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Air Canada denying passenger compensation claims for staff shortages, citing safety

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MONTREAL — Less than four hours before departure, Ryan Farrell was surprised to learn his flight from Yellowknife to Calgary had been cancelled.

Air Canada cited “crew constraints” and rebooked him on a plane leaving 48 hours after the June 17 flight’s original takeoff time.

Farrell was even more surprised six weeks later, when he learned his request for compensation had been denied on the basis of the staff shortage.

“Since your Air Canada flight was delayed/cancelled due to crew constraints resulting from the impact of the COVID-19 pandemic on our operations, the compensation you are requesting does not apply because the delay/cancellation was caused by a safety-related issue,” reads the email from customer relations dated July 29.

The rejection “feels like a slap in the face,” Farrell said.

“If they don’t have replacement crew to substitute in, then the flight (was) cancelled because they failed to assemble a crew, not because any other factor would have made it inherently unsafe to run the flight,” he said in an email.

“I think the airlines are trying to exploit a general emotional connection that people make between ‘COVID-19’ and ‘safety,’ when in reality if you put their logic to the test it doesn’t stand up.”

Air Canada’s response to Farrell’s complaint was no outlier. In a Dec. 29 memo, the company instructed employees to classify flight cancellations caused by staff shortages as a “safety” problem, which would exclude travellers from compensation under federal regulations. That policy remains in place.

Canada’s passenger rights charter, the Air Passenger Protection Regulations (APPR), mandates airlines to pay up to $1,000 in compensation for cancellations or significant delays that stem from reasons within the carrier’s control when the notification comes 14 days or less before departure. However, airlines do not have to pay if the change was required for safety purposes.

The Canadian Transportation Agency (CTA), a quasi-judicial federal body, says treating staff shortages as a safety matter violates federal rules.

“If a crew shortage is due to the actions or inactions of the carrier, the disruption will be considered within the carrier’s control for the purposes of the APPR. Therefore, a disruption caused by a crew shortage should not be considered ‘required for safety purposes’ when it is the carrier who caused the safety issue as a result of its own actions,” the agency said in an email.

That stance reinforces a decision made July 8 — three weeks before Farrell learned he’d been denied compensation — when the CTA used nearly identical language in a dispute over a flight at a different air carrier. The regulatory panel’s ruling in that case emphasized airlines’ obligations around advance planning “to ensure that the carrier has enough staff available to operate the services it offers for sale.”

In the December memo, which was issued at the height of the Omicron wave of COVID-19, Air Canada said: “Effective immediately, flight cancellations due to crew are considered as Within Carrier Control — For Safety.”

“Customers impacted by these flight cancellations will still be eligible for the standard of treatments such as hotel accommodations, meals etc. but will no longer be eligible for APPR claims/monetary compensation.”

The staff directive said the stance would be “temporary.” But Air Canada acknowledged in an email on July 25 that the policy “remains in place given the continued exceptional circumstances brought on by COVID variants.”

Gabor Lukacs, president of the Air Passenger Rights advocacy group, said Air Canada is exploiting a loophole in the passenger rights charter to avoid paying compensation, and called on the transport regulator for stronger enforcement.

“They are misclassifying things that are clearly not a safety issue,” he said of Canada’s largest airline, calling the policy “egregious.”

Consumers can dispute an airline’s denial of a claim via a compliant to the CTA. However, the agency’s backlog topped 15,300 air travel complaints as of May.

Lukacs also noted that European Union regulations do not exclude safety reasons from situations requiring compensation in the event of cancellations or delays. Payouts are precluded only as a result of “extraordinary circumstances,” such as weather or political instability.

“This document, along with the previous declarations and behaviour since the beginning of the pandemic, shows that Air Canada’s priority is clearly to try to limit the costs of the flight cancellations instead of providing good service to its clients,” Sylvie De Bellefeuille, a lawyer with Quebec-based advocacy group Option consommateurs, said after reviewing a copy of the directive.

She said Air Canada aims to deter passengers from requesting compensation in the first place. “This tactic does not, in our opinion, demonstrate that the company cares about its customers.”

Air Canada disagrees with that characterization.

“Air Canada had and continues to have more employees proportionate to its flying schedule when compared prior to the pandemic,” the company said in an emailed statement, indicating it had done everything it could to prepare for operational hiccups.

“Air Canada follows all public health directives as part of its safety culture, and during the Omicron wave last winter that affected some crew availability, we revised our policy to better assist customers in their travels with enhanced levels of customer care for flight cancellations related to crew contending with COVID.”

John Gradek, head of McGill University’s aviation management program, said the transportation agency is partly responsible for the “debacle” because it established looser rules than those in Europe and the United States.

“Carriers have been making strong efforts to point fingers and claim delays are outside of their control to reduce liability,” he said in an email.

This report by The Canadian Press was first published Aug. 7, 2022.

