As you may well know, I am involved in a Canadian Transportation Agency (CTA) case against Swiss International Airlines for their unilateral cancellation of fares issued on Swiss ticket stock from “Round 3” of the erroneous fares. You can see what happens in View From the Wing’s post here. The massive FT thread about the different rounds are here (Round 1/2) and here (Round 3).

Update: People who have tickets and did not pursue a formal complaint may not get the same result as me. CTA says: “Please note that the Agency may not necessarily rule in the same manner as it is not bound by past precedents.” Just keep that in mind if you do wish to file a formal complaint now.

There is actually a news release you can access online here which is a very good summary of what they said in the fifteen page document they attached in their wonderful email this morning.

This is what happened:

Today’s decision is in response to seven complaints alleging that Swiss improperly cancelled on-line purchased tickets. Although the passengers were refunded for the tickets, the Agency has ordered the carrier to:

• compensate one complainant for all expenses incurred as a result of the cancellation, by July 18, 2013.

• allow all other complainants to be transported on the same conditions, at the same price as the ticket originally booked by them, by June 18, 2014.

That’s great and all, but what I find interesting is the arguments and analysis that the CTA uses to base its decision on. In this case, there were three issues at hand, which is from the PDF with the full details. You can access this here.

ISSUE 1: ARE SWISS’ TERMS AND CONDITIONS OF CARRIAGE RELATING TO THE CANCELLATION OF TICKETS WITH ERRONEOUSLY QUOTED FARES CLEARLY STATED, AS REQUIRED BY SUBPARAGRAPH 122(c)(vii) OF THE ATR?

For reference 122(c) from the ATR States that:

122. Every tariff shall contain

[…]
(c) the terms and conditions of carriage, clearly stating the air carrier’s policy in respect of at least the following matters, namely,
[…]
(vii) ticket reservation, cancellation, confirmation, validity and loss,

This is what they decided:

[28] Tariff Rule 5(F) allows Swiss to cancel reservations or tickets with erroneously quoted fares, by reason of “technical failure.” The Agency notes that the Rule is silent regarding Swiss’ definition of what constitutes a “technical failure.” Furthermore, the Rule does not provide examples of situations where a “technical failure” may occur. Consequently, Swiss’ usage of that term provides it with relatively broad latitude in labeling various incidents, including human error, as a “technical failure.” In such a situation, passengers may be unclear as to specific circumstances under which Swiss may cancel their tickets. The Agency therefore finds that Tariff Rule 5(F) is unclear because it is stated in such a manner as to create reasonable doubt, ambiguity and uncertainty respecting its meaning.

That is a very reasonable explanation.

ISSUE 2: IS TARIFF RULE 5(F) JUST AND REASONABLE, AS REQUIRED BY SUBSECTION 111(1) OF THE ATR?

Again for reference, Section 111(1) say:

All tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just and reasonable and shall, under substantially similar circumstances and conditions and with respect to all traffic of the same description, be applied equally to all that traffic.

This is what CTA thinks:

[35] To assess whether a term or condition of carriage is “unreasonable,” the Agency has traditionally applied a balancing test, which requires that a balance be struck between the rights of passengers to be subject to reasonable terms and conditions of carriage and the particular air carrier’s statutory, commercial and operational obligations. This test was first established in Decision No. 666-C-A-2001 (Anderson v. Air Canada) and was recently applied in Decision No. 150-C-A-2013 (Forsythe v. Air Canada).

[36] An air carrier sets its terms and conditions of carriage on the basis of its own interests, without any input from passengers. These terms and conditions may have their basis in purely commercial requirements, and as such, there is no presumption that a tariff is reasonable.

[37] When balancing the passengers’ rights against the carrier’s obligations, the Agency must consider the whole of the evidence and the submissions presented by both parties and make a determination on the reasonableness or unreasonableness of the term or condition of carriage based on which party has presented the more compelling and persuasive case.

[38] Swiss argues that an air carrier cannot be expected to transport passengers for a loss, as Swiss has obligations to its employees and stakeholders. On the other hand, some of the complainants argue that there is no consumer protection in Tariff Rule 5(F).

[39] The Agency has considered the submissions of the parties on this matter, and finds that the complainants have presented a more compelling argument. Specifically, there is no protection afforded to consumers under Tariff Rule 5(F), as Swiss can revoke tickets that it claims to involve fares that have been erroneously quoted by reason of “technical failure.” Also, the Agency finds that the obligation that Swiss alleges it has to honour to its employees and stakeholders does not outweigh the interests of the complainants and other consumers to be subject to reasonable terms and conditions of carriage.

[40] While Swiss argues that it should not be obligated to provide services for compensation that is obviously erroneously published and commercially unfeasible, the Agency notes that Swiss provides no submissions concerning the effect that honouring the erroneously posted fares would have on Swiss’ commercial obligations. The Agency also notes that Tariff Rule 5(F) provides no time period within which Swiss may cancel a ticket that has been erroneously quoted due to technical error, nor does that Rule specify examples of situations that may lead to such an error. Furthermore, Rule 5(F) imposes no obligations on Swiss to ensure that it takes reasonable steps to prevent the issuance of erroneous fares.

[41] The Agency notes that it took Swiss six days to discover the erroneous fares, leaving at least one complainant with less than three weeks to make alternative travel arrangements.

