All-inclusive air price advertising: new Canadian regulations impose important changes in advertising practices 

publication 

February 2013

Aviation Bulletin

The Canadian Transportation Agency ("CTA") recently introduced provisions to the Air Transportation Regulations1 (the "ATR") entitled "Advertising Prices" which made it mandatory to indicate ‘all-inclusive' prices in advertisement for air services, as of December 2012. The main purpose of these provisions, found in Part V.1 of the ATR, is stated to be twofold: first to "enable consumers to readily determine the total price of an advertised air service" and second to "promote fair competition between all advertisers in the air travel industry".

total price of an air service

The total price of an air service is the price that includes air transportation charges and third party charges (that is, the various taxes, fees and charges charged by the government, a public authority or an airport authority, which are determined per person or on an ad valorem basis value). The CTA considers that the total price must be the first price presented to the consumer in an advertisement and must be at least as predominant as any other pricing information found in it. Furthermore, the CTA indicates that this total price shall at a minimum be quoted in Canadian dollars, but may also be expressed in another currency.

The CTA's Interpretation Note of December 18, 2012 on the recent additions to the ATR (the "Note") provides additional clarifications as to the application of the new regulations. For example, precisions are given explaining how amounts that might be changed after the advertisement was published should be taken in consideration, as would be the case if the amount of third party charges is subject to unforeseen changes, or if they can not be determined before the purchase.

other information

The new provisions provide that, in addition to stating the total price of an air service, any advertisement of such services shall also include the following information:

1) the point of origin and point of destination of the air service;

2) an indication as to whether the transportation service is for a one-way or round trip;

3) any limitations on the period during which the advertised price will be offered and any limitation as to when the service will be provided at the price advertised, or, if such is the case, an indication that there is no such limitation;

4) a breakdown of all third party charges, in conformity with the ATR and the Note, unless the offer is made verbally. The breakdown of air transportation charges does not have to be provided unless it appears in the advertisement under the heading "Air Transportation Charges" but it must not be implied in any way that these charges are third party charges and they may not be designated as "taxes";

5) optional incidental services, such as checked baggage or meals, for which a fee is payable, as well as the total price (or range of prices) for such services;

6) any displayed taxes, fees or charges related to the air services that must be paid at departure, in-transit or arrival point by the person to whom the service is provided and which are not collected by the advertiser.

display of required information

The manner in which pricing and other information required by the ATR shall be displayed varies depending on whether the advertisement appears in an interactive or non-interactive media.

Advertisements placed via a non-interactive media do not have to include a breakdown of third party charges, optional incidental services and taxes, fees and charges which are not collected by the advertiser, provided that such advertisements indicate a readily accessible location where such information may be consulted. The CTA provides precisions in its Note to help determine how this requirement can be met.

If the advertisements are distributed via an interactive media, they should indicate, from the outset, the total price of an air service, together with the breakdown of third party charges. Other information should be available in the form of drop-down menus or hypertext links to the web pages containing such information, or should be provided by the advertiser's representative when booking is made by phone.

control of compliance of advertisements

According to the CTA, these new requirements aim to improve transparency in advertising for consumers. The core principle of the new regulations on pricing is that advertisers may no longer display information in their advertisements on air services "in a manner that could interfere with the ability of anyone to readily determine the total price that must be paid for an air service".

In this respect, the CTA has indicated it intends to take an educational approach by answering the questions of advertisers and by publishing information documents. It should be noted that the information provided by the CTA in these types of documents is provided as a general guideline and that each request or complaint received by the CTA will be examined individually, in light of its specific facts and context. The CTA has the power to order amendments to an advertisement in order to make it compliant with the regulations. If this proves to be insufficient, the CTA may also order non-compliant advertisers to pay administrative monetary penalties of up to $5,000 for individuals and $25,000 for bodies corporate, depending on the nature of the breach and whether it is a repeated offence.

application

The new regulations potentially affect most players in the air-transportation of passengers, as they apply to any person who advertises to the public prices of air services within or originating in Canada, whether such person is an individual or a body corporate and regardless of the nature of such person's commercial activities (air carrier, travel agent, etc.) or geographical location.

There are a number of exceptions to which the new regulations do not apply. These include advertisement which does not mention a price for the services being offered or include a non-pecuniary component (such as points earned as part of a loyalty program). These exceptions also include advertisement made for air cargo services, and, under certain conditions, for package travel services or negotiated rates. Finally, advertisement made for services not regulated by the Canada Transportation Act2 or by the ATR or in which the Canadian public is not targeted, such as that displayed on foreign versions of the advertiser's website, are not subject to the new regulations.

by Frédérique Gay, Rachel April Giguère and Éric Vallières

1 Air Transportation Regulations, SOR/88-58.
2 S.C. 1996, c. 10
 

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2013