There’s huge variance globally when it comes to the legal obligations airlines have to passengers when things go wrong.
On one end of the spectrum you have Europe, where EU261 means that passengers could be entitled to as much as 600EUR in compensation in the event of a flight delay. On the other end of the spectrum you have the US, where passengers aren’t entitled to any compensation whatsoever, no matter how long the delay is.
It looks like another country will shortly be imposing strict new rules that could prove costly for airlines… sort of.
New Canadian passenger bill of rights
The Canadian Transportation Agency (CTA) has today outlined a new passenger bill of rights that they’re in the process of trying to put into law.
These regulations include guidelines for how airlines have to communicate with passengers, what passengers are owed in the event of overbooking and lost bags, etc.
But perhaps most interesting is that airlines will be on the hook for cash compensation in the event of a flight delay.
The amount of compensation will vary based on how long the delay is, and what the circumstances are. Compensation will range from 400CAD for a three to six hour delay, to 700CAD for a six to nine hour delay, to 1,000CAD for a delay of more than nine hours.
At least those would be the compensation amounts for the major airlines, while the smaller airlines serving remote communities in the north wouldn’t have to pay as much.
But there’s a big catch
There’s a huge catch here, though. Specifically, in the event of a mechanical delay, airlines wouldn’t have to be on the hook for compensation. As a point of comparison, in Europe a mechanical delay would make one eligible for compensation.
What’s the CTA’s logic with that? They don’t want airlines cutting corners and taking off when they shouldn’t to avoid having to pay compensation, and they want to make sure Canadian airlines can “remain competitive.” I would hope that airlines would have higher safety standards than to cut corners like that.
The reality is that a vast majority of major delays are for mechanical reasons. So really the cash compensation will only apply in cases like where a crew member doesn’t show up, where an airline decides to cancel a flight for whatever reason, etc.
Mechanical delays not being included presents another huge issue. Even if an airline cancels a flight for another reason, you can bet they’ll blame it on a mechanical, knowing that this would get them out of it. Passengers have no way to keep airlines honest in this sense.
Government: No compensation for flight delays and cancellations related to maintenance issues
— Air Passenger Rights (@AirPassRightsCA) December 17, 2018
What’s next for this draft
The CEO of CTA says that these changes follow the EU’s lead. Canada’s Transport Minister says that these changes are “fair and balanced,” and believes that “it’s the best passenger rights bill in the world.”
I disagree on both fronts, at least when it comes to the compensation for delays.
As of now these are just draft regulations, so Canadians will have a couple of months to comment, and after that the regulations would have to be approved by the cabinet, and are expected to be in force by next summer.
The cost of these new regulations
These added regulations will allegedly cost airlines about 2.75CAD per ticket. Obviously the costs of this have to come from somewhere.
The question is to what extent that will be passed on to consumers. A lot of airline executives seem to believe that the demand for air travel is more inelastic than it actually is (hi Scott Kirby!), so while they might just want to pass that on to consumers, it’s questionable how successful they’d be with that strategy.
I’m happy to see Canada add some form of serious regulations, because it’s something we lack in the US. However, don’t expect this to be anything like EU261 in terms of compensation, given that mechanical delays are excluded.
What do you think — should airlines be on the hook for compensation when a mechanical problem is at fault?