Airlines’ appeal of payments could have ripples

Court win may inspire challenges in other industries

The Supreme Court of Canada heard an airline industry appeal Monday that experts say will determine the future of passenger compensation for international flights which are delayed or cancelled — and could eventually harm consumer protection rules in other industries.

The appeal, by Air Canada, Porter Airlines, the International Air Transport Association and a group of international airlines, argues that parts of Canada’s Air Passenger Protection Regulations are in conflict with international conventions on air travel. The appeal follows a Federal Court of Appeal ruling against the airlines in their suit against the Canadian Transportation Agency and the federal government.

Air industry experts say if the appeal is successful, it would gut some of the most significant parts of the APPR, and leave passengers at the mercy of airlines.

“Without the compensation provisions, there would be no incentive for airlines to behave any better,” said John Gradek, a former Air Canada executive and head of McGill University’s Global Aviation Leadership Program.

The court reserved its decision “until a later date,” which legal experts say likely means anywhere from several months to more than a year.

The APPR was first unveiled in 2019, and includes compensation of up to $1,000 for delayed flights within an airline’s control. Delays of three hours or more entitle a passenger to $400, delays of six hours or more are worth $700, while delays of nine hours or more are worth $1,000. Smaller airlines face lower compensation payments. The APPR also specifies compensation for lost baggage.

The IATA and airlines argue that the APPR’s compensation provisions should be tossed out for international flights because Canada has already ratified the Montreal Convention, an international treaty setting out compensation rules for international flights, which was established in 1999.

“The FCA upheld the Regulations and, in so doing … validated a regulatory scheme that breaches Canada’s international obligations under the Convention,” the IATA and airlines wrote in a submission to the Supreme Court of Canada. “If the balance set by the Convention needs adjustment, the integrity of the regime requires that the solution be developed at the international level by State Parties to the Convention.”

The airlines are fighting the rules for a very simple reason, said Gradek: Money.

“They’re facing tens of millions of dollars in compensation payments,” said Gradek. “They’d love to do away with these rules.”

Air Canada declined to comment. The IATA had not immediately responded to a request for comment. In an emailed statement, Porter spokesperson Brad Cicero insisted Porter supports the APPR’s broad objectives.