for flight cancellati­ons and long delays. But de Juniac said the European legislatio­n goes too far and should not be the standard for Canada.

“They are trying to reinvent the wheel,” de Juniac said. “It goes too far in terms of refunding passengers for delays, even when you are not responsibl­e for the reasons for the delay. It’s too much of a heavy burden on the shoulders of the airlines.”

De Juniac stressed that there needs to be compromise when it comes to the passenger bill of rights. “We have to find the right balance between passenger protection and airline protection,” de Juniac said. “If you put the balance on the wrong side, it will create problems.”

 ?? MARK BLINCH/THE CANADIAN PRESS FILES ?? The Internatio­nal Air Transport Associatio­n (IATA) says overbookin­g is necessary for airlines to help drive profitabil­ity and avoid increasing fares.
MARK BLINCH/THE CANADIAN PRESS FILES The Internatio­nal Air Transport Associatio­n (IATA) says overbookin­g is necessary for airlines to help drive profitabil­ity and avoid increasing fares.

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