Canada Gazette, Part I, Volume 152, Number 51: Air Passenger Protection Regulations

December 22, 2018

Statutory authority

Canada Transportation Act

Sponsoring agency

Canadian Transportation Agency

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues

The CTA, in consultation with the Minister of Transport, is proposing to define in regulations air carriers' requirements to communicate clearly, as well as obligations toward passengers when issues arise, such as delayed or cancelled flights, denied boarding, tarmac delays, and damaged or lost baggage. The regulations would also establish requirements regarding the seating of children under the age of 14 and require policies on the transportation of musical instruments. The new regulations would ensure clearer, more consistent passenger rights by establishing minimum requirements, standards of treatment, and in some situations minimum levels of compensation that all air carriers must provide to passengers. The proposal would also address other consumer-related issues such as the transportation of minors and a housekeeping change related to air services price advertising.

Background

Air travel is an integral part of modern life. While typically it goes to plan, when there is a problem, the experience can be disruptive. It is important that passengers receive key information, are aware of their rights and know where to turn for assistance or recourse.

Currently, air carriers are required to set out their terms and conditions of carriage in documents called tariffs. While there are requirements regarding the topics that must be addressed in these documents, air carriers are permitted to establish their own policies in these areas. The CTA ensures that air carriers have tariffs, apply their tariffs, and, in certain circumstances, determine whether tariff terms are reasonable. Without regulations, this approach has not always resulted in a transparent, clear, fair, and consistent regime.

The CTA's mandate to create the proposed regulations comes from the amendments to the Act that received royal assent on May 23, 2018.

The parameters for the regulations are as follows:

1. Clear communication: Require conditions of carriage and information regarding recourse to be made readily available to passengers in language that is simple, clear and concise.
2. Delays, cancellations and denied boarding: Establish carrier obligations toward passengers based on level of carrier control:
   • Situations within carrier's control: set minimum standards of treatment and minimum compensation for inconvenience, require completion of passenger itinerary.
   • Situations within carrier's control but required for safety: set minimum standards of treatment, require completion of passenger itinerary.
   • Situations outside the carrier's control (e.g. natural phenomena, security events): require completion of passenger itinerary.
3. Tarmac delay: Set carrier obligations in the case of tarmac delay over three hours, including the obligation to provide timely information and assistance to passengers, and minimum standards of treatment.
4. Lost or damaged baggage: Prescribe minimum compensation for lost or damaged baggage.
5. Seating of children: Set carrier obligation to facilitate assignment of seats to children under the age of 14 in close proximity to a parent, guardian, or tutor at no additional cost.
6. Transportation of musical instruments: Require carrier to establish terms and conditions on this subject.

In addition to the obligations set out in the Act, the development of the new regulations provides an opportunity for the CTA to address other consumer-related issues.

The CTA undertook a consultation process to receive input from the public, consumer advocates, the air industry and other interested parties. The consultations began on May 28, 2018, and were completed on August 28, 2018.

Objectives

The objective of this proposal is to create new air passenger protection regulations that

1. Are world-leading and feature robust, simple, clear, and consistent passenger rights;
2. Reflect operational realities of carriers and allow for carrier innovation, where appropriate; and
3. Align with international agreements, and apply best practices from lessons learned from other jurisdictions, where appropriate.

Description

Scope

The Air Passenger Protection Regulations (APPR) would apply to all flights to, from and within Canada, including connecting flights. This includes certain charter flights on which one or more seats are for resale to the public, namely charter flights within Canada and flights to and from Canada that are a part of a charter originating in Canada. Passengers would be able to receive compensation under these regulations if they have not already received compensation for the same event under a different passenger rights regime.

In certain elements of the proposal, there is a distinction made between large and small carriers. For these purposes, large carriers are considered to be carriers that have transported at least one million passengers in each of the two preceding years, as well as those operating a flight or carrying passengers on their behalf through a commercial agreement. All other carriers are considered to be small. Where requirements differ for large and small carriers, each carrier would indicate the applicable requirements in their tariff and in the information regarding terms and conditions to be shared with passengers, as described below.

Clear communication

The proposal would ensure that passengers are aware of their rights and are kept informed during a flight disruption. Carriers would be required to provide passengers with information on key terms and conditions of carriage on all digital platforms used, and on all itinerary-related documents the carrier issues to the passenger. There would also be an obligation for carriers to require third parties selling tickets on their behalf to provide this information. For flights to and from Canada, the carrier would also be required to post a written notice at certain key locations in the airport with prescribed text regarding standards of treatment and compensation under the APPR and directing passengers to the carrier or the CTA's website.

In the event of a delay, a cancellation or denied boarding, carriers would be required to notify passengers as soon as possible and provide regular status updates (every 30 minutes following the original scheduled departure time until a new takeoff time is confirmed or an alternative travel arrangement is booked). They would also have to advise the passengers of the applicable standards of treatment and compensation in these cases through the method that the passenger indicated that they prefer.

Air carriers would be required to ensure that communication is accessible. All electronic or digital communication would have to be accessible to persons with disabilities using adaptive technology. If information is provided in physical format, the carrier would have to, upon request, provide it in large print, Braille or digital format.

Delays, cancellations and denied boarding

Under the Act, a carrier's obligations toward passengers will be dependent on the level of control the carrier has over the situation, as outlined below.

• Situations within the carrier's control: provide minimum standards of treatment, provide minimum compensation for inconvenience, and ensure passengers complete their itinerary to the destination on their ticket.
• Situations within the carrier's control but required for safety: provide minimum standards of treatment, and ensure passengers complete their itinerary to the destination on their ticket.
• Situations outside the carrier's control: ensure passengers complete their itinerary to the destination on their ticket.

Categories of carrier control

This regulatory proposal indicates that

• Situations within the carrier's control, but required for safety purposes, are those legally required to reduce risk to passengers, not including scheduled maintenance required to comply with legal requirements. This category also includes mechanical malfunction, which is defined as a mechanical problem that reduces the safety of passengers, but not one identified during scheduled maintenance.
• Situations outside the carrier's control include war or political instability; unlawful acts or sabotage; meteorological conditions or natural disasters that make the safe operation of the aircraft impossible; instructions from air traffic control; a notice to airmen (as defined in the Canadian Aviation Regulations); a security threat; airport operation issues; a medical emergency; a collision with a bird; labour disputes at essential service providers such as an airport or an air navigation service provider; or a request from a police, security or customs official.
• Situations within the carrier's control are those that do not fall into the other two categories.

Completion of itinerary, rebooking and refund

Under the Act, for all delays and cancellations, the carrier would be required to complete the passenger's itinerary. More specifically, under this proposal, the carrier would have to rebook the passenger after a delay at departure of three hours or more and after a cancellation. The passenger would be entitled to be rebooked on the carrier's next available flight.

For delays and cancellations within a carrier's control, if the next available flight would depart nine hours or more after the original scheduled departure time, there would be an obligation for large carriers to rebook the passenger on another (competing) carrier.

The rebooking would have to be under comparable conditions (e.g. same class of service). If the rebooking is made in a lower class of service, the carrier would have to refund the difference in the cost of the applicable portion of the ticket. If the rebooking is made in a higher level of service, the air carrier could not request any supplementary payment.

If the offered rebooking does not meet the passenger's travel needs, the passenger would be entitled to a refund. The passenger would, in addition to a refund, also be entitled to a lump sum payment reflecting the applicable minimum compensation for delays of at least three hours but less than six hours (see "Minimum levels of compensation," below).

For delays or cancellations outside the carrier's control, if the carrier's next available flight would not depart within 48 hours, there would be an obligation for large carriers to rebook the passenger on another (competing) air carrier.

Standards of treatment

The proposal establishes minimum standards of treatment for all flight delays and cancellations that are either (1) within the carrier's control, or (2) within the carrier's control but required for safety purposes, where the passenger has been informed of the delay fewer than 12 hours before departure time.

First, after a delay at departure reaches two hours, air carriers would be required to provide access to a means of communication. They would also be required to provide passengers with food and drink in reasonable quantities taking into account the length of the delay, time of day, and the location of the delay.

If a delay is expected to extend overnight, the air carrier would also be required to provide, free of charge, hotel or other reasonable accommodation, if needed, and free transportation to the accommodation.

Finally, a carrier would be required to ensure that passengers have access to working lavatories during any delay of 30 minutes or more, if operationally feasible, unless the carrier does not control the access to the lavatories.

Minimum levels of compensation

Under the legislation, compensation for inconvenience would be required for delays and cancellations in situations within the carrier's control that are not required for safety. More specifically, where a passenger is informed of a delay or cancellation 14 or fewer days before departure, this regulatory proposal would set the amount payable by the carrier to the passenger based on the length of the delay upon arrival at the passenger's destination.

Large carriers would be subject to the following compensation requirements:

• 3 or more hours, but less than 6 hours: CAN$400
• 6 or more hours, but less than 9 hours: CAN$700
• 9 or more hours: CAN$1,000

This would cover the vast majority of passengers travelling to, from and within Canada.

Small carriers would be subject to the following compensation requirements:

• 3 or more hours, but less than 6 hours: CAN$125
• 6 or more hours, but less than 9 hours: CAN$250
• 9 or more hours: CAN$500

Where, through a commercial arrangement, a small carrier sells tickets under its own name on a large carrier's flight or vice versa, the appropriate level of compensation for large carriers would apply.

Compensation must be first be offered in cash or equivalent, but passengers could choose to accept other forms of compensation, which must be of greater value and cannot expire.

The proposal would establish that upon receipt of a passenger's claim for compensation (made within 120 days of the incident), the air carrier would have 30 days to respond and to pay the compensation owed.

Passengers would be able to seek compensation from any of the carriers involved in transportation on the ticket. Carriers would then be able to seek restitution from one another.

Denied boarding

Denied boarding occurs in situations when a passenger is not permitted to board because the number of passengers who checked in by the required time hold a confirmed reservation and valid travel documentation and are present at the boarding gate in time for boarding is greater than the number of seats available.

If denial of boarding is necessary due to situations within the carrier's control or within the carrier's control but required for safety purposes, the proposal would require carriers to first seek volunteers willing to give up their seat.

If a volunteer cannot be found, passengers denied boarding for reasons within the carrier's control and within the carrier's control but required for safety purposes would be entitled to the same standards of treatment for delays and cancellations in general. They would also be entitled to rebooking or a refund immediately (at the passenger's choice).

If the denial of boarding is within the carrier's control and not required for safety, carriers would have to pay compensation to the passenger based on delay at arrival, as follows:

• Less than 6 hours: CAN$900
• 6 or more hours, but less than 9 hours: CAN$1,800
• 9 or more hours: CAN$2,400

The proposal would require carriers to issue compensation at the time the passenger is notified that they are denied boarding. If payment cannot be made before the passenger's new departure time, the carrier would be required to issue the payment to the passenger within 48 hours.

If a denial of boarding is necessary, carriers would also have to establish and follow a priority boarding list (including persons with disabilities and their support person, service animal or emotional support animal; families; anyone previously denied boarding on the same ticket; and unaccompanied minors).

Finally, these regulations would prohibit carriers from subjecting passengers already on the aircraft to denial of boarding.

Tarmac delays

In addition to the standards of treatment outlined above (which would apply to any delay within the carrier's control or within the carrier's control but required for safety), the proposal establishes, in line with the legislation, robust standards of treatment in respect of tarmac delays over three hours. These include access to working lavatories, proper ventilation, heating and/or cooling; the provision of food and drink in reasonable quantities; the ability to communicate with people outside of the aircraft free of charge; and access to medical assistance, if needed.

