THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Tuesday, September 22, 2026
The Standing Senate Committee on Transport and Communications met with videoconference this day at 9 a.m. [ET] to elect the Deputy Chair; and to study the subject matter of those elements contained in Division 17 of Part 4 of Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.
Senator David M. Wells (Chair) in the chair.
[English]
The Chair: Honourable senators, I call this meeting of the Standing Senate Committee on Transport and Communications to order.
To support the smooth operation of committee proceedings, the following guidelines must be observed by all participants to help prevent audio feedback. Consult the cards placed on the committee tables for guidelines to prevent audio feedback incidents. Keep earpieces away from all microphones at all times. Microphones must not be touched. Activation and deactivation will be managed by the console operator. Avoid handling your earpieces while the microphone is active. Earpieces should remain either on your ear or be placed on the designated sticker at each seat. Thank you for your cooperation on this.
My name is David Wells. I’m a senator from Newfoundland and Labrador. I would like to ask my colleagues to introduce themselves.
Senator Simons: Paula Simons, Alberta, and I come from Treaty 6 territory.
[Translation]
Senator Quinn: Jim Quinn from New Brunswick.
Senator Cormier: René Cormier from New Brunswick.
[English]
Senator Mohamed: Farah Mohamed, Ontario.
[Translation]
Senator Arnold: Dawn Arnold from New Brunswick, as well.
Senator Aucoin: Réjean Aucoin from Nova Scotia.
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
[English]
The Chair: Thank you, colleagues. I would like to welcome everyone with us today, as well as those listening to us online on the Senate’s website, sencanada.ca.
Colleagues, before we begin, I would like to take a moment to acknowledge the passing of our colleague and friend Senator Todd Lewis.
Throughout his life, he brought the practical wisdom of a farmer to everything he did. He was a pragmatic person who had a remarkable ability to cut through complexity and get to the heart of every issue.
As members of this committee will remember, he often asked the simple, straightforward questions that others didn’t think to ask. Those questions invariably helped us advance our understanding of matters before us. He was respected and liked by all who had the privilege of working with him. His contributions to this committee will be greatly missed. On behalf of the committee, I extend our sincere condolences to his family, his friends and all those mourning his loss.
At the same time, colleagues, I would like to warmly welcome Senator Réjean Aucoin to our committee. We are pleased to have you join us. I know your experience and perspectives will be a valuable addition to the important work we undertake here. We look forward to working with you.
Following the retirement of the Honourable Donna Dasko on August 8, 2026, and the resulting vacancy of the deputy chair position, we will now proceed to the election of the deputy chair.
I am ready to receive a motion to that effect. Are there any nominations?
[Translation]
Senator Cormier: I nominate Senator Paula Simons as deputy chair of the committee.
[English]
The Chair: Thank you. Are there any other nominations?
Seeing none, is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
The Chair: I declare the motion carried. Congratulations, Senator Simons.
Colleagues, today, we are meeting to begin our study of the subject matter of those elements contained in Division 17 of Part 4 of Bill C-31, Budget 2025 Implementation Act, No. 2, which relates to amendments to the Canada Transportation Act.
Regrettably, the committee will not have the opportunity to hear from the bill’s sponsor or a representative of the government to introduce the legislation and speak to its intended objectives.
We trust that this will be an exceptional circumstance and future studies will benefit from the opportunity to hear directly from those responsible for bringing the legislation forward.
Nevertheless, we appreciate the participation of officials on our first panel and witnesses who will join us on later panels today. We look forward to their insights as we undertake our study.
With that, I would like to introduce our first panel of witnesses. From Transport Canada, Jennifer Little, Director General, Air Policy; and Vincent Millette, Director, National Air Services Policy. Thank you for joining us today.
Ms. Little will provide opening remarks of approximately five minutes, which will be followed by a question-and-answer session with senators.
I invite Ms. Little to give her opening remarks.