Companies in this story: (TSX:AC)

Christopher Reynolds, The Canadian Press

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Alberta

Enbridge sells minority stake in seven pipelines to Indigenous communities

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Calgary – Enbridge Inc. has signed a deal to sell a minority stake in seven pipelines in the Athabasca region of northern Alberta to a group of 23 First Nation and Métis communities for $1.12 billion.

The deal is the largest energy-related Indigenous economic partnership transaction in North America to date, according to Enbridge.

Athabasca Indigenous Investments (Aii), a limited partnership of 23 Treaty 6 and Treaty 8 First Nations and Métis communities, will manage the investment which includes an 11.57 per cent non-operating interest in the pipelines.

Aii said the deal is expected to bring in more than $10 million annually to the communities represented in the partnership.

The Alberta Indigenous Opportunities Corp., a provincial Crown corporation, said it provided a loan guarantee that enabled the communities to borrow the $250 million for their equity stake in the assets instead of contributing their own capital.

Enbridge chief executive Al Monaco said the partnership exemplifies how Enbridge and Indigenous communities can work together.

The pipelines included in the agreement are the Athabasca, Wood Buffalo/Athabasca Twin and associated tanks, Norlite Diluent, Waupisoo, Wood Buffalo, Woodland and the Woodland extension.

Aii president Justin Bourque said in the release Wednesday that the assets will “help enhance quality of life in our communities for many years to come.”

Chief Greg Desjarlais of Frog Lake First Nation said in the statement that the investment supports economic sovereignty for the Athabasca region communities.

Enbridge said the assets are underpinned by long-life resources and long-term contracts, which provide highly predictable cash flows.

The deal is expected to close within the next month.

In March 2022, 16 Indigenous communities along the Coastal GasLink pipeline route signed option agreements for an equity stake in the project.

This report by The Canadian Press was first published Sept. 28, 2022.

Companies in this story: (TSX:ENB)

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Apple Inc will manufacture iPhone 14 in India

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NEW DELHI (AP) — Apple Inc. will make its iPhone 14 in India, the company said on Monday, as manufacturers shift production from China amid geopolitical tensions and pandemic restrictions that have disrupted supply chains for many industries.

“The new iPhone 14 lineup introduces groundbreaking new technologies and important safety capabilities. We’re excited to be manufacturing iPhone 14 in India,” Apple said in a statement.

Apple unveiled its latest line-up of iPhones earlier this month. They will have improved cameras, faster processors and longer lasting batteries at the same prices as last year’s models.

India is the world’s second-largest smartphone market after China but Apple iPhone sales have struggled to capture a large share of the market against cheaper smartphones from competitors.

The announcement from the Cupertino, California-based company dovetails with Prime Minister Narendra Modi’s push for local manufacturing, which has been a key goal for his government ever since he took office in 2014.

The tech company has bet big on India, where it first began manufacturing its iPhone SE in 2017 and has since continued to assemble a number of iPhone models there. Apple opened its online store for India two years ago, but the pandemic has delayed plans for a flagship store in India, according to local media reports.

The latest model will be shipped out by Foxconn, a major iPhone assembler, whose facilities are on the outskirts of Chennai, a city in southern India.

Apple is likely to shift about 5% of its iPhone 14 production to India from later this year, raising it to 25% by 2025, according to a JP Morgan report quoted by the Press Trust of India news agency.

The analysts expect that nearly a quarter of all Apple products to be manufactured outside China by 2025, compared to about 5% now. Supply chain risks like the stringent COVID-19 lockdowns seen in China are likely the trigger for such relocation efforts that will continue over the next two or three years, the report said.

“Apple has been trying to diversify its supply chain for a while, but these efforts have grown in the last two years over trade sanctions between the U.S. and China,” said Sanyam Chaurasia, an analyst at Canalys.

Last year, the tech giant manufactured around 7 million iPhones in India. This news is likely to significantly increase India-made Apple smartphones, he added.

He said the plan to make more iPhones in India may also lead Apple to drop its prices for the Indian market, making it more competitive. “You can adopt a more aggressive pricing strategy if you manufacture locally,” Chaurasia said.

Most of Apple Inc.’s smartphones and tablets are assembled by contractors with factories in China, but the company started asking them in 2020 to look at the possibility of moving some production to Southeast Asia or other places after repeated shutdowns to fight COVID-19 disrupted its global flow of products.

Apple hasn’t released details, but news reports say the company planned to set up assembly of tablet computers and wireless earphones in Vietnam.

Other companies are keeping or expanding manufacturing in China to serve the domestic market while shifting export-oriented work to other countries due to rising wages and other costs, as well as the difficulty for foreign executives to visit China due to anti-COVID-19 travel restrictions.

___

AP Business Writer Joe McDonald in Beijing contributed.

Krutika Pathi, The Associated Press

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