Airline blames $500m class action lawsuit on travel agents. Air Canada’s constitutional challenge to the B.C. Business Practices & Consumer Protection Act (BPCPA) was heard at the Supreme Court of British Columbia May 9-11 by Madam Justice Adair.
Airline claims that while the Act is constitutionally valid, it does not apply to Air Canada as a federally regulated undertaking or to its partner Lufthansa.
The challenge is part of an effort by its defence counsel to dismiss a claim filed by passenger Bulent Unlu under the B.C. Class Proceedings Act. Plaintiff alleges that Air Canada represented an amount of $340.40 collected on his ticket as a tax, while the money was actually collected for the airline’s own use. Plaintiff is seeking a restitution of the charge for all (putative) class members under a provision of the BPCPA that prohibits misleading trade practices. He’s represented by Poyner Baxter of North Vancouver, a law firm specialising in class actions.
The claim filed November 1, 2010 arises out of a ticket issued October 15, 2008 by an Air Canada consolidator under a fare known in the travel industry as a bulk fare, or non-tariff fare. In its response to civil claim filed on November 23, 2010 Air Canada states that it did not make any representations to the passenger, nor did it receive, retain or divert the charge in question. Any representations made by the travel agent were allegedly made on its own behalf or on behalf of the consolidator, or both, but not Air Canada.
The impugned charge is what is coded as YQ in the tax box of an electronic ticket receipt.
Air Canada’s constitutional challenge was opposed by the Attorney General of British Columbia who responded by sending two senior lawyers to the Vancouver hearing, Linda Brown and Heidi Hughes. Attorney General for Canada was notably absent from the dispute.
Air Canada’s lawyer David Neave argued that the charge in question, a fuel surcharge, was sanctioned by the Canada Transport Agency as the exclusive authority over airline tariffs. He said airline tickets are an integral part of air travel and, since nothing that is not in the tariffs filed with the Agency can go on an airline ticket, the Agency has exclusive jurisdiction over the matter.
Canada Transport Agency is a semi-independent tribunal that administers the Canada Transportation Act and Air Transport Regulations, a quasi-criminal statute, on behalf of the Minister of Transport. Neither the Act nor Regulations provide for civil action or liability.
James Poyner retorted on behalf of the Plaintiff that the charge was plainly marked as a tax on the electronic ticket and there was nothing that indicated it was a fuel surcharge. He said the Plaintiff is not disputing the validity of the fuel surcharge. He pointed to Air Canada’s own affidavit evidence that the Agency had advised the carrier numerous times to incorporate the fuel surcharge into the base fare to avoid misleading consumers.
BC’s lawyers submitted that the province has exclusive jurisdiction over property and civil rights, and BPCPA does not conflict with the federal government’s jurisdiction over aviation and air travel. They pointed out to Supreme Court of Canada decisions concerning overlapping provincial and federal legislation and emphasized that Air Canada’s constitutional challenge was not supported by the Attorney General for Canada. James Poyner deferred to government lawyers for the extensive jurisdictional argument they delivered on behalf of BC’s Attorney General.
Most of the two and a half day hearing was taken up by Air Canada’s argument over its entitlement to its tariffs, and allegations that BPCPA conflicts with the Parliament’s powers and legislative purpose, interprovincial immunity, and international treaties such as the EU Open Skies Agreement.
The potential amount of restitution claimed under the lawsuit is estimated to be in the vicinity of $500 million. Stakes for the Province of British Columbia, and for some other provinces for that matter, are not any less striking. Along with Ontario and Quebec, BC is one of the three provinces that regulate travel agencies in Canada including those that are an integral part of an international airline ticketing network. Ontario is notorious in the travel industry for regularly sending travel agents to jail for breaches of its licensing regulations. A ruling in favour of Air Canada may bring into question the constitutional validity of the provincial regulatory schemes.
It may also provide a carte blanche for the airlines’ growing practice of hiding ancillary charges associated with an airline ticket such as baggage fees, a consumer issue that governments in North America are refusing to address.
Travel agents have no control over how fares and charges are displayed on an airline ticket, which is generated by the airlines’ own data input into an electronic system.
Madam Justice Adair of the BC Supreme Court has reserved judgment.