Jennifer Little, Director General, Air Policy, Transport Canada: Good morning. Thank you very much for inviting me and my colleague Vincent Millette to join you this morning.
The amendments to the Canada Transportation Act presented in Division 17 of Bill C-31 will modernize Canada’s air passenger protection regime, as signalled in the Spring Economic Update and as announced by the government on May 1 of this year.
While the amendments are quite technical, their purpose is very practical.
[Translation]
Currently, responsibility for the Air Passenger Protection Regulations, APPR — including the regulations themselves and the processing of complaints — resides with the agency.
[English]
Currently, the responsibility for the Air Passenger Protection Regulations, or APPR, resides with the Canadian Transportation Agency.
To make Canada’s air passenger protection regime clearer and more effective, the proposed amendments are designed with the goal of tackling three key issues in the current regime: first, addressing the air travel complaint backlog, which is close to 98,000 and growing; second, simplifying the regulations to make them clearer and remove ambiguity, which will support direct resolution with air carriers and reduce the number of complaints; and, third, establishing the potential to move to a private-sector-driven approach to process future complaints under the new regulations, reducing costs for Canadians as well as spending on government operations.
Legislative amendments are required to shift responsibility to the Minister of Transport to enable the procurement of a third party firm to clear the backlog; draft and consult on new passenger protection regulations to strike the right balance between protecting travellers, on the one hand, and not financially overburdening industry on the other; and, finally, to determine how complaints will be processed in the future in the context of the new regulations.
[Translation]
By shifting key responsibilities over to the Minister of Transport, the legislative amendments clear the path to get things done.
[English]
Specifically with respect to clearing the backlog, amendments would allow the Minister of Transport to procure a third party, alternative dispute resolution firm — or ADR firm — to process the agency’s backlog of complaints at lower costs and more quickly by leveraging artificial intelligence tools and private sector know-how.
Once an ADR is contracted, the backlog will move from the agency to the ADR. As the transition takes place, the agency will continue processing new incoming complaints under the current regulations while the backlog is being addressed by the third party.
[Translation]
With respect to the passenger protection regulations themselves, ambiguity in complex regulations has led to an unprecedented wave of complaints to the agency — and that is exactly what has created this untenable backlog. While the regulations are complex, maintaining key protections for air passengers is important when travel does not go as planned, and some degree of regulation is necessary to ensure that air carriers treat their passengers fairly. That said, the current regulations are also very expensive for carriers, and finding the right balance is key.
[English]
Ambiguity and complex regulations have led to the unprecedented wave of complaints and created the untenable backlog. While the regulations are complex, maintaining key protections for air passengers remains important when travel doesn’t go as planned. Some degree of regulation is necessary to ensure carriers treat their passengers fairly. Finding balance in this is key.
To address this, regulation-making authority would be transferred to the Minister of Transport from the agency, as the minister is well placed to assess the full range of public interest considerations, including affordability of travel, carrier viability, competition and connectivity.
The goal will be to clarify the regulations, as a clearer and less complex passenger rights regime is key to reducing complaints and avoiding the buildup of another backlog.
[Translation]
While the preference remains that carriers resolve their issues with passengers directly, a system is needed to arbitrate unresolved complaints.
[English]
To address this, amendments in the act would also provide the opportunity, should the government decide to do so, to move future complaints under the new regulations from the agency to the administration of carrier-contracted, government-approved, private-sector ADR firms.
By virtue of these changes, the modernized regime would be tailored to reduce the regulatory burden on industry while maintaining an appropriate level of protections for passengers.
[Translation]
A simplified regime, tied to an efficient system for handling complaints, would lead to fewer complaints and faster resolution, which is positive for all stakeholders.
[English]
In addition to these three key proposed outcomes, the amendments also include important transparency and enforcement measures. Under the new regulations, the agency would retain their investigative and enforcement powers, and we have proposed amendments to increase the maximum penalty for systemic or recurring misconduct against passengers to $1 million — sending a clear message that accountability matters.
