OTTAWA — A free-market think tank is warning Canadian air travellers to expect higher ticket prices if proposed
changes to passenger compensation
rules are implemented.
Researchers with the Montreal Economic Institute (MEI) say that the beefed up passenger protection rules may look good on paper but will just place more hardship on an already overregulated airline sector.
“Air travel in Canada is already unaffordable and inaccessible,” says Gabriel Giguère, senior public policy analyst at the MEI. “New rules that force airlines to cover costs they can’t control would only make a bad situation worse.”
Giguère is the author of a new research note analyzing proposed amendments to federal Air Passenger Protection Regulations released in late 2024.
He told National Post that the new rules could “upend airline operations” by putting commercial carriers on the hook for all travel interruptions outside of those created by “exceptional circumstances.”
“Now the air carrier is guilty until you can demonstrate that it is not, which will put tremendous pressure on the administrative costs,” said Giguère.
Under the prevailing rules, set in the 2019
, carriers need only compensate passengers in cases where a foreseeable error leads to a flight’s cancellation or a delay of more than three hours. The proposed changes could see airlines have to shell out up to $1,000 per passenger due to circumstances that are outside their control.
Giguère said the proposed definition of “exceptional circumstances” is far from exhaustive, creating even more uncertainty for carriers.
“For example, if it is very cold and de-icing the aircraft takes an unusually long time, does this qualify as an exceptional circumstance?” said Giguère.
The Canadian Transportation Agency estimates that new compensation rules will cost airlines about a
.
Giguère expects that the increased operational costs would have the biggest impact on low-traffic regional routes and service to remote and northern destinations.
“This new regulation risks being the final blow to regional air travel. Routes connecting smaller communities will be the first to disappear as costs rise and they become less profitable,” said Giguère.
He estimates that the cancellation of one flight from Montreal to Saguenay, Qc. would result in a hit of approximately $33,000 to the carrier, a monetary sum that would take 61 incident-free flights to recoup.
Regional air travel has already taken a massive hit since the COVID pandemic, with
multiple small and medium-sized airports
reporting double-digit losses in passenger traffic since 2019.
Alberta’s Fort McMurray airport, for example, saw a 60 per cent decline between 2019 and 2024.
Air passenger rights advocate Gábor Lukács says he doesn’t share this gloomy view of the proposed regulations, adding that, if anything, they go too easy on air carriers.
“Saying (the regulations) don’t go far enough is probably a very polite way to put it,” said Lukács, noting that the regulations would increase the number of disruptions carriers are liable for by
.
Lukács added that he rejected the notion of an inherent tradeoff between protecting passengers and affordability, pointing to “gold standard” air passenger protections
two decades ago.
A recent study found that the EU regulations led to a
in on-time arrivals without substantially affecting the cost of travel.
National Post
rmohamed@postmedia.com
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