Canada's Supreme Court Upholds Flight Disruption Compensation Rules

The Supreme Court of Canada has ruled against the airline industry in a case that will affect how passengers are compensated for travel disruptions. The decision follows a lawsuit filed by the airline industry over government regulations implemented in 2019.

On Friday, the Supreme court rejected an appeal from the airline industry, determining that airlines are obligated to refund passengers.

New regulations mandate that airlines, whether Canadian or international, must compensate passengers in the event of flight disruptions or damage to, or loss of, luggage. This regulation applies to all travelers arriving in, departing from, and traveling within Canada.

Airlines contended that Canada lacks the authority to enforce regulations on foreign carriers, asserting that the proposed compensations are inconsistent with international air travel standards.

The legal dispute centers around Canada’s Air Passenger Protection Regulations, which require airlines to compensate passengers for flight delays or cancellations, with specific monetary amounts determined by the extent of the disruption.

Flight Disruption Compensation

Passengers facing delays exceeding nine hours may receive compensation of up to C$1,000 when the disruption is attributed to the airline’s responsibility. The regulations mandate that airlines must, in certain situations, offer food and lodging for passengers, along with compensation for any lost or damaged luggage.

In the event of a flight cancellation, airlines must provide a refund or arrange for a new seat on either their next available flight or on a flight operated by a different airline. Travelers facing a dispute that falls under the regulations have the option to present their case to the Canadian Transportation Agency (CTA), which will determine their eligibility for compensation.

The airline industry, comprising Air Canada, Canadian carrier Porter Airlines, the International Air Transport Association, and international airlines such as British Airways, took legal action against the Canadian government regarding these regulations but ultimately faced defeat in federal court. The battle culminated at the Supreme Court in March.

The airlines contend that the regulations ought to be discarded, citing Canada’s status as a signatory to an international treaty that delineates compensation guidelines for flights. Canada contended that its regulations aim to ensure equitable and uniform treatment for all travelers.

The International Air Transport Association expressed disappointment in a statement regarding the ruling, emphasizing that passenger interests are best protected through safe travel with minimal disruptions.

Canada not alone

“Although airlines are essential in this regard, it is imperative for the federal government to concentrate on enhancing the overall air travel system, particularly in the segments of the value chain that fall directly within its jurisdiction,” it stated.

Advocates for passenger rights, having sought intervenor status in the matter, assert that international regulations establish a baseline for compensation in air travel while allowing individual nations the latitude to formulate their own rules.

On Friday, a joint statement from the Council of Canadians with Disabilities, the National Pensioners Federation, and the Public Interest Advocacy Centre declared the decision “a major victory for Canadian consumers”.

Canada is not alone in implementing regulations for compensating airline passengers. Since 2005, the European Union has maintained its own, a practice also adopted by the UK. The US Government also implemented new regulations in 2024 mandating that airlines provide timely refunds to passengers.

Gabor Lukacs, a prominent advocate for airline passengers in Canada and an intervenor in the Supreme Court case, expresses his criticism of Canada’s regulations, asserting that they fall short compared to the more robust frameworks established in the UK and the EU.

In a statement released on Friday, Mr. Lukacs expressed his gratitude towards the court for rejecting the airlines’ efforts to undermine passenger protection in Canada, stating that he was pleased the door remained open for such crucial rights.