The amendments would also remove the confidentiality requirement on travellers, which currently prohibits them from speaking openly about their experiences with complaints processing. And amendments would allow for other important transparency measures, including data collection and reporting.
[Translation]
All told, these measures will address significant irritants in the air passenger protection system, bring much-needed clarity to the regulations, accelerate the complaints resolution process and reduce costs for Canadians by moving complaint processing from a federal agency to the private sector, should the government wish to adopt this approach over the long term.
[English]
We would be pleased to answer any questions. Thank you.
The Chair: Thank you very much, Ms. Little.
[Translation]
Senator Miville-Dechêne: Thank you for being here. I will quote the minister:
“A large-scale project like this one is best handled by people who have honed their expertise in the fields of arbitration and dispute resolution.”
Can you clarify for us the actual expertise that the Department of Transport Canada has in dispute resolution? What is your expertise?
Vincent Millette, Director, National Air Services Policy, Transport Canada: At this time, Transport Canada does not have specific expertise. That’s why we’re proposing to seek out private sector expertise by hiring third parties to resolve complaints.
Senator Miville-Dechêne: Will all complaints be handled by the private sector? Does this mean that nothing will be done internally, aside from the minister making regulatory decisions?
Mr. Millette: The backlog of complaints will be handled by a private company.
For future complaints, under the new regulations, there will be three options: the Transportation Agency will continue to process them; they will be transferred to Transport Canada, where we will develop the expertise; or we will set up a private system where carriers will have to use a private third party pre‑approved by the minister.
Senator Miville-Dechêne: Isn’t that an admission of an abysmal failure? In other words, the regulations are not understandable, the implementation of the act has failed, and nothing has worked when it comes to the Transportation Agency. You’re forced to review the regulations and the system, and to say that you won’t be doing it and will have to send it off to the private sector. Isn’t that an admission of an absolute failure?
[English]
Ms. Little: Thank you for the question. One of the important checks in the system is that we would be required to consult on a new regulatory package through the Canada Gazette Part 1 process. Through that, we receive valuable insights with respect to the proposed regulations, including from industry, from Canadians and from travellers — but also from other potential interests in the system, who would be able to provide extraordinarily helpful insights into ensuring that the system is tidied up.
We are talking about a successive proposal whereby, on the one hand, you are clearing the backlog to remove that burden from the agency so that while the new regulations are being prepared, the agency is processing incoming complaints. Then the government has the opportunity to observe how the ADR firm operates during that period and decide on a future approach. As Vincent described, that could be one of three potential avenues. The legislation provides for the government to make that choice.
Senator Simons: I want to thank Senator Miville-Dechêne for setting the table for the questions I will ask. In 2023, the government of the day passed amendments designed to clarify, simplify and strengthen the complaints regime. I understand those amendments, even though they were passed, were never brought into effect because the regulations to make them real never happened.
First, if Bill C-31 is passed in its current form, what happens to those 2023 amendments? Do they still require implementation on their own? Are they rendered moot? Are they overwritten? What happens with the previous changes we endorsed?
Ms. Little: Thank you for the question. Yes, the new regulations were passed because the system was severely stress‑tested during the pandemic. There was a requirement to look at the regime anew at that time. The agency was also asked to look at the regulatory package because it became very clear that even though an effort was made to streamline the regulations, it still resulted in an extraordinary and unprecedented number of complaints, which signalled there was something wrong with the way that the regulations, perhaps, were —
Senator Simons: Or it signalled that the airlines were not doing a very good job.
Ms. Little: It’s certainly a complex matter. The regulations as written create an ambiguity. The objective of the air passenger protection regime is to always have the carrier settle with travellers in the first instance, and when that is not possible, there is recourse to the agency. But significant ambiguity regarding the regulations and where they apply made it very complicated for both carriers and passengers to understand what their rights were. It was not sufficiently clear to make those decisions easily.