The proposal also requires that for tarmac delays at Canadian airports, the carrier would have to provide an opportunity for disembarkation after three hours and to give the opportunity for persons with disabilities to disembark first, where operationally feasible.

In order to prioritize the objective of ensuring passengers reach their destination, the proposal would allow air carriers the discretion to stay on the tarmac for one additional 45-minute window, should takeoff be imminent and the air carrier be able to continue providing standards of treatment. This would help mitigate the risk of avoidable flight cancellations that could result from a rigid disembarkation rule and, in turn, would minimize further passenger inconvenience.

Lost or damaged baggage

The Montreal Convention sets the maximum liability for damages for baggage lost, damaged or delayed during international travel at 1,131 special drawing rights (approximately CAN$2,100). However, these provisions do not currently apply to domestic travel.

The regulatory proposal would extend the application of this regime to domestic travel covered in these regulations. In addition, the proposal would require the reimbursement of any baggage fees.

Transportation of musical instruments

The regulatory proposal would require carriers to establish terms and conditions of carriage regarding the transportation of musical instruments in its tariff. The topics that the tariff would have to address would include the acceptance of musical instruments, instruments as carry-on baggage, cabin storage options and additional fees.

Seating of children under the age of 14 years

The proposal would require air carriers to facilitate, at the earliest opportunity, the seating of children under the age of 14 in close proximity to their parent, guardian, or tutor at no extra cost. The proximity requirement would depend on the age of the child, as follows:

• under the age of 5: in a seat directly adjacent to their parent, guardian or tutor
• aged 5 to 11: in the same row and separated by no more than a seat from their parent, guardian or tutor
• aged 12 or 13: at least within two rows as the parent, guardian or tutor

Unaccompanied minors

For international travel, Canada is a signatory to the Convention on International Civil Aviation, which is managed and administered by the International Civil Aviation Organization (ICAO). New standards regarding the transportation of unaccompanied minors have been incorporated into the Convention. These standards specify that aircraft operators must establish a program for the transportation of unaccompanied minors, and that they cannot allow minors under the age of 5 to travel without an accompanying adult.

This regulatory proposal would incorporate into the ATR the new standards regarding the transportation of unaccompanied minors for international travel that Canada, as a signatory to the Convention, is required to adopt. Air carriers would be required to establish a policy for unaccompanied minors and prohibit minors under the age of 5 from travelling without an accompanying person.

Air services price advertising

In 2012, regulatory requirements with respect to air services price advertising (ASPAR) were introduced to help consumers easily determine the total price of advertised air services and the components of the total price, and encourage fair competition among advertisers of air services. The rules state that air price advertising directed at the public must include the total price, inclusive of all taxes, fees and charges that a consumer must pay to obtain the air service, as well as charges for optional services. This proposal would move these requirements from the ATR to the APPR to reflect their consumer focus.

Enforcement

The proposal would also make contravention of any of the APPR requirements as being subject to administrate monetary penalties (AMPs). These could reach $5,000 per offence for individuals and $25,000 for corporations, depending on the type of penalty and contravention.

Regulatory development

Consultation

On May 28, 2018, the CTA launched its consultations with the public, consumer advocates, the air industry and other interested stakeholders to inform the APPR.

The consultation process provided multiple channels for input and resulted in extensive engagement by Canadians and stakeholders. There was a dedicated, air passenger protection website that included a discussion paper, questionnaire and platform to upload comments. There were eight public consultation sessions that took place across Canada — Toronto, Winnipeg, Vancouver, Calgary, Yellowknife, Halifax, Montréal and Ottawa. A survey was conducted in 11 Canadian airports. There were also bilateral consultation meetings with consumer advocacy groups, air carriers and industry associations, officials from other governments, and other experts.

At the conclusion of the consultations, the CTA had received 30 874 website visits; 4 923 completed online questionnaires; 534 comments submitted online; 203 registrants for the in-person/call-in consultations; 930 completed airport surveys; 39 bilateral consultation meetings; and 104 formal written submissions. The input is summarized in a What We Heard report, available on the CTA's website.

There is general consensus among individual travellers that

• Clear, concise, accurate and regular communication from air carriers is important to ensure that passengers know their rights at various stages of the travel process, particularly when issues arise.
• Compensation should be fair, reflect losses and inconvenience and deter the practice of overbooking.
• Tarmac delays beyond three hours should not be permitted, and air carriers should be required to provide necessities such as food, water, lavatories and proper ventilation before three hours have elapsed.
• Children under 14 should be seated near their parent or guardian at no extra charge; proximity should be age-dependent.
• Complaints processes should be simple, clear and consistent and there should be penalties for air carrier non-compliance.
• The regulations should be developed taking into account the accessibility-related needs of persons with disabilities.

Consumer advocates generally agree that

• Air carrier obligations should be equivalent to or exceed requirements in other jurisdictions (e.g. EU, United States) and not conflict with the Montreal Convention.
• Communication of passenger rights must be done in simple, concise and clear language.
• Compensation should reflect the length of flight delay, with cash as the primary payment form.
• Non-compliance must be addressed through clear, simple, fair and effective complaint and enforcement mechanisms.

The following are key views and comments generally raised by air carriers and their representatives:

• Air carriers are only one of many players impacting flights (others include airport authorities, security, customs, air navigation services, extraordinary circumstances). The regulations should reflect this complex system and not solely penalize air carriers for disruptions attributable to others or multiple factors.
• The proposed regulations should not apply to situations outside of Canadian jurisdiction (e.g. a tarmac delay in an airport outside of Canada) or flights operated by foreign carriers originating outside of Canada and should recognize the exclusivity of the Montreal Convention for international travel.
• The regime should not hinder the ability of air carriers to innovate, compete and distinguish themselves in the marketplace.
• Potential unintended consequences of prescriptive regulations, including flow-through costs to passengers, should be considered.
• Application of the new regime to all types of air carriers would ensure consistency but could reduce the viability of small, low-cost, regional, remote and northern air carriers.
• Air carriers should be given the opportunity to comment on the regulations themselves, including cost implications. They should also have sufficient lead time to make the necessary adjustments to their IT systems, training, and processes before having to comply with the new regulations.

All input provided was taken into account in the development of the regulations, as described in the "Rationale" section below. The APPR are meant to provide robust passenger protection, while taking into account the operational realities of air carriers. The public and stakeholders will have an opportunity to comment on the specific regulatory proposals through the Canada Gazette process.

Instrument choice

The Act, as amended in May 2018, provides a framework for the APPR and requires the CTA to develop the specific regulatory provisions within the established parameters, including standards of treatment and minimum compensation levels. Therefore, no other instruments were considered.

The input provided during consultations, and best practices and lessons learned from other jurisdictions were considered in developing this regulatory proposal.

Regulatory analysis

Benefits and costs

The cost-benefit analysis (CBA) estimates the incremental net benefit to society of the proposed APPR. The incremental benefit is determined as the difference between the net benefit of the regulation scenario and the baseline scenario. The APPR are estimated to result in present value costs to Canadian carriers and the CTA of $1.541B, present value benefits to Canadian passengers of $1.628B and a net present benefit of $87.3 million, expressed in 2012 Canadian dollars, over a 10-year period following the coming into force of the regulations. On an annualized basis, the cost to carriers represents around $2.75 per passenger.

The proposal establishes minimum standards for the following:

Regulatory provisions

Provision	Compensation	Standard of Treatment	Establish Process/Policy
Delay	table 1 note (WCC)✓	✓	✓
Cancellation	table 1 note (WCC)✓	✓	✓
Denied boarding	table 1 note (WCC)✓	✓	✓
Assignment of seats to children under the age of 14			✓
Tarmac delay	table 1 note (WCC)✓	✓	✓
Lost and damaged baggage	✓
Musical instruments			✓
Unaccompanied minors			✓
Communication			✓
Table 1 Note Table 1 Note (WCC)✓ (WCC): Passenger is only entitled to compensation if the disruption is within the carriers control. Return to table 1 note (WCC)✓ referrer

Affected stakeholders

The following stakeholders would be impacted by the proposed APPR:

• Air carriers — Costs to Canadian carriers are considered
• Passengers — Benefits to Canadian passengers are considered
• Government (CTA)

Baseline scenario

Currently, carriers set out the terms and conditions of carriage in their tariffs. These tariffs form the contract between a passenger and a carrier when a ticket is purchased. A carrier's tariff will cover its obligations in all types of events including delays, cancellations, tarmac delays, lost or damaged baggage and seating of children, among other things.

Because each carrier is, for the most part, responsible for setting its own tariff, there can often be differences in the treatment of passengers in different types of events. The objective of the APPR is to normalize the minimum standard across all carriers operating in Canada to ensure that the obligations on carriers are clear, concise and easily understood by carriers and passengers.

In order to establish the baseline for this CBA, the tariffs of carriers operating in Canada were analyzed on an issue-by-issue basis. Further, responses to the CTA's CBA survey to industry were taken into account. It is assumed that in the absence of the APPR, carriers would continue operating according to their current tariffs for the duration of the study period.

As there are hundreds of Canadian carriers in Canada, a sample of carriers was analyzed for this study and was assumed to be representative of the population. The baseline for non-Canadian carriers was assumed to be similar to that of Canadian carriers flying internationally. While this assumption may be wrong in any given instance, it is expected to be realistic on average, as some jurisdictions ensure consumer protection in the form of compensation, while others do not. Furthermore, it is expected that in many instances, Canadians flying into jurisdictions with compensation schemes similar to that of the European Union are often unaware that they are entitled to compensation and would therefore often not claim it. Carriers were categorized into large, medium and small based on the number of employees. Markups were applied to the sample costs of each carrier category in order to arrive at the total cost to industry.

The number of passengers from 2017 was used as the starting point for the baseline. That number is expected to increase at an average annual rate of 3.1% over the 10-year study period. The growth rate is assumed to be the same under both the baseline and the regulation scenarios.

Methodology, data sources and assumptions

Study period

This analysis examines costs and benefits over a 10-year period (2019–2028). A discount rate of 7% is used to establish the net present value of the regulatory proposal. Values are expressed in 2012 constant dollars.

Number of passengers

The number of passengers for 2017 is estimated using the number of enplaned and deplaned passengers. ^{footnote 1} The number of domestic enplaned and deplaned passengers is divided by two to arrive at an estimate of the number of passenger segments on domestic flights.

Enplaned and deplaned passengers in 2017

Passengers	Enplaned and Deplaned Passengers	Estimated Number of Passengers
Domestic	88 229 824	44 114 912
International	61 411 848	61 411 848
Total	149 641 672	105 526 760

Source: Air passenger traffic at Canadian airports, annual, Statistics Canada, Table: 23-10-0253-01 (formerly CANSIM 401-0044).

Use of U.S. data

Air carriers do not currently report data in Canada for many of the provisions covered by the proposed regulations, such as rates of involuntary denied boarding, delayed or cancelled flights, lost or damaged baggage or tarmac delays. Therefore, for the purpose of this CBA, these values were extrapolated from data reported by U.S. carriers and published by the U.S. Department of Transportation. ^{footnote 2} In circumstances where carriers provided estimates of their own operations, these estimates were used to adjust the average rates reported by U.S. carriers.

Further, in instances where the United States introduced similar consumer protections, potentially altering carrier behaviour, data prior to the introduction of such protections were considered to inform the baseline scenario, and data post-introduction of such protections were considered to inform the APPR scenario.

Carrier market shares

Market shares are determined on the basis of available seat miles from 2017 using data purchased from Flight Global. As many of the small carriers do not report flight movement records to Flight Global, small carriers are assumed to make up 1% of market shares.

