The Canadian Transportation Agency: Its role in economic regulation, consumer protection and dispute resolution in Canadian transportation

Notes for a Luncheon Speech by Marian L. Robson
Chair and CEO, Canadian Transportation Agency,
to the BC Aviation Council and the
Richmond, BC, Chamber of Commerce
Thursday, March 27, 2003

Best Western Richmond Hotel,
7751 Westminster Highway
Richmond, BC

(check against delivery)

Thank you, Craig (Richmond, Chairman of the Board, BC Aviation Council) for introducing me. And thank you Jerry (Lloyd, President and CEO of the BC Aviation Council) for the invitation to speak to you today. He and I bumped into each other a few months ago on a flight between Vancouver and Ottawa, and he subsequently asked me to come and speak to you today.

My opportunity to speak is timely, given the recent /introduction of amendments to my Agency's legislation, the Canada Transportation Act, by David Collenette, the Transport Minister, which Parliament will consider over the next few months. Minister Collenette also introduced the Canada Airports Act. The government's proposals, captured in Bills C-26 and C-27, are now at the stage of parliamentary debate and approvals, and I will touch on these at the end of my presentation to you today.

I was asked to provide a brief overview of the Canadian Transportation Agency's role, but I will try to concentrate on aviation matters and our larger transportation responsibilities and issues that would be of interest, in general, to West Coast business people.

Let me begin by saying that I like to think of our Agency as being as significant and interesting as today's news. For proof, if you listen to the radio or read about what's making news today, besides the war in Iraq of course, you might see that the Canadian Transportation Agency issued its decision on the obstacles that travellers with disabilities encounter on board VIA Rail's new "Renaissance" passenger cars.

For this venerable organization, that has been in existence in one form or another for some 100 years, it seems we have a knack for getting into some very interesting and timely matters in the transportation world. Incidently, our origins are in the old Railway Act which was passed by Parliament in 1903, which created the Board of Railway Commissioners. Over the years, our Agency had responsibilities added by Parliament to include aviation and marine responsibilities, along with authority to remove undue obstacles to the travel of people with disabilities.

Today, the Agency finds itself involved with issues as modern and diverse as air rage; which carriers get to fly into Vancouver International Airport; and what constitutes an obstacle on board an aircraft, ferry or rail car for citizens among us who have disabilities.

You could describe our role, basically, as consumer protection balanced with business protection, so, although your interests may be mainly aviation- and business-oriented, you also undoubtedly travel and may have been touched, directly or indirectly through your circle of friends and family, by disability issues.

Air matters

I am well aware of the interests the BC Aviation Council has in the Vancouver International Airport and how important this vital gateway is to the economic health of greater Vancouver, BC and, indeed, all of Canada. We at the Canadian Transportation Agency share those interests.

But we are also interested in protecting the rights of consumers (and we are all, after all, consumers, if you think about it); and in the fair and equitable treatment of all parties in the federal transportation system, including our Canadian air carriers.

To protect consumers and carriers alike, every air carrier in Canada is required to publish a tariff which outlines the terms and conditions, fares, rates and charges for its air services, and make that tariff available to the public on request. Since July 2000, our Agency may require a carrier to compensate passengers who incur expenses as a result of a carrier's failure to adhere to its tariff provisions. And we've done that.

To help air passengers know their rights and responsibilities, the Agency publishes a very useful little booklet called Fly Smart . Its aim is to inform air passengers about some of the complex matters, like tariffs, that can cause them problems when they fly. We have been advertising this booklet over the past several months using back-lit signs at major airports across Canada, including at Vancouver Airport near the Domestic Arrivals publication/baggage carousel, and it's a very popular product.

I mentioned that the Agency deals with complaints about unruly passengers. These can be complex cases in which it is difficult to determine what actually took place on board the aircraft. To assist us, the Agency may use a public hearing in which witnesses are summoned and questioned. As a result of one such hearing in Toronto last year, we ordered a carrier to refund a passenger her out-of-pocket expenses which she incurred when the carrier refused to transport her back to Canada following an incident involving smoking on her out-bound flight. And the carrier has removed her life-time ban on future travel with that carrier.

You can read about interesting cases like these on our Web site, I'd like to point out. That's CTA (for the Canadian Transportation Agency) Dot GC, Dot CA.

The Agency also issued decisions recently about various forms of surcharges in the air industry. Basically, although we understand the difficult times the industry faces, we think there has been a proliferation of surcharges, which should only be temporary in nature, or incorporated into basic airline pricing. The consumer gets confused by current air fare advertising, we believe. It should be simpler, and our Agency's Air Travel Complaints Commissioner - who I will talk about later - has also said so, quite vocally, I might add.