It is the same for the agency. The agency’s officers have to process some very complex claims. The purpose of this initiative is to prepare a new package of regulations that would replace the existing regulations, provide a clearer way forward for travellers and industry and reduce the burden on the complaint system for Canadians.
Senator Simons: Again, does that mean the amendments from 2023 will be overwritten? Are they not going to happen?
Ms. Little: That is correct. The purpose would be to have a new regulatory package, which would replace any prior regulations in the air passenger protection space.
Senator Simons: Concerns have been raised that contracting this out to third party private companies raises the potential for a conflict of interest. If you want to have the contract to be the mediator or assessor, the airlines who are paying for this will be much more inclined to hire — hypothetically, human nature being what it is, there may be pressure that people feel regarding the way they are deciding, predicated on the fact they are being paid by the people they are adjudicating. Could you talk about how one is going to deal with that issue of a perceived, if not real, conflict of interest for the people who are being paid by the group they are designed to police?
Ms. Little: That’s an excellent question. That’s one of the reasons that the transparency measures are so important. We plan to build into the regulations — and we’ve provided for it in legislation — that the government can require firms and carriers to post the outcomes of their experiences.
Also, the removal of the confidentiality requirement on passengers, so that passengers can speak freely about their experience with the alternative dispute resolution firm and the carriers themselves, provides more visibility into the decision-making process.
We see that as an effective check and balance so that we will be able to compare the findings of the ADR firms against the agency’s historical findings as well and get a sense of any trends that would indicate that the independent ADR firm was finding in any irregular pattern. We will be keeping an eye on this through oversight.
As well, the agency will continue to have that power — in fact, an enhanced power — to go after carriers they have observed making systemic and repeated violations against the human rights regime. We are trying, through the legislation, to put in checks and balances to address and mitigate those concerns.
Senator Simons: Thank you very much.
[Translation]
Senator Cormier: Thank you for being here. It is understandable that the government wants to reduce backlogs. I’m wondering about the multiple mechanisms for resolving complaints. How does the department ensure national consistency among decisions made using these various mechanisms? What oversight is there, and how will you ensure that consistency?
Ms. Little: That’s a good question. Thank you very much.
[English]
Consistency and coherence are essential to this plan. The objective is to bring more rigour and clarification to the regime overall.
For the purposes of clearing the backlog, as a first step, it would be one firm that would be contracted by the government while the agency continues to process incoming claims. You are quite right: We will need to perform some oversight to ensure the findings are similar. That’s where some of the transparency measures will come in. We will have a line of sight to the findings of both the agency and the ADR firm. In this process, there will also be an opportunity for collaboration and the transfer of knowledge from the agency to the ADR firm. We will have that line of sight to ensure there is consistency.
Should the government, in the future, decide to continue with a system where alternative dispute resolution firms are contracted by carriers, again, the minister would have the opportunity to designate firms and build in strict, consistent requirements that they would have to adhere to. Through oversight by Transport Canada and by monitoring the statistics, we hope to maintain that consistency because it is true that customers deserve to have a similar experience no matter which ADR firm their carrier chooses to contract.
[Translation]
Senator Cormier: It would be legitimate to question the department’s ability to obtain accountability. In terms of resources and mechanisms, the situation is quite complex, so I still have some fairly important questions about how the department will really be able to obtain accountability. I’m thinking in particular of compliance with the Official Languages Act. How, for example, will the department reassure Canadians that, regardless of where they are in Canada and regardless of the official language they speak, they can access similar and equitable services? What can you tell us about that?
[English]
Ms. Little: Absolutely. The official language requirements and the accessibility requirements will be built into the requirements for ADR firms to be designated by the minister.
We will establish a strict set of criteria. Any ADR firm wishing to operate in this environment and make their services available to carriers — should the government choose to go this way — would have to meet these high standards. That would be built into the requirement.