[42] Considering the above, the Agency is of the preliminary opinion that the broad, undefined authority that Tariff Rule 5(F) affords Swiss is disadvantageous to consumers. Swiss has not demonstrated to the Agency’s satisfaction that Rule 5(F) considers or balances the passengers’ rights to reasonable terms and conditions of carriage with Swiss’ statutory, commercial and operational obligations. In light of the foregoing, the Agency finds, on a preliminary basis, that Rule 5(F) is unreasonable within the meaning of subsection 111(1) of the ATR.

(Emphasis Mine)

Rule 5F is present in the LX Contract of Carriage (CoC) and essentially the “rule” that LX used to say that the tickets were invalid because they reserved the rights to cancel a fare if there was a technical error.

The basis of my claim was that I felt my ticket should be reinstated because 5F was left out of the LX CoC at the time of booking. The amended version has obviously been uploaded to the internet, but at the time I put in my credit card information on expedia, they didn’t have that clause. I said in my claim that obviously you can’t be held liable for a contract that first of all, nearly 99.99% of consumers will not read (and in fact you are liable because every time you purchase a ticket you are liable to their contract of carriage), but the fact that another version of the CoC was on the website at the time of booking (they changed it around a week after they cancelled my ticket) without the 5F clause makes Swiss’ reason to cancel invalid and unreasonable.

If you look at the highlighted portion of the CTA document from section 35-42 above, CTA is saying that the tariff is disadvantageous to consumers, which is pretty but pleasantly surprising.

ISSUE 3: DID SWISS PROPERLY APPLY THE TERMS AND CONDITIONS OF CARRIAGE RELATING TO THE CANCELLATION OF TICKETS WITH ERRONEOUSLY QUOTED FARES AS SET OUT IN TARIFF RULE 5(F), AS REQUIRED BY SUBSECTION 110(4) OF THE ATR?

What CTA says:

[71] When, as in this case, the Agency receives complaints that contest a carrier’s action, the carrier is given the opportunity to provide evidence in support of its position. In this case, Swiss was also required to provide a detailed explanation of the technical incident that led to the air fares in question being made available to the various travel agencies used by the complainants when purchasing the tickets that were subsequently cancelled. Swiss has failed to do so.

[72] The Agency notes that Swiss restricted its answer to the cancellation of erroneous first class tickets in this matter. The Agency also notes that Swiss cancelled Mr. ___’s tickets for travel commencing May 1, 2013, and that these tickets strictly involved business class travel. As Swiss provided no comments regarding this issue, the Agency finds that in cancelling Mr. ___’s May 1, 2013 tickets, Swiss did not properly apply Rule 5(F) of its Tariff.

[73] With respect to Swiss’ cancellation of the other complainants’ tickets, the evidence on file does not establish that a technical error occurred during ATPCO’s posting of the erroneous fares. While Swiss generally explains the process by which fares are generated and provided to ATPCO, Swiss does not provide any information explaining the point during the process at which the alleged error occurred, the cause of that error and why such an error is deemed to be technical in nature, as opposed to human. Furthermore, as indicated by many of the complainants, contrary to Swiss’ submission, ATPCO does not state in its November 7, 2012 letter that the fares were erroneous; rather, ATPCO refers to the erroneous fares as “low fares.”

[74] The Agency therefore finds that, on a balance of probabilities, Swiss has not established that a technical failure occurred at all and, consequently, Swiss has not demonstrated that it properly applied Tariff Rule 5(F) when it cancelled the complainants’ tickets.

I agree with this as well. The numbers on the fares hint at a failure to properly apply the exchange rate of the Myanmmar Kyat (MMK) to the fare, especially when other fares that were plated on airlines including NH (ANA), 9W (Jet Airways), and UL (Sri Lankan) for the exact same itineraries (in some cases) were mostly honoured and flown.

I’m not a legal expert at all, so I’ve just written what I thought.

What I find interesting is the approach that the CTA takes, which I feel is extremely pro-consumer. They’ve long been compared with the US DoT with these sort of fares because as far as I know the CTA has no regulations on price increases after purchase. If you don’t know, this is the main piece of legislation (you can access this here) that made Korean Air honour its tickets from the Rangoon Fare “Round 1: (which was again ex-RGN on Korean Air First Class to LAX):

(a) It is an unfair and deceptive practice within the meaning of 49 U.S.C. 41712 for any seller of scheduled air transportation within, to or from the United States, or of a tour (i.e., a combination of air transportation and ground or cruise accommodations), or tour component (e.g., a hotel stay) that includes scheduled air transportation within, to or from the United States, to increase the price of that air transportation, tour or tour component to a consumer, including but not limited to an increase in the price of the seat, an increase in the price for the carriage of passenger baggage, or an increase in an applicable fuel surcharge, after the air transportation has been purchased by the consumer, except in the case of an increase in a government-imposed tax or fee. A purchase is deemed to have occurred when the full amount agreed upon has been paid by the consumer.

In any case, this should be great for me; although Swiss still has time to appeal clause 5F (or else it has to be removed from the tariff, which would be awesome). It seems like the CTA has firmly put its authority into this judgement.

Looks like I will be flying Swiss First soon! Here is a video for your virtual enjoyment (unless you happen to have 85,000 Miles & More miles).

http://www.youtube.com/watch?v=m0wH-j545HQ