Our Agency responds to complaints about pricing when only one carrier serves a route, and that situation is common in BC and the North. Last year, we investigated complaints about pricing on seven different non-competitive routes within Canada. Interestingly, in all cases, the Agency found that the fares were not unreasonable when compared to the fares offered by the carrier on similar, competitive domestic services.

To take a broader look at the situation, we hired an independent aviation consultant, InterVISTAS, to carry out a pricing study on air routes here in Western Canada. We chose Western Canada because both Air Canada and WestJet operate on many of the routes, which makes price comparisons possible between routes that are non-competitively served and those which have competitive services.

InterVISTAS's report showed that Air Canada's continuously available fares on the routes under review remained relatively stable over time. However, the study did raise questions about fares on five non-competitive routes; specifically, Kamloops-Vancouver; Kamloops-Whitehorse; Castlegar-Vancouver; Cranbrook-Vancouver; and Kamloops-Saskatoon. Four of those five routes were served by Air Canada only at the time of the study (November 2001). This year, we will investigate the fares on those five western routes and, if warranted, we'll take remedial action. The executive summary of the InterVISTAS report is posted on our Web site.

We are also studying sole-carrier pricing in Atlantic Canada, where there has been a lot of new market activity recently. New carriers, such as CanJet and Jetsgo, have arrived on the scene there and established carriers have expanded their routes, while others, such as Jazz, have left a number of markets.

Elsewhere in the area of tariff enforcement, we get many complaints about things like compensation for lost or damaged publication/baggage and denied boarding (or "bumping").

The Agency encourages voluntary compliance with the various Acts and regulations we are responsible for. Nevertheless, we have regional enforcement officers, including one in Vancouver, Wayne Wooldridge, our Senior Investigator here, who you may have crossed paths with.

Wayne has counterparts across the country who do periodic inspections and targeted investigations. In 2002, they completed 240 on-site inspections of Canada-based air carriers and 32 passenger terminal operators. The Agency also conducted 23 investigations of carriers or individuals suspected of operating illegal air services in Canada and identified a number of infractions. Except in the most serious cases, such as flying without a licence or publication/insurance, Wayne and his counterparts normally give a formal warning, providing carriers a chance to take corrective action before a monetary penalty is assessed.

I'd now like to turn to the international (bilateral) negotiation process for airline service.

The Agency, as Canada's Civil Aeronautics Authority, plays a key role in bilateral air negotiations as part of a team, along with Transport Canada, that is led by the Department of Foreign Affairs and International Trade. It administers 73 international bilateral agreements which govern the international aviation world by providing all of the rules to be followed by foreign carriers serving Canada and, conversely, Canadian airlines serving foreign markers.

I must say we have a fine team of experts who specialize in the arcane world of code-sharing and traffic rights.

The Agency's Air Travel Complaints Commissioner is another service we provide to help protect, specifically, those consumers who have been unable to resolve their complaints with air carriers. The role of the Commissioner and her staff is to review and attempt to resolve air travel complaints that have not been resolved by an air carrier to the satisfaction of the travelling customer. Her Office's record of achievement is very good. According to our most recent figures, almost two-thirds of complainants (64 per cent, in fact) received better responses from the carriers because of the intervention of the Commissioner's Office.

The Commissioner, Liette Lacroix Kenniff, who is a Member of our Agency, has the authority to request any documentation relevant to a complaint - from the carrier or from the complainant - and she reports twice-yearly to Parliament, outlining the number and nature of complaints received, the manner in which her Office dealt with them, the carriers involved, and any systemic problems she detected.

In her latest report, our Air Travel Complaints Commissioner recommended that air carriers:

• show the true cost of the tickets, including taxes and additional fees;
• avoid misleading advertising such as showing one-way fares when only a round-trip ticket can be purchased;
• publicly and prominently display the carrier's limits of liability. Such information is often not included on electronic tickets; and
• compensate passengers when they are downgraded from full service to no-frills service.

Recently, she received several complaints about unsanitary bathrooms on Air Transat aircraft. The Commissioner brought the matter to the attention of Health Canada, which conducted an on-site inspection of the carrier's aircraft. Health Canada determined that the size of the waste tanks on the carrier's Airbus 310 was inadequate for the number of passengers aboard. As a result, Air Transat agreed to increase the capacity of their waste tanks.