Similarly, should it be found that a designated ADR firm was not respecting the obligations put upon them for official languages and accessibility, not performing in a consistent way or if there were irregularities, the minister would have the opportunity to withdraw their designation.
[Translation]
Senator Cormier: Some airlines have responsibilities under the Official Languages Act, and others do not necessarily have an obligation to enforce the act. How will the department ensure that those companies, those carriers that don’t necessarily have obligations under the Official Languages Act, comply with the legislation in their dealings with passengers?
Mr. Millette: As Ms. Little mentioned, strict rules on official languages and accessibility will be set out for the designated private firms. As for the airlines’ compliance or non-compliance with the Official Languages Act, I would say that is really a question for the Department of Canadian Heritage, which is responsible for the Official Languages Act.
Senator Cormier: You have that responsibility at Transport Canada, as well.
[English]
The Chair: I have two questions, but I’m going to ask them together because they are related. Will the minister have authority over only licence holders or airlines? Are there other entities associated with airline travel related to the airport corporation, refuelling or other things that are not necessarily under the rubric of the airlines where that authority will be extended?
We all direct our complaints at airlines even if they are not responsible for what happened. Can you talk a little about how this will be addressed under the new regulations or under the new legislation?
Ms. Little: The Air Passenger Protection Regulations apply strictly to carriers, and there is no proposal to change the application of that regime. The new regulations would apply to carriers, just as the current regulations do. They are really about the relationship between the carrier and their customers.
The Chair: Would that extend to the entities subcontracted by the carrier, for example, food services, fuelling or de-icing? These are things that there could be complaints about. Essentially, what percentage of complaints that come in that are actually airline issues versus those regarding subcontractors of the airport?
Mr. Millette: I don’t have the exact statistics with me, but we can say the vast majority of complaints are under the purview of the carriers. Regarding your question about how complaints about subcontractors would be dealt with, because the carriers are the ones subcontracting them, they are responsible for them.
The Chair: What happens with complaints that are from contractors of the airport? Does the minister dismiss those because they will not be in his jurisdiction?
Ms. Little: There is no official mechanism or regulation regarding the relationship between incidents that may happen at an airport. Of course, if there is a significant incident, individuals would have recourse to the courts, for example, but there is no federal regulation that governs complaints between the traveller and the airport or any other facility at the airport. These regulations about air passenger protections strictly apply to carriers.
The Chair: Will the legislation treat this differently from what is happening now?
Ms. Little: No. The application to carriers will be the same as it is today.
The Chair: Thank you.
[Translation]
Senator Quinn: Thank you for joining us today. My first question is somewhat related to my colleagues’ questions.
[English]
From what I understand, the responsibility is being transferred from the agency to the minister somewhat. Complaints will come in, and the minister will decide to deal with them or put them to the agency or a third party. Have I understood that flow correctly?
Ms. Little: Thank you for the question. It is a three-part plan with a few elements in between.
In the first instance, the minister would take the backlog of complaints at a moment in time. There would be a moment in time identified when all the complaints strictly in the backlog would be removed from the agency and the minister would turn to an ADR firm to resolve the backlog. At that time, the agency would continue to process incoming complaints under the current regulations while the Minister of Transport develops a new set of regulations.
When the new set of regulations comes into force, the minister would have the opportunity to decide how the complaints under the new regime would be processed. As Mr. Millette mentioned, based on their experience, it may be that the ADR firm is preferred. The option would remain for the agency to continue to process complaints unencumbered by the backlog should the minister decide to go that way. However, there is a scenario where the minister would decide to take them to Transport Canada.
There are steps to the process regarding those decisions.
Senator Quinn: That process suggests there must be new capacity in Transport Canada for it to play its role, not only in assisting the minister in the future process but also in assisting the flow of the current backlog to the ADR and then assessing the performance of the ADR. Is that fair to say?