Cost of accommodation

The cost of accommodation for one passenger (2018 CAN$/night) is $145.56. This amount was determined by taking an average of nightly rates from hotels within close proximity to airports across Canada and applying an assumed corporate discount of 15%.

Proportion of passengers accepting accommodation

It is assumed that 55.5% of passengers eligible for accommodation (in both the baseline and APPR scenarios) will not accept accommodation as they would choose to stay at home or with friends or family or share a room with a travel companion.

Cost of food and drink

The value of a meal voucher (2018 CAN$) is assumed to be between $8 (the price of a combo at a fast food establishment found in many Canadian airports) and $25 (the highest level of food voucher reported to be provided by carriers for a single meal), with an expected value of $16.50.

Valuation of passengers' travel time

In this analysis, the value of time refers to the dollar amount associated with the opportunity cost of the time spent travelling by air. The value of time depends on the passenger's travel purposes, which are broadly categorized as either for non-business or business purposes. Non-business purposes account for leisure and other personal motives for travelling. Typically, business travellers' value of time is based on their hourly wage (the median wage is used in this study), whereas non-business travellers' value of time is based on their revealed and stated preferences. ^{footnote 3} However, for a matter of simplicity, the methodology prescribed by the "Revised Departmental Guidance on Valuation of Travel Time in Economic Analysis" of the United States Department of Transportation (USDOT) is used to determine the value of time of a Canadian passenger. Based on this methodology, the value of one hour of air travel of a Canadian passenger (VOT) is estimated at $18.49 in 2017 dollars ($17.25 in 2012 Canadian dollars).

Premiums for enhanced quality of passengers' time

Flight disruptions (e.g. flight delays, cancellations and lost baggage) can be stressful and uncomfortable for passengers. ^{footnote 4} The proposed APPR would improve passengers' experience during air travel by imposing obligations on carriers that would reduce stress and discomfort during flight disruptions. Together, reduction in anxiety levels and improved sense of comfort during extended wait periods are fostered by the design of the APPR, which would create benefits to passengers. For instance, awareness of clear procedures in case of flight disruptions would decrease the level of anxiety to passengers, while the obligation to ensure a minimum level of standard of treatment to passengers guarantees a better flight quality experience, increasing comfort.

Similar to the methodology employed by the USDOT's cost and benefit analysis on the "Final Rule — Enhancing Airline Passenger Protections," the estimates of decreased anxiety and increased comfort to the passengers are based on a premium applied to the value of passengers' time. ^{footnote 5}

• Premium for increased comfort (food and drink) = 0.34
• Premium for increased comfort (deplaning and hotel accommodation) = 0.66
• Premium for reduced anxiety = 0.01

Proportion of passengers considered to be Canadian

Based on Statistics Canada data, ^{footnote 6} the percentage of Canadian residents travelling on international flights is 64.91%. There are currently no data on passenger nationality for domestic flights; therefore, the percentage of passengers considered Canadian residents on domestic flights is assumed to be 82.5%. This is the mid-point between the percentage of Canadians travelling on international flights and 100%.

Claim rates

For the purposes of this CBA, the claim rates of compensation by individuals in various scenarios are assumed to be the following:

Passenger Type	Claim Rate
Canadian, baseline	30%
Foreign, baseline	30%
Canadian, APPR	80%
Foreign, APPR	70%
Denied boarding	100%

Details of the costs and benefits for each regulatory provision can be found in the full CBA document, which is available from the CTA upon request. The following provides a brief description of the incremental benefits and costs of the proposed regulations.

Altering scheduled flight times

It should be noted that it is possible that carriers could extend their scheduled flying times to reduce the probability of paying compensation on chronically delayed flights. However, this analysis does not take this into account. It is assumed that carriers' scheduled flight times will remain unaltered in the APPR scenario.

Benefits

Compensation

Currently, passengers are compensated for flight disruption within a carrier's control either based on criteria described in a carrier's tariff or at the discretion of a carrier. The proposed APPR would establish minimum levels of compensation, tied to the length of delay to a passenger, to be paid in the event of flight delays, delays to passengers resulting from cancellations and denied boarding. Further, carriers would be required to compensate passengers for lost or damaged baggage on domestic flights, commensurate with the value of lost or damaged baggage, and refund baggage fees.

In both the APPR and baseline scenarios, the benefit of compensation is determined by first estimating the number of Canadian passengers that would be expected to be entitled to compensation and claim compensation under each scenario and then multiplying the number of passengers by the amount of compensation due under each scenario. Summing this compensation yields the total benefit of compensation to Canadian passengers under both the baseline and APPR scenarios. The difference represents the incremental benefit to Canadian passengers of the proposed regulatory provisions.

The present value of the incremental benefits to compensation under the APPR scenario is $1.349 billion, with an annualized benefit of $192 million.

Increased comfort — Food and drink

Currently, passengers are provided with food and drink (or food vouchers for use in an airport) during flight disruptions either based on criteria described in a carrier's tariff or at the discretion of a carrier. The proposed APPR would set a time threshold according to which carriers must provide passengers with food and drink during a flight disruption.

In both the APPR and baseline scenarios, the benefit to passengers of being provided with food and drink is determined by first estimating the number of Canadian passengers who would be delayed under the various passenger delay scenarios for which carriers provide food and drink. Based on the number of passengers estimated to be experiencing delay, the average delay to passengers can be determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours of delay during which passengers would have the benefit of waiting with food and drink by the value of a traveller's time and the premium for increased comfort (food and drink).

The present value of the incremental benefits to "Increased comfort — Food and drink" under the APPR scenario is $93 million, with an annualized benefit of $13 million.

Increased comfort — Accommodation

Currently, passengers are provided with accommodation during flight disruptions either based on criteria described in a carrier's tariff or at the discretion of a carrier. The proposed APPR would require carriers to provide passengers with accommodation during a flight disruption when the delay is expected to occur overnight.

In both the APPR and baseline scenarios, the benefit to passengers of being provided with accommodation is determined by first estimating the number of Canadian passengers who would be delayed under the various passenger delay scenarios for which carriers would be required to provide accommodation. Based on the passengers estimated to be experiencing delay, the average delay to passengers can be determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours of delay during which passengers would have the benefit of waiting in an accommodation by the value of a traveller's time and the premium for increased comfort (accommodation).

The present value of the incremental benefits to "Increased comfort — Accommodation" under the APPR scenario is $166 million, with an annualized benefit of $24 million.

Increased comfort — Disembarkation

Currently, passengers are provided with the opportunity to disembark during a tarmac delay based on criteria described in a carrier's tariff or at the discretion of a carrier. The proposed APPR would generally require carriers to return to the gate to disembark after three hours of delay on a tarmac.

In both the APPR and baseline scenarios, the benefit to passengers of deplaning is determined by first estimating the number of Canadian passengers who would be expected to experience tarmac delays greater than three hours. Based on this number, the average delay to passengers can be determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours of delay during which passengers would have the benefit of waiting in an airport, rather than in an airplane, by the value of a traveller's time and the premium for increased comfort (disembarkation).

The present value of the incremental benefits to "Increased comfort — Disembarkation" under the APPR scenario is $3.97 million, with an annualized benefit of $0.57 million.

Decreased anxiety

Under the APPR scenario carriers would be required to provide updates on causes of disruptions, type of disruption and expected length of disruption. Further, carriers would be required to communicate the recourse available to a passenger in the event of a disruption. Having a clear understanding of what is going on and of what recourse is available is expected to reduce anxiety for passengers experiencing flight disruptions.

Passengers travelling with children would be expected to experience less anxiety since the regulations would require the seating of children within close proximity to a parent or guardian, free of charge. Finally, domestic passengers experiencing lost or damaged baggage are expected to experience less anxiety as a result of clear expectations for compensation.

In the APPR scenario, the benefit to passengers of decreased anxiety is determined by first estimating the number of Canadian passengers who would be expected to experience reduced anxiety as a result of the regulations. The average time during which a passenger is expected to experience reduced anxiety is then determined for each scenario. The benefit to passengers can then be estimated by multiplying the total number of hours during which passengers would be expected to experience reduced anxiety by the value of a traveller's time and the premium for decreased anxiety.

The present value of the incremental benefits to "Decreased anxiety" under the APPR scenario is $15.4 million, with an annualized benefit of $2.2 million.

Time savings

In the case of involuntary denied boarding, the amounts of compensation are designed to help encourage carriers to seek volunteers. This expected reduction in involuntary denied boarding is expected to translate into time savings for Canadian passengers.

The time savings (in hours) to Canadian passengers is determined by multiplying the difference between the number of passengers expected to be involuntarily denied boarding in the baseline and APPR scenarios by the average delay to a passenger involuntarily denied boarding. The benefit is determined by multiplying the total time savings by the value of a passenger's time.

The present value of the incremental benefits to time savings under the APPR scenario is $1.1 million, with an annualized benefit of $0.162 million.

Non-monetized benefits

Requiring carriers to seat children near their parent or guardian could result in a safety benefit in the event of an evacuation, as parents would not be trying to locate their children when the plane is being evacuated. The APPR would also benefit musicians, as carriers would be required to state their policy for carrying musical instruments in their tariffs. This would help provide more certainty to musicians travelling with musical instruments.

Costs

Compensation

The cost to carriers of compensation is determined in the same manner as the benefit of compensation. However, instead of multiplying by the number of Canadian passengers entitled to and expected to claim compensation, the multiplication is done by the total number of passengers travelling with Canadian carriers who are entitled to compensation and who would be expected to claim compensation. The incremental cost is determined as the difference between compensation costs in the baseline and APPR scenarios.

The present value of the incremental costs to compensation under the APPR scenario is $1.341 billion, with an annualized cost of $191 million.

Providing food and drink

The cost to carriers of providing passengers with food and drink in both the APPR and baseline scenarios is determined by multiplying the number of passengers travelling on Canadian carriers who would be entitled to food and drink in the various scenarios by the cost of providing food and drink under each scenario.

The present value of the incremental costs to providing food and drink under the APPR scenario is $78 million, with an annualized cost of $11 million.

Providing accommodation

The cost to carriers of providing passengers with accommodation in both the APPR and baseline scenarios is determined by multiplying the number of passengers travelling on Canadian carriers who would be entitled to accommodation in the various scenarios by the cost of providing accommodation under each scenario.

The present value of the incremental costs of providing accommodation under the APPR scenario is $70 million, with an annualized cost of $10 million.

Tarmac delay — Disembarkation

The only cost estimated in the case of deplaning is the fuel cost. Under both the baseline and APPR scenarios, the estimated number of Canadian carriers' flights being delayed on the tarmac for more than three hours that would be expected to taxi back to the gate is multiplied by the average fuel cost per minute and the average number of minutes for taxiing back to the gate. Further, only half of international flights are considered, as the majority of tarmac delays occurring in other jurisdictions would be subject to the disembarkation requirements of that jurisdiction.

The present value of the incremental costs of deplaning under the APPR scenario is $111,000, with an annualized cost of $16,000.

Training

The proposed regulations would require carriers to invest in developing and offering training to their employees to ensure that the carrier is operating within the requirements of the proposed regulations. The cost of training is expected to be fully assumed in the first year of the coming into force of the proposed regulations.

The cost of developing training programs is estimated by multiplying the number of hours of each employee type involved in the development of the training by the average wage for each employee type. The hours estimated to be required to develop training programs are assumed to be higher for large carriers than for small carriers.

The cost of having the required employees take the training is estimated by multiplying the number of employees in the pilot and co-pilot, other flight personnel, management and administration and other carrier personnel categories employed in Canada by their respective hourly wages and the assumed number of hours required for training.