Other complaints she deals with include: quality of service, flight schedules, ticketing, frequent flyer programs, denied boarding and reservations. In total, 1764 written complaints were received in 2002, of which 452 came from Western Canada.

Marine matters

Turning now to marine matters, under the Canada Marine Act, our Agency investigates complaints about fees set by port authorities for the use of port facilities and various transportation services. In BC, there are six port authorities that come within our mandate - Vancouver, Prince Rupert, Fraser River, North Fraser, Nanaimo and Port Alberni Port Authorities.

We also have a mandate under the Coasting Trade Act to determine whether suitable Canadian ships are available when applications are filed to use foreign ships in Canadian waters. In BC, past applications related to tug-and-barge operations, passenger sightseeing, sailing operations and the occasional application for specialized vessels used to film movies in BC waters by our studios in "Hollywood North". Should governments decide to permit offshore oil and gas exploration in the future, this activity will generate new applications for the use of foreign vessels, since Canadian companies may not have such specialized vessels in their fleets when needed.

Under the Pilotage Act, our Agency investigates pilotage authority tariff proposals, if objections to new proposed rates are received. As you may know, marine pilots use their specialized knowledge of coastal waters to ensure safe navigation and protect our environment. Similar pilotage authorities operate in the Great Lakes, the St. Lawrence River and on the East Coast. In 1999, the Agency approved , with modifications, the first contested tariff of the Pacific Pilotage Authority, which manages pilotage for the entire BC coast and Fraser River.

Rail matters

Turning to Railway matters now, we license all federal railways, ensuring that there is sufficient liability publication/insurance in place to protect shippers and other parties. We also help resolve disputes that may arise with respect to railway construction, crossings of public or private roads, or issues that arise due to the proximity of railways to other parties.

When railways discontinue operations, the Agency can determine the Net Salvage Value of assets, including land, as part of negotiations for the transfer of rail lines for any purpose to another party.

Of course, railways move many products, including Western grain, to export locations at Vancouver and Prince Rupert, and the movement of Western grain takes place under the Government of Canada's Revenue Cap regulatory regime for which, each year, the Agency determines eligible revenues for CN and CP.

The Agency also does railway costing, accounting and financial analysis. This expertise requires our analysts to be thoroughly familiar with railway operations. To stay current, we regularly visit rail yards throughout Canada, including the major yards in the Vancouver area, to remain current with operational and technological changes as railways continuously streamline themselves.

The Agency administers what is known as Final Offer Arbitration provisions of the Act, which allow an independent arbitrator to settle a dispute over railway rates. We can also investigate rail complaints to help shippers obtain better rail service or access to competing rail lines. As an example, the Agency can resolve disputes about inter-switching, competitive line rates, joint rates, running rights and level-of-service obligations.

Over the past year, the Agency ruled on two cases involving running rights that are of particular significance to shippers using Canadian rail service. The issues are complex, but the decisions are posted on our Web site for those who want to look at them. This whole concept of running rights is quite controversial, and the subject of much debate and study in recent years. It was widely discussed in past reports, such as those of the late Justice Willard Estey and the Canada Transportation Act Review Panel.

Notwithstanding the controversy and debate about what running rights make sense and the desire on the part of some to have them changed, the Agency is responsible for applying the legislation as it exists, so we come face to face with practical issues in the current environment.

Alternative Dispute Resolution

When resolving disputes and handling complaints, the requirement is, generally, that the Agency render a decision within 120 days, unless the parties agree to an extension. Often, they do, and the process can take much longer.

I am especially proud of new initiatives at the Agency to streamline and speed up the process, including the ability to lodge complaints through the Internet; and modified hearings, where we sit down with parties to a dispute, gather information from them in a setting that is less like a court than our traditional hearings, and then issue a decision quickly.

I am confident that these alternate forms of dispute resolution will become increasingly attractive in the future, since business and citizens alike are demanding more efficiency in how the Government of Canada deals with their issues and concerns.

To this end, the Agency offers a mediation service to resolve disputes that come before it. Examples of issues that have been resolved through mediation include noise and vibration from railway yards, maintenance fees for railway fences and crossings, and the treatment of passengers with disabilities. We have received very positive feedback from participants in the mediation of these disputes. The parties indicated a high degree of satisfaction with mediation because it is quicker, private, less costly and, where there is a continuing working relationship between the parties, it has helped improve lines of communication.

