New Rights For Pax, New Rules For Airlines In Proposed Legislation

By Bruce Parkinson

Minister of Transport
Marc Garneau

New legislation aims to ensure there are no scenes in Canada like the ugly incident on United Airlines where a passenger who had paid for a ticket was dragged off.

"When Canadians purchase an airline ticket, they expect the airline to provide the service that they paid for and to be treated with respect. When things don't go the way they are planned, travellers deserve clear, transparent, fair and consistent compensation," Transport Minister Marc Garneau said in a statement.

Dubbed the Transportation Modernization Act, the proposed legislation would establish new air passenger rights around flashpoint issues including bumping and compensation for delays, cancellations and lost baggage. It would require that children be seated near a parent or guardian at no extra charge -- and would call on airlines to set standards for transporting musical instruments.

The legislation also proposes to raise the foreign ownership limit on Canadian airlines from 25% to 49% and promises more clarity and oversight with respect to inter-airline agreements and joint ventures in order to ensure that they are consistent with the public interest.

There were few specifics in the announcement. The Feds say that the Canadian Transportation Agency will develop precise wording over the coming months.

Response from Canada's major airlines was generally positive, although there was some disappointment that elements of the air travel experience governed by Federal authorities – like airport security and high taxes, fees and airport rents – were not discussed.

"Air Canada welcomes the Government's desire to establish air passenger rights that are clear, consistent, transparent and fair for passengers and air carriers industry-wide. We believe it is in the interest of all parties to create a more predictable and fair system that applies to all airlines operating in Canada, which is not currently the case," Canada's largest airline said in a press release. 

One sticking point is potential airport fees to cover additional costs from CATSA, which is currently funded by Parliament. The government is now saying that, if an airport wants to add routes and needs to expand its capacity to screen passengers, it will have to pay CATSA for additional services, and that "it would be up to each airport to determine how it would cover these costs."

The assumption is that airports will hand those costs on to passengers as some sort of fee.

AC had this to say on that front:

"Regarding the CATSA proposed amendments, we would have hoped that the Government would have addressed shortfalls in CATSA funding and other shortcomings in a more comprehensive fashion so as to improve the overall air traveller experience. In addition, we continue to encourage the Government to address aviation industry infrastructure, rates, taxes and charges." 

WestJet was also supportive of the proposed bill:

"We welcome the legislation and are committed to working with the CTA, the Minister, parliamentarians and government agencies in the months to come," said Mike McNaney, VP, Industry, Corporate and Airport Affairs.

"We also encourage the government to address all aspects of the travel experience, particularly those beyond the control of airlines such as lengthy wait times for passenger screening and customs," McNaney added. "We believe that any effort to improve the guest's travel experience must take into account all aspects of that experience, in particular those services provided by the federal government."

Transat CEO Jean-Marc Eustache says all Canadian airlines share common objectives of improving the travel experience for pax while keeping system and industry costs under control.

"As long as this remains the fundamental driving force for this regulatory initiative, I am confident that the final result will be positive for all."

The three major airlines all express support for the proposal in the bill to increase foreign ownership. They see the change as opening new avenues for growth and venture financing.

On that topic, Transat added: "It will also allow for an expanded traffic rights regime under the Canada-EU air transport agreement that may translate into new and innovative transatlantic air services for consumers."

The proposed legislation will also provide the minister of transport with new oversight and authorization powers with respect to inter-airline agreements and joint ventures in the airline sector in order to ensure that they are consistent with the public interest.

This is a particular issue of concern for Transat, which says it has been warning the federal government of the growing market power of existing airline joint ventures operating in Canada and of the potential adverse effect on long-term viable competition in the sector.

"We are encouraged by the Government's willingness to subject these joint ventures to a structured oversight and approval process to ensure that they are not anti-competitive," stated Eustache.

"However, to ensure that the public interest is truly served and protected, it is imperative that this scrutiny be applied to both future and existing joint ventures in the airline sector operating in Canada."

These same joint ventures have been exempted from the normal application of competition laws in the US and the EU and are currently building dominant market-shares in well over a dozen of Canada's intercontinental air transport markets.

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