The present value of the incremental costs of developing and providing training under the APPR scenario is $18.5 million, with an annualized cost of $2.6 million.

Communication

The proposed regulations would require carriers to clearly communicate certain information to passengers at the time of reservation and in the event of a flight disruption. The costs to carriers to meet the requirements of the proposed communication aspects of the regulations include upfront implementation costs and ongoing operating costs. Since the ongoing costs of communicating with passengers would be assumed in both the baseline and APPR scenarios, carriers are not expected to require any additional employees to perform communication in the APPR scenario. Ongoing costs are therefore assumed to be negligible and only one-time implementation costs are monetized.

To estimate the costs of implementing the provisions, the IT, legal and business administrative costs are calculated for each communication provision. Since it is assumed that the resources required to estimate costs for large, medium and small carriers are different, costs are estimated for each carrier type. They are then totalled to estimate the one-time implementation costs of the communication provision.

The present value of the incremental costs of communication under the APPR scenario is $24.9 million, with an annualized cost of $3.5 million.

Changes to reservation systems

The provision requiring carriers to seat children within close proximity to a parent or guardian was estimated based on responses from carriers to the CTA's CBA survey and is expected to result in one-time, upfront costs related to changes to carriers' reservation systems. Costs were only considered for carriers that do not already guarantee seating within close proximity to a parent or guardian, free of charge.

The present value of the incremental costs of making changes to reservation systems under the APPR scenario is $260,000, with an annualized cost of $37,000.

Administrative costs to industry

The proposed regulations are likely to result in an administrative cost to carriers in issuing compensation, meal vouchers and accommodation, and rebooking passengers in the event of flight disruptions. The APPR would also rely on the carrier to make an initial determination of the cause of cancellations and delays. In many cases, there may be multiple causes, which could be the subject of a dispute between passengers and air carriers.

However, these additional costs are expected to be minimal. Currently, carriers offer various forms of compensation in the event of a breach of tariff. The proposed regulations may result in increased volumes of passengers claiming compensation; however, the uniform nature of the compensation requirements are expected to streamline the issuing of compensation for carriers. For the purpose of this CBA, these costs were not monetized.

Cost to Government

The CTA is responsible for the consumer protection of air travellers. It discharges this mandate by facilitating, mediating and adjudicating disputes between air travellers and air carriers. It also has a responsibility for ensuring that carriers' tariffs are reasonable.

The CTA is also responsible for issuing licences to scheduled and chartered air carriers operating in Canada and for the monitoring and enforcement of the carriers' obligations and adherence to CTA orders and decisions. The CTA anticipates an initial increase in all of these activities after the coming into force of these regulations.

The present value of the incremental costs to Government of administering the APPR is $9.7 million, with an annualized cost of $1.4 million.

A. Quantified impacts (2012 price level)

Cost-benefit statement

Base Year 2018	First Year 2019 ($. Millions)	Final Year 2028 ($. Millions)	Total Present Value ($. Millions)	Annualized Average ($. Millions)
Benefits/Canadians	209.0	264.9	1 628.4	231.9
Costs/Air carriers	238.3	241.3	1 531.4	218.0
Costs/Government of Canada	2.8	0.4	9.7	1.4
Net benefits			87.3	12.4

B. Qualitative benefits

• Increased certainty for musicians travelling with musical instruments
• Increased safety in the event of evacuation

Note: Costs and benefits are analyzed over a 10-year period (2019–2028) at a 7% discount rate.

Sensitivity analysis

Uncertainty has been taken into account in this cost-benefit analysis by assigning probability distributions to several variables. The results of the cost-benefit analysis summarized in Table 2, above, is the middle value calculated using the median of probabilistic inputs. The low and high values were determined by changing one variable at a time to determine the lowest and highest possible combination of outcomes. It should be noted that the lowest/highest possible net benefit is not derived by taking the difference between the lowest/highest possible costs and benefits, as in some cases, the value of an input that generated the lowest/highest cost may not be the same value that generates the lowest/highest benefit.

Finally, it should be noted that the extreme outcomes, determined through this sensitivity analysis would be extremely unlikely to occur as they would require several already unlikely outcomes to occur simultaneously. The probability of all extreme values occurring simultaneously is 0.2²⁰ = 1.04858E^-14.

The percentage of passengers on domestic flights who are Canadian, the percentage of passengers who claim compensation under the APPR scenario, and the value of a traveller's time have the largest impact on the net present value (NPV). Setting all of these variables to their maximum probable values increases the NPV by $348 million. Setting them all at their minimum probable values decreases the NPV by $302 million.

The table below summarizes the highest, lowest and most likely outcomes, derived through the sensitivity analysis.

Low, middle, and high values based on sensitivity analysis

Costs and Benefits	Low ($, Millions)	Middle ($, Millions)	High ($, Millions)
Benefits for Canadian public	965.30	1,628.40	3,651.80
Costs to carriers	790.50	1,531.40	3,312.40
Costs to Government	9.70	9.70	9.70
Total cost/All stakeholders (including Government)	800.30	1,541.10	3,322.10
Net benefit	−438.90	87.30	784.90

Note: Values in this table are presented as the present value using a 7% discount rate.

Small business lens

Although most of the Canadian commercial air operators do not meet the definition of the small and medium business category when using the gross revenue criteria to determine whether a business is small, the CTA has determined that 378 air carriers would be considered small businesses using the criteria of having 100 employees or fewer.

Costs to small businesses are associated directly with compliance with the regulations, including compensation paid to passengers in the event of flight disruption, expenses (e.g. IT systems) assumed to comply with communication provisions, and costs related to developing new training programs and delivering training to all relevant employees on the new processes and provisions.

The estimated annualized increase in total cost is $4,420,790 (in 2012 dollars) for all affected small businesses and the average cost per small business is $11,695 (in 2012 dollars). The estimated present value of total costs and cost per small business over the 10-year period are valued at $31,049,779 (in 2012 dollars) and $82,142 (in 2012), respectively.

In the initial option, the APPR requirements would be applied to air carriers equally, regardless of their business size. However, to take into account concerns regarding impacts on the viability of small carriers, the CTA is proposing a flexible option in which small carriers would be subject to lower compensation requirements and would not be required to rebook using competing carriers.

Initial Option

Short description: Apply the APPR to carriers regardless of their business size

Number of small businesses impacted: 378

Costs/Risk considerations	Annualized Average ($)	Present Value ($)
Compliance costs	5,004,605	35,150,249
Administrative costs	0	0
Total costs (all small businesses)	5,004,605	35,150,249
Total cost per small business	13,240	92,990
Risk considerations

Flexible Option

Short description: Two-tiered approach to compensation and rebooking requirements

Number of small businesses impacted: 378

Costs/Risk considerations	Annualized Average ($)	Present Value ($)
Compliance costs	4,420,790	31,049,779
Administrative costs	0	0
Total costs (all small businesses)	4,420,790	31,049,779
Total cost per small business	11,695	82,142
Risk considerations

"One-for-One" Rule

As the proposed regulations would not impose incremental administrative costs on businesses, the "One-for-One" Rule would not apply.

Regulatory cooperation and alignment

The EU has put in place a passenger protection regime including communication requirements, minimum standards of treatment, rebooking and reimbursement, and in some cases compensation for flight disruptions. Current U.S. rules to strengthen air passenger rights address communication with passengers, set standards of treatment and disembarkation requirements during tarmac delays, and establish compensation for denied boarding due to overbooking.

The CTA considered best practices and lessons learned from these other jurisdictions, while tailoring the proposal to Canadian needs. As a result, the APPR would ensure that passengers travelling to, from and within Canada have rights that are comparable to those in other jurisdictions and that unintended consequences experienced in other jurisdictions can be mitigated.

In addition, the requirements related to the transportation of minors are intended to implement in Canadian regulation the new ICAO standards in this area. This is a requirement, as Canada is a signatory to the Convention on International Civil Aviation.

Gender-based analysis plus (GBA+)

The regulations are intended to benefit the travelling public generally. The only targeted regulation relates to the seating of children under 14 years of age next to their parent or guardian at no additional cost. This regulation would result in a positive impact for travelling parents in general and, potentially to a greater extent, for women. Based on information from Statistics Canada, women are four times more likely to be lone parents (1.26 million) than men (0.35 million).

During consultations, some carriers indicated that compliance with the new regulations could involve financial requirements that hamper the viability of smaller airlines and those with already thin financial margins, including ultra-low-cost airlines serving a wide range of travellers and those serving northern and remote areas.

These risks are mitigated in the regulatory proposal through the two-tier approach to compensation and rebooking requirements. Requirements related to hotel accommodations, provision of food and communication take into account the operating environments of carriers serving northern and remote communities (where amenities are often limited).

Rationale

The CTA has developed this regulatory proposal in alignment with statutory requirements and the framework set out in the Act.

The CTA considered all input received through the consultations to develop the regulations. The CTA has also considered best practices and lessons learned from air passenger protection regimes in other jurisdictions, including the European Union (EU) and the United States, as well as the Montreal Convention, an international treaty to which Canada is party (along with the United States and the EU).

Scope

The proposed scope aligns with Parliament's intent that the regulations apply to "all flights to, from and within Canada, including connecting flights." The regime would apply as broadly as possible to travellers in Canada to ensure as much consistency as possible. The proposal is also meant to limit passenger confusion concerning redress in situations where flights are operated through commercial agreements between carriers like code sharing, wet leasing or interlining.

During consultations, the CTA heard concerns that the costs associated with the APPR could impact the viability of small or emerging carriers, and that carriers serving northern and remote areas may face challenges with certain provisions (given the unique operating environments in which accommodation options, communications and amenities may be limited). Instead of limiting the scope of the regulations to mitigate these issues — for example, through carve outs of some carriers — the proposal establishes different compensation levels and rebooking requirements for small air carriers. The proposal also establishes requirements concerning food, drink, accommodation and communication that take into account the location of the delay.

This approach strikes a balance between establishing robust passenger protections and ensuring Canada's small carriers are still able to provide diverse service offerings to passengers, including ultra-low-cost travel, and transportation to and from remote, regional and northern areas.

The CTA would monitor the effects of these regulations on the growth of small and medium-sized carriers and new entrants into the market and reassess if needed.

Clear communication

The regulatory proposal reflects the general agreement among the public, consumer advocacy groups, and industry stakeholders that passengers should be given clear information — regarding terms and conditions of carriage and during flight disruptions — in plain language through a range of methods.

The proposal is aimed at maximizing opportunities for passengers to receive key information throughout the travel process by, for example, requiring different methods of communication, and by requiring carriers to ensure information is shared by third parties authorized to sell tickets in the carrier's name. It is also designed to ensure that the needs of persons with disabilities are met.

The proposal also takes into account some operational issues raised by air carriers, such as their limited control of signage at airports and potential difficulty for front-line staff in immediately determining the precise cause of a delay.

Standards of treatment

The standards of treatment and rebooking requirements proposed in this package are comparable to those established in the EU regime, and generally align with comments provided by the public and consumer advocates. Specifically, requiring standards of treatment to be provided starting two hours after the delay at departure aligns with the EU regime.

Some members of the public and consumer advocates indicated a preference for prescribed dollar values for food and drink requirements. However, in order for the standards of treatment to reflect the wide range of possible delay circumstances and operational realities of different airport locations, the proposed food and drink requirements are dependent on the time of day, duration of the delay and location. This will take into account cost variances at different airport locations and limited amenities in some remote areas. Accommodation requirements are similarly linked to the location of the delay.