Just having the Agency's mediation service available has benefits too. During the pre-mediation phase of the process, some parties have found that they had not opened a genuine dialogue to understand the interests of the other side, so they contact the other side to have this discussion and, on a number of occasions, they have found on their own they could then reach settlements that might not have otherwise occurred. This is, of course, the best solution of all.

Accessibility matters

I now want to talk a little about accessibility issues in the Canadian transportation network. Under Part V of the Canada Transportation Act, the Agency has the mandate to eliminate undue obstacles to the mobility of persons with disabilities. To do this, our staff works with the carriers, air-rail-and-ferry, and the disability community to develop voluntary Codes of Practice to remove obstacles to persons with disabilities who use the federally-regulated transportation system. Despite these Codes, we still get involved in resolving many disputes between carriers and travellers who have disabilities.

Under the Act, people who perceive undue obstacles can apply to the Agency for a fair hearing, for which the Agency must follow a three-step determination, namely: whether the person has a disability for the purposes of the Act; whether there was an obstacle to the mobility of persons with disabilities; and, if there is an obstacle, whether that obstacle is "undue" or unwarranted.

This takes us into some very interesting areas, when you think about it. For instance, last year, the Agency had six complaints, from persons who are obese, 10 complaints from persons who have allergies and 23 complaints regarding Air Canada's policy and procedures with respect to the use of medical oxygen in flight.

Also, over the past year or so, we have been involved in a very complex investigation into an application by the Winnipeg-based Council of Canadians with Disabilities, which alleged there were 46 different obstacles on board VIA Rail's new passenger rail cars, known as the "Renaissance" cars, which have only recently gone into service.

Today, in our decision we are announcing, we found there are, indeed, significant accessibility problems with these cars. And we consider 14 of those obstacles to be severe enough to be considered "undue" at this stage, possibly requiring corrective action by VIA. We won't know that for certain until VIA provides us with technical information about the structure of the cars and estimates of the cost to modify certain structures to remove the obstacles. Then, the Agency will make its final determination.

Conclusion

Above all, as we do our work, the factor that strikes me as the most significant about the Agency's mandate is that our work has a direct impact on people. People of all kinds. Business people. People who travel, in general. People who ship goods. People who provide transportation services and count on the industry for their livelihood.

Looking ahead, we are taking signals from the document released on February 25, 2003, by the Transport Minister, David Collenette, called Straight Ahead - A Vision for Transportation in Canada.

Straight Ahead proposes a policy framework to allow Canada's transportation system to meet the economic, social and environmental needs of the next decade and beyond. It seeks to address the full spectrum of long-term transportation issues in Canada, ranging from airline and railway competition issues to critical infrastructure needs, environmental pressures and safety and security imperatives. How it does so, as determined by Parliament in legislation that may be passed as soon as this summer, remains to be seen.

Of particular interest to our Agency, Bill C-26, an Act to amend the Canada Transportation Act and other Acts, was also introduced February 26. It proposes additional responsibilities for our Agency. For example, according to the Minister, legislative amendments will be proposed to strengthen publicly funded passenger and commuter rail services, including giving publicly funded passenger rail operators such as VIA, Go Transit and West Coast Express recourse to the Canadian Transportation Agency when commercial negotiations are unsuccessful with respect to the terms and conditions of operation on federal rail lines (that is, CN and CP).

And Bill C-27, the Canada Airports Act, was introduced last week in the House (on March 20). According to the Minister, that Bill modernizes the corporate governance regime for airport authorities and establishes a framework for disclosure and accountability for Canada's major airports.

Of particular interest to the Agency, the proposed Act provides airport operators, for the first time, with a set of principles to guide them in setting aeronautical and passenger fees. These principles are designed to ensure that fees are set in a transparent manner, are fair, do not generate more revenues than required for their purpose and, in the case of aeronautical fees, do not compromise aviation safety or security.

When establishing or changing fees, airport operators would be required by Bill C-27 to follow a process of notification and allow input from affected parties. And the Canadian Transportation Agency would be assigned responsibility for hearing appeals on non-compliance with the required principles and processes, similar to the role we now have respecting appeals on user fees set by NAV CANADA.

As these two pieces of legislation are debated in both Houses of Parliament and go through study and review by the House Standing Committee on Transport and the Senate's Standing Committee on Transport and Communications, we will see exactly what responsibilities Parliament ultimately sends our way. Regardless, I can assure you that the Canadian Transportation Agency will fulfill its responsibilities with the best interests of Canadians at heart.

I hope I have given you a snapshot of the Agency and a flavour of its many roles in the Canadian transportation system. Thank you for this opportunity to speak to you today.