Ms. Little: Yes. What is interesting about the proposal and the addition of the ADR firm in particular is to test the efficacy of the firm. One of the government’s objectives, of course, is to reduce costs to Canadians and find government efficiencies, so the option of retaining the complaints process under the auspices of Transport Canada or the agency may be less preferable given the potential to put the onus on the carriers to cover the cost of complaints. Those future decisions would be informed by government objectives and priorities at the time, and there is the potential for the ADR firm to perform these tasks and remove a burden on the taxpayer.
Senator Quinn: In the budgeting process, has Transport Canada performed an estimate that could be included in the Main Estimates? Is there an estimate for the cost of the new role that the bureaucracy in Transport Canada is going to assume?
Has there been an allowance made in the budgeting process?
Ms. Little: For the oversight of the process at Transport Canada, we do not have any new resources. We are able to absorb that responsibility internally, and the expense would be for the government to contract the ADR firm. Over time, it would reduce $25 million a year that is going to the agency to process claims at present. There would be a one-time government settling with the ADR firm to clear the backlog, and then the government has a choice about the way forward. It may be incented to move toward industry pay.
Senator Quinn: It’s interesting that you currently have the capacity to absorb all this because it seems to be a large task.
Having said that, are there other models that you have looked at? I understand the European Union has a model that is fairly robust. Have you looked at other models to observe what their best practices are and how they can be adopted?
Ms. Little: We have. We looked at the European model. As well, there is a very similar model followed in the United Kingdom. We engaged with our colleagues at the United Kingdom Civil Aviation Authority as well as studying the European model.
Senator Arnold: Thank you for being here. You have provided a lot of clarity.
I would like to better understand one of your answers regarding the backlog. I think all Canadians were thinking that 92,000 is a very big number. However, I think I heard you say that you feel a lot of that came from the ambiguity around the legislation on this.
Ms. Little: Yes. The fact that the regulations are not clear-cut has led, in part, to the backlog.
If customers and carriers were very clear, and if there were a very clear delineation between being at fault and compliance, there would be less of a requirement to complain. Our sense is that there would be a much greater possibility for carriers to resolve issues directly with their customers.
The complaints system has compounded because of this ambiguity. Also, the volume has been very difficult for the agency to manage. The idea is to remove the burden of the backlog; having 98,000 unresolved complaints is not serving Canadians. Going in, removing the backlog and putting clearer regulations in place altogether are designed to have an air passenger protection system that works better for Canadians.
Senator Arnold: I was a bit surprised to see that it was confidential and that people couldn’t talk about it. In your research of other models, is it typical to have it be confidential or to have the transparency of everyone knowing where things stand?
Ms. Little: The idea behind the transparency measure at the time was to encourage parties to go to mediation. There was an intent behind it, but we saw that parties were not going to mediation. They were skipping that in favour of going straight to the complaints process. The system, in that regard, didn’t work as planned. We see that removing the confidentiality aspect — which is also a considerable irritant — will make things much more transparent.
And, again, as per an earlier comment, it’s our hope that on balance, some of these checks and balances being put into the system regarding transparency and greater visibility around complaints and where the decisions are being taken will ensure fairness across the system.
Senator Arnold: Thank you.
Senator Mohamed: I want to return to the 30 days that a passenger has to deal with the airline. My understanding is that there is a concern around burden to passengers. I think part of the backlog is it’s an irritant for people because they wait for so long. That’s money out of their pocket, and nothing has been resolved. I don’t know if it’s like things have been in a backlog for a year or whatever the case may be, but I want to better understand the requirement for passengers to first use 30 days. For some people, that is a significant amount of time; you spent a lot of money, and you’re then told that you must spend up to 30 days resolving this with the airline when often there isn’t agreement on what the disruption was caused by.
I want to better understand how that is not increasing the burden on a passenger. That’s my first question.