Completion of itinerary

The requirements related to rebooking and refunds protect the interests of passengers, while taking into account the operational considerations of carriers. Rebooking parameters reflect the aim of ensuring the passengers arrive at their destination as soon as possible by ensuring they are rebooked on the carrier's next possible flight or, in the case of large carriers, rebooked on a competitor flight if the carrier does not have an available flight leaving within nine hours of the original departure time.

Starting the rebooking and refund requirements after a flight delay of three hours allows time for a carrier to recover the flight from the delay before having to rebook, which can be a complex process that diverts resources from delay recovery.

Large carriers are also allowed a reasonable opportunity to make other arrangements for the affected passengers before having to take on the financial implications of last-minute rebooking on a competing carrier. Setting the threshold at nine hours reflects the lower frequency of certain flights, as well as hours of operation restrictions at some airports.

Exempting small air carriers from the requirement to rebook passengers on other carriers takes into account that many small air carriers have infrequent flights and/or do not have commercial or partnership arrangements with other air carriers.

Minimum compensation levels

The CTA received a range of suggestions regarding the appropriate amount of compensation for delays and cancellations — from $0 to $9,000. The proposed amounts for large carriers are comparable to those established in the EU regime (which range from EUR 250 to EUR 600, or approximately CAN$375 to CAN$900). These amounts also reflect input from public and consumer advocacy groups that compensation amounts should reflect inconvenience.

Certain air carriers are of the view that compensation should be linked to the price of the ticket purchased or at least not surpass it. However, the objective of this proposal is to compensate for the inconvenience experienced by the passenger, which does not change depending on the price of a ticket. Basing compensation amounts on the length of delay instead of the individual fare (or flight distance, as is used in the EU) achieves that objective. This is also the clearest and most administratively straightforward option and reflects input received from the public during consultations.

Some stakeholders and members of the public recommended that the same compensation requirements apply to all carriers, regardless of size. However, the two-tiered proposal takes into account concerns that costs could impact the viability of small carriers, many of which serve remote communities, and ensures that air travel is accessible for Canadians.

The specific time frames for compensation (three or more hours, but less than six hours; six or more hours, but less than nine hours; and nine or more hours) align with the EU regime, in which compensation for delays is required for delays of three hours or more.

The proposal reflects consumer views that it is important to be offered compensation in the form of cash. It also provides the flexibility, supported by both carriers and consumers, to offer other forms of compensation (e.g. travel vouchers, seat upgrades, and points towards loyalty programs). Making cash the primary form of compensation, with passenger discretion to accept other forms of greater, non-expiring compensation, ensures that carriers can tailor compensation to passenger needs, provided passengers are aware of all options.

Air travel can involve commercial arrangements where more than one carrier is involved in the transportation on a ticket. Certain air carriers indicated to the CTA that they should not be held liable for compensation where delays have been caused by another carrier. However, in order to ensure that the process is simple and clear for passengers, this proposal would allow passengers to seek compensation from any of the carriers involved in transportation on the ticket. Carriers would then be able to seek restitution from one another.

Denied boarding

During consultations, the public expressed particular concern regarding denied boarding due to factors entirely within carrier control, such as overbooking. While carriers advised against punitive compensation requirements, establishing compensation that is significantly higher than general delay and cancellation compensation — while also leaving carriers with flexibility to negotiate with potential volunteers — is intended to reduce the number of passengers moved to later flights against their will. The APPR would not prevent carriers from innovating in their methods of seeking volunteers (e.g. through an auction).

This proposal establishes requirements for immediate compensation (i.e. starting at a delay of 0 hours) for denied boarding, reflecting the heightened inconvenience associated with being denied boarding against one's will. Immediate payment for denied boarding aligns with the U.S. regime and reflects the low administrative complexity of processing these payments.

Tarmac delays

The standards of treatment for general delays of two hours or more would apply to all types of delays that are within the carrier's control and within the carrier's control but required for safety purposes, including tarmac delays.

In line with the legislation, the proposal also aims to increase passenger comfort during any tarmac delay over three hours by requiring that carriers provide a range of necessities recommended by the public and consumer advocates during consultations.

At airports in Canada, carriers would generally return to the gate for disembarkation after three hours — the earliest time permitted by the Act. The timing of disembarkation also draws from international best practices, namely the tarmac delay rules in the United States.

However, in order to mitigate further delay and passenger discomfort, the proposal would allow air carriers the discretion to stay on the tarmac for one additional 45-minute window, should takeoff be imminent. While there may be public objections to allowing a plane to stay on the tarmac for longer than three hours, this is intended to account for operational considerations and lessons learned expressed by air carriers, in particular the increase in flight cancellations experienced in the United States following the implementation of a strict disembarkation rule.

Lost or damaged baggage

Under the regime, liability limits established under the Montreal Convention for international travel would also apply to domestic flights, which would ensure consistency for travellers. This approach also recognizes that the regime cannot conflict with the Montreal Convention, which provides an exclusive scheme for international travel, a consideration that was emphasized by stakeholders generally. The proposal also reflects the view expressed by many members of the public that baggage fees should be reimbursed in instances of damage, loss or temporary loss.

Seating of children under the age of 14

Some members of the air industry are of the view that the seating of children free of charge is not an area in which government intervention is needed. However, this is clearly mandated by the legislation.

The proposal reflects public and consumer advocate views that children should be seated near their parent or guardian at no extra charge, and, generally, that proximity should depend on the age of the child. In the CTA's public survey at airports, 79% of respondents indicated that children under 5 years of age should be seated adjacent to their parent, guardian or tutor. Results also suggest that it would be reasonable to allow for slightly greater separation between older children and their parent, guardian or tutor, with the greatest latitude for children aged 12 to 14.

By basing seating requirements on the age of the child and requiring that air carriers facilitate the seating of children at the earliest opportunity, the proposal recognizes the complexity of assigned seating processes while ensuring that carriers take measures at every point to facilitate the seating. Facilitation could be done at the time of booking, at check-in, at the gate, and on the aircraft.

Transportation of musical instruments

Generally, stakeholders support providing clear policies on the transportation of musical instruments. Advocates for musicians wish to see regulations that put in place a prescriptive policy in this area, harmonizing with the U.S. policy. Air carriers, however, believe that competition in this area generates the best results. The proposal aligns with the legislation, which stipulates that regulations must require carriers to establish terms and conditions for the carriage of musical instruments without being prescriptive in terms of the content of the requirements.

Other consumer-related proposals

The proposal relating to the transportation of unaccompanied minors is intended to incorporate into the ATR the new standards regarding the transportation of unaccompanied minors, which Canada is required to adopt, as a signatory to the Convention on International Civil Aviation.

Moving the ASPAR into the APPR is a logical step, given that they are both oriented toward consumers.

Implementation, compliance and enforcement, and service standards

The proposed amendments would come into force on July 1, 2019.

The CTA's ongoing monitoring of the air industry includes inspections and investigations, and the CTA's existing air passenger complaints processes and dispute resolution services would apply to the new obligations. Enforcement officers conduct periodic inspections of air carriers to ensure that operating requirements are met, and they would do targeted investigations if they suspect an air carrier is not meeting their operating requirements.

Following an application for air passenger travel dispute resolution under the existing tariff-based regime, timelines are 65 business days for facilitation, 20 business days for mediation (when no extension has been requested), 30 to 65 days for arbitration (depending on the type), and 85 business days for adjudication (for complex cases, 65 business days after close of pleadings).

Once the regulations are in place, the CTA would issue guidance and tools for the public and air carriers to help ensure that this new regime is implemented smoothly and that passengers know their rights.

Contact

Caitlin Hurcomb
Manager
Regulatory Affairs Division
Analysis and Outreach Branch
Canadian Transportation Agency
15 Eddy Street, 19th Floor
Gatineau, Quebec K1A 0N9
Telephone: 819-997-6667
Email: Caitlin.Hurcomb@otc-cta.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Canadian Transportation Agency, pursuant to subsection 86(1) ^{footnote a}, sections 86.1 ^{footnote b} and 86.11 ^{footnote c} and subsection 177(1) ^{footnote d} of the Canada Transportation Act ^{footnote e} and subject to the approval of the Governor in Council, proposes to make the annexed Air Passenger Protection Regulations.

Interested persons may make representations concerning the proposed Regulations within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Caitlin Hurcomb, Manager, Regulatory Affairs, Canadian Transportation Agency, 15 rue Eddy, Gatineau, Quebec K1A 0N9 (tel.: 819-997-6667).

Ottawa, December 13, 2018

Jurica Čapkun
Assistant Clerk of the Privy Council

Air Passenger Protection Regulations

Interpretation

Definitions — Part II of Act

1 (1) The following definitions apply in Part II of the Act.

mechanical malfunction means a mechanical problem that reduces the safety of passengers but does not include a problem that is identified further to scheduled maintenance undertaken in compliance with legal requirements. (défaillance mécanique)

required for safety purposes means legally required in order to reduce risk to passengers but does not include scheduled maintenance in compliance with legal requirements. (nécessaire par souci de sécurité)

Definitions — Regulations

(2) The following definitions apply in these Regulations.

Act means the Canada Transportation Act. (Loi)

large carrier means

• (a) a carrier that transported one million passengers or more during each of the two preceding calendar years; or
• (b) a carrier that is, under a commercial agreement with a carrier referred to in paragraph (a), operating a flight or carrying passengers on behalf of that carrier. (gros transporteur)

small carrier means any carrier that is not a large carrier. (petit transporteur)

Denial of boarding

(3) For the purpose of these Regulations, there is a denial of boarding when a passenger is not permitted to board an aircraft because the number of passengers who checked in by the required time, hold a confirmed reservation and valid travel documentation and are present at the boarding gate in time for boarding is greater than the number of seats available on the flight.

General

Multiple carriers

2 (1) All carriers carrying a passenger are jointly and severally, or solidarily, liable to the passenger with respect to the obligations set out in these Regulations or, if they are more favourable, the obligations set out in the applicable tariff.

Exception — baggage

(2) Subsection (1) does not apply to the obligations set out in section 23.

Persons with disabilities

3 (1) These Regulations do not limit a carrier's other legal obligations with respect to persons with disabilities.

Carrier's right of action

(2) For greater certainty, these Regulations do not remove a carrier's right of action against any other person in accordance with the law.

Application to charter flights

4 (1) In the case of a charter flight, sections 2 to 24 apply

• (a) to a charter flight within Canada if one or more seats on that flight are purchased for resale to the public; or
• (b) to a charter flight to or from Canada, if the charter originated in Canada and one or more seats on that flight are purchased for resale to the public.

Licensee obligations

(2) A licensee must include the obligation to comply with these Regulations in its contracts with a charterer with respect to flights referred to in subsection (1).

Simple, clear and concise communication

5 (1) A carrier must make its terms and conditions of carriage that apply in the following circumstances available in simple, clear and concise language:

• (a) flight delay, flight cancellation or denial of boarding;
• (b) lost or damaged baggage; and
• (c) the seating of children who are under the age of 14 years.

Means of communication

(2) The terms and conditions referred to in subsection (1) must be made available on all digital platforms the carrier uses to sell tickets and on all documents related to the passenger's itinerary.

Information on treatment, compensation and recourse

(3) A carrier must provide information on the treatment and compensation owed by the carrier and the recourses available to the passenger, including their recourses to the Agency, in simple, clear and concise language on all digital platforms it uses to sell tickets and on all documents related to the passenger's itinerary.

Notice

(4) The following notice must be made available on all digital platforms the carrier uses to sell tickets and on all documents related to the passenger's itinerary issued to the passenger: "If you are denied boarding, if your flight is cancelled or delayed for at least 2 hours, or if your baggage is lost or damaged, you may be entitled to certain standards of treatment and compensation under the Air Passenger Protection Regulations. For more information about your rights, please contact your air carrier or visit the Canadian Transportation Agency's website."

