Supreme Court upholds rules on compensation in victory for air travellers

MONTREAL — The Supreme Court of Canada has upheld rules that bolster compensation for air passengers subjected to delays, cancellations and damaged luggage on international flights.

In a victory for air travellers across the country, the country’s highest court unanimously dismissed an appeal by a group of airlines that challenged Canada’s passenger rights charter on Friday.

Air Canada, Porter Airlines Inc. and 16 other appellants had argued that the Air Passenger Protection Regulations launched in 2019 violate global standards and should be rendered invalid for trips into and out of the country.

The legal challenge, which kicked off that year, said that by imposing heftier compensation requirements for flight cancellations or lost baggage on trips abroad, the regulations exceeded the Canadian Transportation Agency’s authority and breach international rules known as the Montreal Convention.

In December, the Federal Court of Appeal dismissed the airlines’ case, with the exception of one regulation that applies to the temporary loss of baggage.

The Canadian Transportation Agency and attorney general argued there is no clash between passenger protections and the Montreal Convention, a multilateral treaty.

On Friday, the Supreme Court effectively agreed, stating in a decision written by Justice Malcolm Rowe that the regulations “do not conflict with the Montreal Convention.”

Under the federal rules, passengers must be compensated with up to $2,400 if they were denied boarding because a trip was overbooked _ so-called flight bumping. Delays and other payments for cancelled flights warrant compensation of up to $1,000.

Travellers can receive up to about $2,300 for lost or damaged baggage, though the exact number fluctuates based on exchange rates.

Since the rules came into force five years ago, the government has taken further steps to tighten them, a move prompted by scenes of airport chaos, endless security lines and overflowing baggage halls in 2022.

In 2023, it amended the law to close loopholes that have allowed airlines to avoid paying customers compensation and worked to establish a more streamlined complaints resolution system.

The new provisions also sought to ratchet up penalties via a $250,000 maximum fine for airline violations — a tenfold increase over the previous regulations — in an effort to encourage compliance.

Another amendment — both are yet to take effect — would place the regulatory cost of complaints on carriers’ shoulders. The measure, which would cost airlines $790 per complaint under a recent proposal from the regulator, aims to encourage them to brush up their service and thus reduce the number of grievances against them.

Meanwhile, the complaints backlog at the country’s transport regulator continues to mount, standing at about 78,000 as of last month.