The Montreal Economic Institute (MEI) is cautioning that Canadian travellers could face higher ticket prices if proposed amendments to federal Air Passenger Protection Regulations are implemented. The free-market think tank argues that new refund requirements would place additional financial pressure on airlines, costs that would likely be passed on to consumers.
Proposed Rules Shift Burden to Airlines
Gabriel Giguère, senior public policy analyst at the MEI and author of a new research note analyzing the proposed changes, told National Post that the regulations could "upend airline operations" by holding carriers responsible for nearly all travel disruptions. The proposed amendments, released in late 2024, would require airlines to compensate passengers for circumstances outside their control unless they can demonstrate "exceptional circumstances" occurred.
"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 current rules established in 2019, airlines only provide compensation when a foreseeable error causes a flight cancellation or delay exceeding three hours.
Uncertainty Around "Exceptional Circumstances"
The analysis highlights particular concern about the vague definition of what qualifies as an "exceptional circumstance" under the proposed framework. Giguère noted the definition is far from exhaustive, creating operational 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?" Giguère questioned. This ambiguity could force airlines to pay up to $1,000 per passenger for situations completely beyond their control.
Regional Routes Most Vulnerable
While the Canadian Transportation Agency estimates the new rules would cost airlines approximately one dollar per passenger annually, Giguère believes the financial impact would be more significant. He expects increased operational costs would disproportionately affect low-traffic regional routes and services 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," Giguère warned. He provided a specific example, noting that cancelling one flight from Montreal to Saguenay, Quebec could cost a carrier approximately $33,000 - a loss that would require 61 incident-free flights to recover.
Giguère emphasized that air travel in Canada is already unaffordable and inaccessible for many, and new rules forcing airlines to cover uncontrollable costs would worsen the situation. The MEI maintains that these regulatory changes, while appearing beneficial for passengers, could ultimately reduce service options and increase costs for Canadian travellers.