Persons with disabilities

(5) If the information referred to in subsection (1) or (3) or the notice set out in subsection (4) is provided in a digital format, that format must be compatible with adaptive technologies intended to assist persons with disabilities. If it is provided in a physical format, the carrier must, on request, provide it in large print, Braille or a digital format.

Person authorized to sell tickets

6 The carrier must ensure than anyone authorized to sell tickets in the carrier's name complies with section 5.

Notice at airport

7 (1) A carrier operating a flight to or from an airport in Canada must display, in a clearly visible manner at the check-in desk, at self-service machines and at the boarding gate, a notice containing the following text:

"If you are denied boarding, if your flight is cancelled or delayed for at least 2 hours, or if your baggage is lost or damaged, you may be entitled to certain standards of treatment and compensation under the Air Passenger Protection Regulations. For more information about your rights, please contact your air carrier, or visit the Canadian Transportation Agency's website.

Si l'embarquement vous est refusé, ou si votre vol est annulé ou retardé de deux heures ou plus, ou si vos bagages sont perdus ou endommagés, vous pouvez bénéficier de certaines normes de traitement et avoir droit à une indemnité en vertu du Règlement sur la protection des passagers aériens. Pour de plus amples renseignements sur vos droits, veuillez communiquer avec votre transporteur aérien ou visitez le site Web de l'Office des transports du Canada."

Persons with disabilities

(2) If the notice is provided in a digital format, that format must be compatible with adaptive technologies intended to assist persons with disabilities. If it is provided in a physical format, the carrier must, on request, provide it in large print, Braille or a digital format.

Delay, Cancellation and Denial of Boarding

Tarmac delay obligations

8 (1) If a flight is delayed on the tarmac for more than three hours after the doors of the aircraft are closed for take-off or after the flight has landed, the carrier must provide passengers with the following, free of charge:

• (a) if the aircraft is equipped with lavatories, access to those lavatories in working order;
• (b) proper ventilation and cooling or heating of the aircraft;
• (c) the ability to communicate with people outside of the aircraft; and
• (d) food and drink, in reasonable quantities, taking into account the length of the delay, the time of day and the location of the airport.

Urgent medical assistance

(2) If a passenger requires urgent medical assistance while the plane is delayed on the tarmac for more than three hours after the doors of the aircraft are closed for take-off or after the flight has landed, the carrier must facilitate access to that assistance.

Passenger disembarkation

9 (1) If a flight is delayed on the tarmac at an airport in Canada for more than three hours after the aircraft doors have been closed for take-off or the flight has landed, the carrier must provide an opportunity for passengers to disembark.

Take-off imminent

(2) A carrier is not required to provide an opportunity for passengers to disembark in accordance with subsection (1) if take-off is likely in less than 45 minutes and the carrier is able to provide the treatment referred to in section 8 until take-off.

Priority disembarkation

(3) A carrier that allows passengers to disembark must, if feasible, give passengers with disabilities and their support person, service animal or emotional support animal, if any, the opportunity to disembark first.

Exceptions

(4) This section does not apply if providing an opportunity for passengers to disembark is not possible for reasons that are beyond the carrier's control, including reasons related to safety and security or to air traffic or customs control.

Obligations — situations outside carrier's control

10 (1) This section applies in respect of a carrier when there is delay, cancellation or denial of boarding due to situations outside the carrier's control, including

• (a) war or political instability;
• (b) unlawful acts or sabotage;
• (c) meteorological conditions or natural disasters that make the safe operation of the aircraft impossible;
• (d) instructions from air traffic control;
• (e) a NOTAM, as defined in the Canadian Aviation Regulations;
• (f) a security threat;
• (g) airport operation issues;
• (h) a medical emergency;
• (i) a collision with birds;
• (j) labour disputes at an essential service provider such as an airport and an air navigation service provider; and
• (k) a request from a police, security or customs official.

Obligations

(2) The carrier must

• (a) provide the information set out in section 13;
• (b) in the case of a delay of three hours or more, provide alternate travel arrangements, in the manner set out in section 18, to a passenger who desires such arrangements; and
• (c) in the case of a cancellation or a denial of boarding, provide alternate travel arrangements in the manner set out in section 18.

Obligations when required for safety purposes

11 (1) This section applies in respect of a carrier when there is delay, cancellation or denial of boarding that is within the carrier's control but is required for safety purposes.

Delay

(2) In the case of a delay, the carrier must

• (a) provide the information set out in section 13;
• (b) if a passenger is informed of the delay less than 12 hours before the departure time on their original ticket, provide the treatment set out in section 14; and
• (c) if the delay is of three hours or more, provide alternate travel arrangements, in the manner set out in section 17, to a passenger who desires such arrangements.

Cancellation

(3) In the case of a cancellation, the carrier must

• (a) provide the information set out in section 13;
• (b) if a passenger is informed of the cancellation less than 12 hours before the departure time on their original ticket, provide the treatment set out in section 14; and
• (c) provide alternate travel arrangements in the manner set out in section 17.

Denial of boarding

(4) In the case of a denial of boarding, the carrier must

• (a) provide the information set out in section 13;
• (b) deny boarding in accordance with section 15 and provide the treatment set out in section 16; and
• (c) provide alternate travel arrangements in the manner set out in section 17.

Obligations when within carrier's control

12 (1) This section applies in respect of a carrier when there is delay, cancellation or denial of boarding that is within the carrier's control and that is not referred to in subsection 11(1).

Delay

(2) In the case of a delay, the carrier must

• (a) provide the information set out in section 13;
• (b) if a passenger is informed of the delay less than 12 hours before the departure time on their original ticket, provide the treatment set out in section 14;
• (c) if the delay is of three hours or more, provide alternate travel arrangements, in the manner set out in section 17, to a passenger who desires such arrangements; and
• (d) if a passenger is informed 14 days or less before the original departure time that their arrival time at the destination on their ticket will be delayed, provide the minimum compensation for inconvenience in the manner set out in section 19.

Cancellation

(3) In the case of a cancellation, the carrier must

• (a) provide the information set out in section 13;
• (b) if a passenger is informed of the cancellation less than 12 hours before the departure time on their original ticket, provide the treatment set out in section 14;
• (c) provide alternate travel arrangements in the manner set out in section 17; and
• (d) if a passenger is informed 14 days or less before the original departure time that their arrival time at the destination on their ticket will be delayed, provide the minimum compensation for inconvenience in the manner set out in section 19.

Denial of boarding

(4) In the case of a denial of boarding, the carrier must

• (a) provide the information set out in section 13;
• (b) deny boarding in accordance with section 15 and provide the treatment set out in section 16;
• (c) provide alternate travel arrangements in the manner set out in section 17; and
• (d) provide the minimum compensation for inconvenience in the manner set out in section 20.

Information — cancellation, delay, denial of boarding

13 (1) If there is a cancellation, delay or a denial of boarding, a carrier must inform affected passengers of

• (a) the reason for the delay, cancellation or denial of boarding;
• (b) the compensation for inconvenience to which the passenger may be entitled;
• (c) the standard of treatment, if any, owed to the passenger by the carrier; and
• (d) the recourses available against the carrier, including their recourse to the Agency.

Communication every 30 minutes

(2) In the case of a delay, the carrier must communicate status updates every 30 minutes until a new departure time for the flight is set or new travel arrangements have been made for the affected passenger.

New information

(3) The carrier must communicate any new information as soon as possible.

Audible and visible announcement

(4) The information referred to in subsection (1) must be provided by means of both audible and visible announcements.

Method of communication

(5) The information referred to in subsection (1) must be communicated to the passenger using the communication method that they have indicated that they prefer, including a method that is compatible with adaptive technologies intended to assist persons with disabilities.

Two-hour wait

14 (1) If paragraph 11(2)(b) or (3)(b) or 12(2)(b) or (3)(b) applies in respect of a carrier, and a passenger has waited two hours after the departure time on their original ticket, the carrier must provide the passenger with the following treatment free of charge:

• (a) food and drink in reasonable quantities, taking into account the length of the delay, the time of day and the location of the passenger; and
• (b) access to a means of communication.

Accommodations

(2) If the carrier expects that the passenger will wait overnight for their original flight or for a flight reserved as part of alternate travel arrangements, the air carrier must offer, free of charge, hotel or other comparable accommodation that is reasonable in relation to the location of the passenger and transportation to and from the hotel or other accommodation.

Lavatories

(3) Once a passenger has waited 30 minutes after the departure time on their original ticket, the carrier must ensure that they have access to working lavatories, unless the carrier does not control any lavatories or it is not operationally feasible to allow passengers access to them.

Refusing or limiting treatment

(4) The carrier may limit or refuse to provide a treatment referred to in subsection (1) or (2) if providing that treatment would further delay the passenger.

Denial of boarding — request for volunteers

15 (1) If paragraph 11(4)(b) or 12(4)(b) applies in respect of a carrier, it must not deny boarding unless it has asked if any passenger is willing to give up their seat.

Passenger on aircraft

(2) The carrier must not deny boarding to a passenger who is already on the aircraft.

Priority for boarding

(3) If denial of boarding is necessary, the carrier must select the passengers who will be denied boarding, giving priority for boarding to passengers in the following order:

• (a) an unaccompanied minor;
• (b) a person with a disability and their support person, service animal, or emotional support animal, if any;
• (c) a passenger who is travelling with their family;
• (d) a passenger who was previously denied boarding on the same ticket;
• (e) a passenger travelling with a group.

Treatment when boarding is denied

16 (1) If paragraph 11(4)(b) or 12(4)(b) applies in respect of a carrier, it must, before a passenger boards the flight reserved as an alternate travel arrangement, provide them with the following treatment free of charge:

• (a) food and drink in reasonable quantities, taking into account the length of the wait, the time of day and the location of the passenger; and
• (b) access to a means of communication.

Accommodations

(2) If the carrier expects that the passenger will wait overnight for a flight reserved as part of alternate travel arrangements, the carrier must offer, free of charge, hotel or other comparable accommodation that is reasonable in relation to the location of the passenger and transportation to and from the hotel or other accommodation.

Refusing or limiting treatment

(3) The carrier may limit or refuse to provide a treatment referred to in subsection (1) or (2) if providing that treatment would further delay the passenger.

Alternative arrangements — carrier control

17 (1) If paragraph 11(2)(c), (3)(c) or (4)(c) or 12(2)(c), (3)(c) or (4)(c) applies in respect of a carrier, it must provide the following free of charge to ensure that passengers complete their itinerary as soon as possible:

• (a) in the case of a large carrier
  • (i) a confirmed reservation on the next available flight that is operated by the original carrier, or a carrier with which the original carrier has a commercial agreement, and that is on any route to the destination on the passenger's original ticket and departs within nine hours of the departure time on the original ticket, or
  • (ii) a confirmed reservation on a flight operated by any carrier on any route to the destination on the passenger's original ticket if the carrier cannot provide a confirmed reservation that complies with paragraph (a); and
• (b) in the case of a small carrier, a confirmed reservation on the next available flight that is operated by the original carrier, or a carrier with which the original carrier has a commercial agreement, and that is on any route to the destination on the passenger's original ticket.

Refund

(2) If the alternate travel arrangements offered in accordance with subsection (1) do not accommodate the passenger's travel needs, the carrier must instead

• (a) if, because of the delay, cancellation or denial of boarding, the travel no longer serves a purpose, refund the ticket and provide the passenger with a confirmed reservation to the point of origin of the ticket that accommodates the passenger's travel needs; and
• (b) in any other case, refund the unused portion of the ticket.

