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Air Canada has 30 days to consult with the Canadian Transportation Agency on what exactly constitutes overbooking. (Michelle Siu/THE CANADIAN PRESS)
Air Canada has 30 days to consult with the Canadian Transportation Agency on what exactly constitutes overbooking. (Michelle Siu/THE CANADIAN PRESS)

Air Canada ordered to increase payout to bumped passengers Add to ...

Bigger refunds are on the runway for travellers delayed by overbooked flights on Air Canada, following a ruling from the Canadian Transportation Agency that the airline’s current compensation isn’t enough.

However, the agency has yet to issue a final ruling – or to decide how much more bumped travellers should be paid.

The Canadian Transportation Agency (CTA) has ruled that the airline must compensate travellers more than the $100 cash or a $200 voucher toward another flight within North America it gives to passengers bumped from flights due to overbooking. The ruling only applies to domestic Canadian flights.

The decision stems from a complaint by a mathematician living in Halifax, Gabor Lukacs, in which he argued at length that Air Canada’s compensation is insufficient.

Mr. Lukacs, who is part of a small group of consumer advocates, even proposed a system in which the airline would pay from $200 to $800 cash to stranded passengers depending on the length of the delay. The complaint notes similarly higher compensation rules in the United States and Europe.

This is a preliminary ruling by the CTA, however, and Air Canada has 30 days to consult with the agency on what exactly constitutes overbooking.

The airline must also “provide factual evidence as to why it should not apply” either the higher American compensation rules or the penalties proposed by Mr. Lukacs, the agency’s ruling said.

“In general, I was also challenging the whole practice of overbooking flights,” Mr. Lukacs said. “I travel a lot myself. I’m an academic. And airlines in many ways embody what I think is wrong with the corporate attitude, that we-can-do-everything-to-you and we-can-set-the-rules type of attitude.”

Overbooking is a common practice among many international airlines, and the CAT ruled that it’s a reasonable business practice. Mainly, it allows them to sell refundable tickets, Air Canada said. Selling more tickets than actual seats on certain flights allows for the likelihood that some passengers will cancel their tickets or change reservations.

It’s a calculated risk, and it only inconveniences about 0.09 per cent of Air Canada passengers, the airline said. The company wouldn’t comment on the ruling Tuesday, saying that it is still in consultation with the agency.

A spokesman for WestJet Airlines Ltd., Air Canada’s main domestic competitor, said that WestJet’s policy is to not overbook, unlike Air Canada.

“And it has nothing to do with fully refundable tickets,” spokesman Robert Palmer said, noting that WestJet can refund tickets. “We have just decided not to overbook.”

WestJet does, however, compensate passengers if they are bumped because an aircraft has been swapped for a smaller one for mechanical or other reasons.

Air Canada argued to the CTA that it does sometimes compensate stranded passengers far beyond $100 in cash, such as paying for their hotel accommodations, meals and other costs ranging from ground transportation to phone calls.

Still, Canada doesn’t have broad regulations for compensating passengers left stranded at airport gates. Instead, it’s up to individuals to wage sophisticated complaints against the airlines to change the rules, such as Mr. Lukacs’s complaint to the CTA.

Federal bill C-459 introduced by the New Democratic Party sought to implement new industry-wide, compensation rules for all domestic airlines, similar to European and American regulations. The bill was defeated in its second reading by the Conservative government.

“In European countries and other countries, air passengers have rights. But the Canadian government is protecting the airline industry and not the customers,” said the NDP’s official opposition transportation critic Olivia Chow.

In the U.S., the Department of Transportation requires bumped passengers to be refunded double the price of their ticket, up to $650 (U.S.), for short delays. For long delays of more than two hours for domestic flights and four hours for international ones, passengers are entitled to four times the ticket price, up to $1,300.

These are system-wide, applicable to all U.S. airlines. The system in Canada currently can only be changed ruling by ruling by passengers raising grievances with regulators against an airline.

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