Canadian airlines have asked a Federal Court of Appeal panel to quash rules that bolstered compensation for passengers subjected to delayed flights and damaged luggage. The hearings, which pits airlines against the federal government and the Canadian Transportation Agency, started yesterday and continue today (Thursday).

Air Canada and Porter Airlines Inc., along with 16 other appellants that include the International Air Transport Association (IATA), which represents more than 300 member airlines, are arguing that payments required under the country’s three-year-old passenger rights charter violate international standards and should be rendered invalid.

First filed in 2019, the court application states the new provisions exceed the Canadian Transportation Agency’s authority and also contravene the Montreal Convention, a multilateral treaty, by setting compensation amounts based on the length of the delay and “irrespective of the actual damage suffered,” according to the appellants.

The filing further says nullifying the regulations “would avoid the confusion to passengers” who could be subject to travel regimes from multiple jurisdictions on international flights.

“Justices, the solution cannot be for state parties to individually chip away at the Montreal Convention by adopting piecemeal domestic solutions that depart from the principles accepted by all state parties,” appellant lawyer Pierre Bienvenu told the panel.

Under the federal rules, passengers have to be compensated up to $2,400 if they were denied boarding – so-called flight bumping – because a trip was overbooked and receive up to $2,100 for lost or damaged luggage. Delays and other payments for cancelled flights warrant compensation of up to $1,000.

However, Ottawa argues that there is no conflict between the passenger protections and the Montreal Convention, which has more than 70 signatories that have adopted schemes around compensation for cancellations, delays and denied boarding.

“In the European Union, a regime similar to the regulations has been in force since 2004 and the Court of Justice of the European Union (the CJEU) has declared it compatible with the Montreal Convention, despite challenges from the airline industry,” the attorney general writes in the factum. “No regime analogous to the regulations has been invalidated on the ground of incompatibility with the Montreal Convention.”

The issue came to the forefront after a 2017 incident in which two Montreal-bound Air Transat jets were diverted to Ottawa because of bad weather and held on the tarmac for up to six hours, leading some passengers to call 911 for rescue.

It took on renewed relevance to thousands of Canadians starting in March 2020 as the COVID-19 pandemic and travel restrictions grounded fleets and prompted mass flight cancellations.

In 2020, the Federal Court of Appeal dismissed an attempt by airlines to freeze the country’s new passenger bill of rights until an appeal of the regulations was heard.

Some travellers and passenger rights advocates say the rules in fact don’t go far enough, arguing that airlines’ exemption from compensating customers in situations “outside of the airline’s control” uses too broad a definition and amounts to a loophole.

For example, the regulations impose no obligation on airlines to pay customers for delays or cancellations if they were caused by mechanical problems discovered in day-to-day maintenance or a pre-flight check, rather than during scheduled maintenance – more thorough inspections required after 100 hours cumulatively in the air.

AirHelp, a Berlin-based passenger rights company, has said the exemptions for weather or mechanical malfunctions don’t encourage airlines to avoid “so-called undiscovered issues” and allows them to sidestep compensation by pointing to malfunctions on the tarmac.