Comparable conditions

(3) To the extent possible, the alternate travel arrangements must provide services under comparable conditions to the original ticket.

Refund of additional services

(4) A carrier must refund the cost of any additional services purchased by a passenger in connection with their original ticket if

• (a) the passenger did not receive those services on the new flight; or
• (b) the passenger was required to pay for those services a second time.

Higher class of service

(5) If the alternate travel arrangements provide for a higher class of service than the original ticket, the carrier must not request supplementary payment.

Lower class of service

(6) If the alternate travel arrangements provide for a lower class of service than the original ticket, the carrier must refund the difference in the cost of the applicable portion of the ticket.

Form of refund

(7) Refunds under this section must be made to the person who purchased the ticket and be in the same form as the form in which the ticket or additional service was purchased.

Alternative arrangements — no carrier control

18 If paragraph 10(2)(b) or (c) applies in respect of a carrier, it must provide the following free of charge to ensure that passengers complete their itinerary as soon as possible:

• (a) in the case of a large carrier
  • (i) a confirmed reservation on the next available flight that is operated by the carrier, or a carrier with which the original carrier has a commercial agreement, and that is on any route to the destination on the passenger's original ticket and departs within 48 hours of the end of the event that caused the delay, cancellation or denial of boarding, or
  • (ii) a confirmed reservation on a flight operated by any carrier on any route to the destination on the passenger's original ticket, if the carrier cannot provide a confirmed reservation that complies with paragraph (a); and
• (b) in the case of a small carrier, a confirmed reservation on the next available flight that is operated by the carrier, or a carrier with which the original carrier has a commercial agreement, and that is on any route to the destination on the passenger's original ticket.

Compensation for delay or cancellation

19 (1) If paragraph 12(2)(d) or (3)(d) applies in respect of a carrier, it must provide the following compensation:

• (a) in the case of a large carrier
  • (i) $400, if the passenger's arrival time at their destination on the original ticket is delayed by three hours or more, but less than six hours,
  • (ii) $700, if the passenger's arrival time at their destination on the original ticket is delayed by six hours or more, but less than nine hours, or
  • (iii) $1,000, if the passenger's arrival time at their destination on the original ticket is delayed by nine hours or more; and
• (b) in the case of a small carrier
  • (i) $125, if the passenger's arrival time at their destination on the original ticket is delayed by three hours or more, but less than six hours,
  • (ii) $250, if the passenger's arrival time at their destination on the original ticket is delayed by six hours or more, but less than nine hours, or
  • (iii) $500, if the passenger's arrival time at their destination on the original ticket is delayed by nine hours or more.

Compensation in case of refund

(2) If the passenger's ticket is refunded in accordance with subsection 17(2), the carrier must provide a minimum compensation of

• (a) $400, in the case of a large carrier; and
• (b) $125, in the case of a small carrier.

Deadline to file request

(3) To receive the compensation referred to in paragraph (1) or (2), a passenger must file a request for compensation with the carrier within 120 days after the day on which the flight delay or flight cancellation occurred.

Response in 30 days

(4) The carrier must, within 30 days after the day on which it received the request, provide compensation or an explanation as to why compensation is not payable.

Large and small carriers

(5) If a ticket includes a flight that, as a result of a commercial arrangement, is operated either by a large carrier under its own name on an aircraft owned and operated by a small carrier or by a small carrier under its own name on an aircraft owned and operated by a large carrier, a passenger is entitled to the compensation set out in paragraph (1)(a) or (2)(a), as the case may be.

Compensation for denial of boarding

20 (1) If paragraph 12(4)(d) applies in respect of a carrier, it must provide the following compensation:

• (a) $900, if the passenger's arrival time at their destination on the original ticket is delayed by less than six hours;
• (b) $1,800, if the arrival time at the destination on the original ticket is delayed by six hours or more, but less than nine hours; and
• (c) $2,400, if the arrival time at the destination on the original ticket is delayed by nine hours or more.

Immediate payment

(2) The carrier must provide the compensation to the passenger as soon as it is operationally feasible after the denial of boarding.

Payment within 48 hours

(3) A carrier must ensure that it is operationally feasible to provide the compensation within 48 hours of a denial of boarding.

Written confirmation

(4) If it is not possible to provide the compensation before the boarding time of the flight reserved as part of alternate travel arrangements, the carrier must provide the passenger with a written confirmation of the amount of the compensation.

Adjustment

(5) If the passenger arrives at the destination on their original ticket after the time they were expected to arrive when the written confirmation was provided and the amount on that written confirmation therefore does not reflect the amount due in accordance with subsection (1), the carrier must adjust the amount of the compensation indicated on the written confirmation.

Compensation for inconvenience

21 (1) If a carrier is required by these Regulations to provide compensation for inconvenience to a passenger, the carrier must offer the amount required in monetary form. However, the compensation may be made in another form if

• (a) compensation in the other form has a greater monetary value than the minimum monetary value of the compensation that is required under these Regulations;
• (b) the passenger has been informed in writing of the monetary value of the other form of compensation;
• (c) the compensation does not expire; and
• (d) the passenger confirms in writing that they have been informed of their right to receive monetary compensation and have chosen the other form of compensation.

Consumer price index

(2) On the first April 1 after the first anniversary of the coming into force of these Regulations, and on every second April 1 after that day, the amount of compensation for inconvenience set out in these Regulations is adjusted according to the following formula, rounded to the nearest $10:

A × (B ⁄ C)

where

• A is the amount set out in subsection 19(1) or (2) or 20(1), as the case may be;
• B is the average Consumer Price Index for the twelve months of the calendar year immediately preceding that April 1, as published by Statistics Canada under the authority of the Statistics Act; and
• C is the average Consumer Price Index for the twelve months of the calendar year in which these Regulations come into force, as published by Statistics Canada under the authority of the Statistics Act.

Update

(3) On the dates referred to in subsection (2), a carrier must update all documents it provides to the public in respect of compensation for inconvenience.

Seating of Children under the Age of 14 Years

Assigning seats

22 (1) In order to facilitate the seating of a child who is under the age of 14 years in close proximity to a parent, guardian or tutor in accordance with subsection (2), a carrier must

• (a) assign seats before check-in at no additional charge to a child under the age of 14 and their parent, guardian or tutor; and
• (b) if the carrier does not assign seats in accordance with paragraph (a), do the following:
  • (i) advise passengers before check-in that the carrier will facilitate seat assignment of the child in close proximity to a parent, guardian or tutor at no additional charge at the time of check-in or at the boarding gate,
  • (ii) assign seats at the time of check-in, if possible,
  • (iii) if it is not possible to assign seats at the time of check-in, request that other passengers volunteer to change seats at the time of boarding, and
  • (iv) if it is not possible to assign seats at the time of check-in and no passenger volunteers to change seats at the time of boarding, request that other passengers volunteer to change seats before take-off.

Proximity to adult's seat

(2) The carrier must facilitate the assignment of a seat to a child who is under the age of 14 years by offering, at no additional charge,

• (a) in the case of a child who is 4 years of age or younger, a seat that is adjacent to their parent, guardian or tutor's seat;
• (b) in the case of a child who is 5 to 11 years of age, a seat that is in the same row as their parent, guardian or tutor's seat, and that is separated from that parent, guardian or tutor's seat by no more than one seat; and
• (c) in the case of a child who is 12 or 13 years of age, a seat that is in a row that is separated from the row of their parent, guardian or tutor's seat by no more than one row.

Difference in costs

(3) If a passenger is assigned a seat in accordance with subsection (2) that is in a lower class of service than their ticket provides, the carrier must reimburse the difference in the cost of the classes of service. If the passenger chooses to be assigned a seat that is in a higher class of service than their ticket provides, the carrier may charge them for the difference in the costs of the classes of service.

Baggage

Lost or damaged baggage

23 (1) If a carrier admits to the loss of baggage, or if baggage is lost for more than 21 days or damaged, the carrier must provide compensation equal to or greater than the sum of

• (a) the fees paid for that baggage,
• (b) in cases where the Carriage by Air Act applies, the compensation payable under that Act, and
• (c) in cases where the Carriage by Air Act does not apply, the amount that would be payable under the Convention for the Unification of Certain Rules for International Carriage by Air set out in Schedule VI to that Act, if the carrier were conducting international carriage of baggage within the meaning of paragraph 1 of Article 1 of that Convention.

Temporary loss

(2) If baggage is lost for 21 days or less, the carrier must provide compensation equal to or greater than the sum of

• (a) the fees paid for that baggage,
• (b) in cases where the Carriage by Air Act applies, the compensation payable under that Act, and
• (c) in cases where the Carriage by Air Act does not apply, the amount that would be payable for delay in the carriage of baggage under the Convention for the Unification of Certain Rules for International Carriage by Air set out in Schedule VI to that Act, if the carrier were conducting international carriage of baggage within the meaning of paragraph 1 of Article 1 of that Convention.

Musical instruments

24 A carrier must establish terms and conditions with regard to

• (a) the transportation of musical instruments, if applicable;
• (b) musical instruments that may be carried in the cabin or that must be checked baggage, including
  • (i) restrictions with respect to size and weight,
  • (ii) restrictions with respect to quantity, and
  • (iii) the use of stowage space in the cabin;
• (c) fees for transporting instruments; and
• (d) passenger options if, because a flight will occur on a different aircraft than expected, there is insufficient stowage space in the cabin.

Advertising

Definitions

25 The following definitions apply in sections 27 to 31.

air transportation charge means, in relation to an air service, every fee or charge that must be paid upon the purchase of the air service, including the charge for the costs to the carrier of providing the service, but excluding any third party charge. (frais du transport aérien)

third party charge means, in relation to an air service or an optional incidental service, any tax or prescribed fee or charge established by a government, public authority or airport authority, or by an agent or mandatary of a government, public authority or airport authority, that upon the purchase of the service is collected by the carrier or other seller of the service on behalf of the government, the public or airport authority or the agent for remittance to it. (somme perçue pour un tiers)

total price means

• (a) in relation to an air service, the total of the air transportation charges and third party charges that must be paid to obtain the service; and
• (b) in relation to an optional incidental service, the total of the amount that must be paid to obtain the service, including all third party charges. (prix total)

Subsection 86.1(2) of the Act

26 For the purposes of subsection 86.1(2) of the Act and sections 25 to 31, a prescribed fee or charge is one that is fixed on a per person or ad valorem basis.

Application

27 (1) Subject to subsection (2), sections 28 to 31 apply to advertising in all media of prices for air services within, or originating in, Canada.

Exception

(2) Sections 28 to 31 do not apply to an advertisement that relates to

• (a) an air cargo service;
• (b) a package travel service that includes an air service and any accommodation, surface transportation or entertainment activity that is not incidental to the air service; or
• (c) a price that is not offered to the general public and is fixed through negotiation.

Medium to advertise

(3) Sections 28 to 31 do not apply to a person who provides another person with a medium to advertise the price of an air service.

Information in advertisement

28 (1) A person who advertises the price of an air service must include in the advertisement the following information:

• (a) the total price that must be paid to the advertiser to obtain the air service, expressed in Canadian dollars and, if it is also expressed in another currency, the name of that currency;
• (b) the point of origin and point of destination of the service and whether the service is one way or round trip;
• (c) any limitation on the period during which the advertised price will be offered and any limitation on the period for which the service will be provided at that price;
• (d) the name and amount of each tax, fee or charge relating to the air service that is a third party charge;
• (e) each optional incidental service offered for which a fee or charge is payable and its total price or range of total prices; and
• (f) any published tax, fee or charge that is not collected by the advertiser but must be paid at the point of origin or departure by the person to whom the service is provided.

