New rules of the skies

Compensation for flight bumps, lost luggage

Compensation for lost luggage, being bumped: what you need to know about the new air passenger bill of rights before it comes into effect.

Canadian airlines will be required to compensate passengers for lost luggage or getting bumped from overbooked flights under a new air passenger rights regime that comes into effect Monday despite industry efforts to quash the rules in federal court.

As of July 15, the Canadian Transportation Agency’s air passenger protection regulations will impose standards on airlines when it comes to communicating, overbooking, tarmac delays, lost luggage and transporting musical instruments.

Disgruntled travellers could get up to $2,400 if they are bumped from an overbooked flight or $2,100 if their luggage is lost or damaged. Effective December, airlines must also compensate passengers up to $1,000 for delays or cancellations within their control.

The new rules have proven controversial for industry players and consumer advocates alike.

The International Air Transport Association, alongside 18 other plaintiffs including Air Canada and Porter Airlines Inc., argue the rules breach international obligations and exceed Canada’s authority, according to a federal court application asking a judge to declare the regulations invalid.

In particular, the legal case led by the IATA — a trade association that represents 290 airlines — argues the rules are inconsistent with the Montreal Convention, a treaty adopted in 1999 that unified rules regarding international carriage by air.

Airlines are also not happy about the proposed compensation levels. The application argues carriers will face steep costs without proof of any damage to the passenger in question.

It used overbooked flights as an example. It noted that passengers denied boarding when a flight is full are entitled to $900 if they arrive at their destination up to six hours late, $1,800 for six-to-nine-hour delays and $2,400 if they’re more than nine hours late, even though there could be very real differences in the damages sustained by someone 30 minutes late versus five hours and 59 minutes.

The government has yet to issue a formal response to the legal challenge, although earlier this week it confirmed plans to respond.

Some, however, argue the provisions do not go far enough. Advocacy group Air Passenger Rights has pushed back against the allowance for up to three-hour delays on the tarmac and argues the new rules fall short of European Union passenger rights standards when it comes to delays caused by maintenance issues.

Still, the Canadian Transportation Agency plans to move forward with the rules next week, which could provide some clarity in the marketplace.

“Against a hodgepodge of previous ad hoc rulings from the Canadian Transportation Agency, it is important that Canada’s airlines have a clear understanding of passenger protection requirements, standards of care and potential penalties,” said Robert Kokonis, president of consultancy AirTrav Inc.

But Kokonis said legislation must not inflict disproportionate harm on carriers or passengers.

“In either case, costs will likely be passed on to customers through ticket prices, because the (regulations) are being imposed in a country that is already one of the most expensive aviation jurisdictions in the world for taxes and fees,” he said.

Spokespeople for Canada’s two largest airlines, WestJet Airlines Ltd. and Air Canada, both said they will be prepared for the new regime come Monday.

Financial Post ejackson@postmedia.com

STAN BEHAL / POSTMEDIA NEWS FILES New Canadian Transportation Agency air passenger protection regulations come into effect on Monday which will impose certain requirements on airlines when it comes to compensating customers whose flights were bumped or whose luggage was lost.