Third party charges

(2) A person who advertises the price of an air service must set out all third party charges under the heading "Taxes, Fees and Charges" unless that information is only provided orally.

Air transportation charges

(3) A person who mentions an air transportation charge in the advertisement must set it out under the heading "Air Transportation Charges" unless that information is only provided orally.

One direction of round trip service

(4) A person who advertises the price of one direction of a round trip air service is exempt from the application of paragraph (1)(a) if the following conditions are met:

• (a) the advertised price is equal to 50% of the total price that must be paid to the advertiser to obtain the service;
• (b) it is clearly indicated that the advertised price relates to only one direction of the service and applies only if both directions are purchased; and
• (c) the advertised price is expressed in Canadian dollars and, if it is also expressed in another currency, the name of that other currency is specified.

Readily obtainable information

(5) A person is exempt from the requirement to provide the information referred to in paragraphs (1)(d) to (f) in their advertisement if the following conditions are met:

• (a) the advertisement is not interactive; and
• (b) the advertisement mentions a location that is readily accessible where all the information referred to in subsection (1) can be readily obtained.

Total price readily determinable

29 A person must not provide information in an advertisement in a manner that could interfere with the ability of anyone to readily determine the total price that must be paid for an air service or for any optional incidental service.

Distinction — tax and charges

30 A person must not set out an air transportation charge in an advertisement as if it were a third party charge or use the term "tax" in an advertisement to describe an air transportation charge.

Name of third party charge

31 A person must not refer to a third party charge in an advertisement by a name other than the name under which it was established.

Administrative Monetary Penalties

Designation

32 The provisions, requirements and conditions set out in column 1 of the schedule are designated for the purposes of subsection 177(1) of the Act.

Maximum amount

33 The maximum amount payable in respect of a contravention of a provision, requirement or condition set out in column 1 of the schedule is the amount

• (a) in respect of a corporation, set out in column 2; and
• (b) in respect of an individual, set out in column 3.

Consequential Amendments

Air Transportation Regulations

34 The definition passenger in section 2 of the Air Transportation Regulations ^{footnote 7} is repealed.

35 The Regulations are amended by adding the following after section 2.1:

2.2 For the purposes of these Regulations, passenger means a person, other than a member of the air crew, who uses an air carrier's domestic service or international service by boarding the air carrier's aircraft pursuant to a valid contract or arrangement.

36 (1) The portion of paragraph 107(1)(n) of the Regulations before subparagraph (i) is replaced by the following:

• (n) a clear statement of the terms and conditions of carriage, including those required under the Act, in respect of at least the following matters:

(2) Paragraph 107(1)(n) of the Regulations is amended by adding the following after subparagraph (ii):

• (ii.1) unaccompanied minors, including those who are travelling under the carrier's supervision,
• (ii.2) the assignment of seats to children who are under the age of 14 years,
• (ii.3) flight delay,
• (ii.4) flight cancellation,

(3) Subparagraph 107(1)(n)(iii) of the Regulations is replaced by the following:

• (iii) denial of boarding,

(4) Paragraph 107(1)(n) of the Regulations is amended by adding the following after subparagraph (v):

• (v.1) delay on the tarmac,

(5) Paragraph 107(1)(n) of the Regulations is amended by adding the following after subparagraph (viii):

• (viii.1) the transportation of musical instruments,

(6) Paragraph 107(1)(n) of the Regulations is amended by adding the following after subparagraph (ix):

• (ix.1) lost or damaged baggage,

37 (1) The portion of paragraph 122(c) of the Regulations before subparagraph (i) is replaced by the following:

• (c) a clear statement of the terms and conditions of carriage, including those required under the Act, in respect of at least the following matters:

(2) Paragraph 122(c) of the Regulations is amended by adding the following after subparagraph (ii):

• (ii.1) unaccompanied minors, including those who are travelling under the carrier's supervision,
• (ii.2) the assignment of seats to children who are under the age of 14 years,
• (ii.3) flight delay,
• (ii.4) flight cancellation,

(3) Subparagraph 122(c)(iii) of the Regulations is replaced by the following:

• (iii) denial of boarding,

(4) Paragraph 122(c) of the Regulations is amended by adding the following after subparagraph (v):

• (v.1) delay on the tarmac,

(5) Paragraph 122(c) of the Regulations is amended by adding the following after subparagraph (viii):

• (viii.1) the transportation of musical instruments,

(6) Paragraph 122(c) of the Regulations is amended by adding the following after subparagraph (ix):

• (ix.1) lost or damaged baggage,

(7) Section 122 of the Regulations is amended by striking out "and" at the end of paragraph (b), by adding "and" at the end of paragraph (c) and by adding the following after paragraph (c):

• (d) a policy respecting the refusal to transport a person who is less than 5 years old unless that person is accompanied by their parent or a person who is at least 16 years old.

38 Part V.1 of the Regulations is repealed.

Canadian Transportation Agency Designated Provisions Regulations

39 Items 96.1 to 96.92 of the schedule to the Canadian Transportation Agency Designated Provisions Regulations ^{footnote 8} are repealed.

Coming into Force

July 1, 2019

40 These Regulations come into force on July 1, 2019.

SCHEDULE

(Sections 32 and 33)

Item	Column 1 Provision, Requirement or Condition	Column 2 Maximum Amount Payable — Corporation ($)	Column 3 Maximum Amount Payable — Individual ($)
1	Subsection 4(2)	25,000	5,000
2	Paragraph 5(1)(a)	25,000	5,000
3	Paragraph 5(1)(b)	25,000	5,000
4	Paragraph 5(1)(c)	25,000	5,000
5	Subsection 5(2)	25,000	5,000
6	Subsection 5(3)	25,000	5,000
7	Subsection 5(4)	25,000	5,000
8	Subsection 5(5)	25,000	5,000
9	Section 6	25,000	5,000
10	Subsection 7(1)	25,000	5,000
11	Subsection 7(2)	25,000	5,000
12	Paragraph 8(1)(a)	25,000	5,000
13	Paragraph 8(1)(b)	25,000	5,000
14	Paragraph 8(1)(c)	25,000	5,000
15	Paragraph 8(1)(d)	25,000	5,000
16	Subsection 8(2)	25,000	5,000
17	Subsection 9(1)	25,000	5,000
18	Subsection 9(3)	25,000	5,000
19	Paragraph 10(2)(a)	25,000	5,000
20	Paragraph 10(2)(b)	25,000	5,000
21	Paragraph 10(2)(c)	25,000	5,000
22	Paragraph 11(2)(a)	25,000	5,000
23	Paragraph 11(2)(b)	25,000	5,000
24	Paragraph 11(2)(c)	25,000	5,000
25	Paragraph 11(3)(a)	25,000	5,000
26	Paragraph 11(3)(b)	25,000	5,000
27	Paragraph 11(3)(c)	25,000	5,000
28	Paragraph 11(4)(a)	25,000	5,000
29	Paragraph 11(4)(b)	25,000	5,000
30	Paragraph 11(4)(c)	25,000	5,000
31	Paragraph 12(2)(a)	25,000	5,000
32	Paragraph 12(2)(b)	25,000	5,000
33	Paragraph 12(2)(c)	25,000	5,000
34	Paragraph 12(2)(d)	25,000	5,000
35	Paragraph 12(3)(a)	25,000	5,000
36	Paragraph 12(3)(b)	25,000	5,000
37	Paragraph 12(3)(c)	25,000	5,000
38	Paragraph 12(3)(d)	25,000	5,000
39	Paragraph 12(4)(a)	25,000	5,000
40	Paragraph 12(4)(b)	25,000	5,000
41	Paragraph 12(4)(c)	25,000	5,000
42	Paragraph 13(1)(a)	25,000	5,000
43	Paragraph 13(1)(b)	25,000	5,000
44	Paragraph 13(1)(c)	25,000	5,000
45	Paragraph 13(1)(d)	25,000	5,000
46	Subsection 13(2)	25,000	5,000
47	Subsection 13(3)	25,000	5,000
48	Subsection 13(4)	25,000	5,000
49	Subsection 13(5)	25,000	5,000
50	Paragraph 14(1)(a)	25,000	5,000
51	Paragraph 14(1)(b)	25,000	5,000
52	Subsection 14(2)	25,000	5,000
53	Subsection 14(3)	25,000	5,000
54	Subsection 15(1)	25,000	5,000
55	Subsection 15(2)	25,000	5,000
56	Subsection 15(3)	25,000	5,000
57	Paragraph 16(1)(a)	25,000	5,000
58	Paragraph 16(1)(b)	25,000	5,000
59	Subsection 16(2)	25,000	5,000
60	Subparagraph 17(1)(a)(i)	25,000	5,000
61	Subparagraph 17(1)(a)(ii)	25,000	5,000
62	Paragraph 17(1)(b)	25,000	5,000
63	Paragraph 17(2)(a)	25,000	5,000
64	Paragraph 17(2)(b)	25,000	5,000
65	Subsection 17(3)	25,000	5,000
66	Paragraph 17(4)(a)	25,000	5,000
67	Paragraph 17(4)(b)	25,000	5,000
68	Subsection 17(5)	25,000	5,000
69	Subsection 17(6)	25,000	5,000
70	Subsection 17(7)	25,000	5,000
71	Subparagraph 18(1)(a)(i)	25,000	5,000
72	Subparagraph 18(1)(a)(ii)	25,000	5,000
73	Paragraph 18(1)(b)	25,000	5,000
74	Subparagraph 19(1)(a)(i)	25,000	5,000
75	Subparagraph 19(1)(a)(ii)	25,000	5,000
76	Subparagraph 19(1)(a)(iii)	25,000	5,000
77	Subparagraph 19(1)(b)(i)	25,000	5,000
78	Subparagraph 19(1)(b)(ii)	25,000	5,000
79	Subparagraph 19(1)(b)(iii)	25,000	5,000
80	Paragraph 19(2)(a)	25,000	5,000
81	Paragraph 19(2)(b)	25,000	5,000
82	Subsection 19(4)	25,000	5,000
83	Paragraph 20(1)(a)	25,000	5,000
84	Paragraph 20(1)(b)	25,000	5,000
85	Paragraph 20(1)(c)	25,000	5,000
86	Subsection 20(2)	25,000	5,000
87	Subsection 20(3)	25,000	5,000
88	Subsection 20(4)	25,000	5,000
89	Subsection 20(5)	25,000	5,000
90	Subsection 21(1)	25,000	5,000
91	Subsection 21(3)	25,000	5,000
92	Paragraph 22(1)(a)	25,000	5,000
93	Paragraph 22(1)(b)	25,000	5,000
94	Subsection 22(2)	25,000	5,000
95	Subsection 22(3)	25,000	5,000
96	Subsection 23(1)	25,000	5,000
97	Subsection 23(2)	25,000	5,000
98	Paragraph 24(a)	25,000	5,000
99	Paragraph 24(b)	25,000	5,000
100	Paragraph 24(c)	25,000	5,000
101	Paragraph 24(d)	25,000	5,000
102	Paragraph 28(1)(a)	25,000	5,000
103	Paragraph 28(1)(b)	25,000	5,000
104	Paragraph 28(1)(c)	25,000	5,000
105	Paragraph 28(1)(d)	5,000	1,000
106	Paragraph 28(1)(e)	5,000	1,000
107	Paragraph 28(1)(f)	5,000	1,000
108	Subsection 28(2)	5,000	1,000
109	Subsection 28(3)	5,000	1,000
110	Section 29	5,000	1,000
111	Section 30	5,000	1,000
112	Section 31	5,000	1,000