I think you answered my second question, but I want to be clear: Are you saying that because there is increased clarity around the regulations, the chance of a backlog will be minimized because the clarity will sort of lead people to say that they either can or cannot make a claim? That seems to me, again, not in the best interests of a passenger, because the burden of proof is on the passenger. Many times, you will ask, “Why is this disruption caused?” You will hear “It’s weather,” or “It’s mechanical,” or “The crew didn’t show up.” There will not be a lot of consistency based on that flight at that time, depending on whom you ask.
I’m trying to get to the heart of how this is best for the passenger, given the increased amount of time required and not always knowing the reason for the disruption. How does that not then lead to a backlog down the road?
Thank you.
Ms. Little: Thank you. Those are excellent questions, and I’ll try to take them in turn.
With respect to the 30 days, at present, when there is a complaint made by a traveller with the carrier, the carrier is required to have a process in place to resolve the complaint within 30 days. We have proposed an amendment that actually tightens up and requires them to resolve it in 30 days, so there is a bit of a tightening of the requirement proposed in this legislation.
The 30 days is designed to have reasonableness in terms of the ability to resolve the complaint, gather the information and make a decision. In many cases, the carriers will resolve with their customers before complaints even need to be issued. There is always the possibility that carriers may provide a voucher to their customers to avoid complaints entirely. We have seen that the carriers can be very responsive.
With respect to the backlog and the clarity of the regulations, the idea is to ensure that the traveller’s protections are maintained and they receive resolution more quickly when there is a reasonable cause for complaint.
With the clearer regulation, that is the proposal: That, by design, the system will be easier to arbitrate both by the carriers with their customers and, if necessary, by the Canadian Transportation Agency, or CTA.
Mr. Correia will correct me if I’m wrong, but the onus and the burden of proof is on the carrier to be able to defend against a complaint. There is less of an onus on the traveller to make that case. The traveller comes forward with a complaint, and then the onus is on the carrier to prove why or why not the complaint is founded.
Senator Mohamed: Can I return to the use of the word “reasonableness”? Who determines reasonableness?
Ms. Little: Well, through the regulatory drafting process, Canadians will have an opportunity to opine on the draft regulations developed by the Minister of Transport. There will be a full Canada Gazette Part 1 process, where all Canadians will have an opportunity to take a look at what is being proposed and voice their views.
Senator Mohamed: Finally, there is the idea that you can resolve with the carrier and it will happen faster because a carrier will often offer something that leads a person to say, “Okay, fine.” It is often a $25 voucher, for example. It is often smaller than what they would receive if they went for something larger. If they get into a conversation within the 30 days with the airline, an offer is made and they do not accept it, they still have the opportunity to go outside of that 30 days and pursue this other avenue, right? Am I understanding that correctly?
Ms. Little: I think so, if I understand correctly. If a customer goes to the carrier and the complaint is not resolved to the customer’s satisfaction, the customer’s recourse, at present, is to the agency.
Senator Mohamed: Will that continue?
Ms. Little: Yes.
Senator Mohamed: Thank you.
Ms. Little: In the future, should the minister decide under the future regulations that the complaints be no longer processed by the agency, the resource would be through the ADR firm or the courts.
Senator Mohamed: Thank you.
[Translation]
Senator Aucoin: I thank the witnesses for being here. I’ll follow up on what Senator Mohamed asked. If I understand correctly, the carrier can solve the problem within the first 30 days. Otherwise, people can file a complaint, which must be resolved within 90 days, either by the department or by a private agency designated by the department.
I have two very short questions on that. First, if, after the 90 days, a person is not satisfied with the outcome, is there an appeal mechanism?
Second, if people choose not to go through the complaint, arbitration or mediation process, what recourse will they have if they don’t get a resolution from the carrier?
Mr. Millette: Thank you for the question. Passengers could take the matter to the small claims court of each province.
Senator Aucoin: Is there an appeal mechanism after mediation? Is mediation final?
Mr. Millette: If they choose to go to the third-party complaint resolution company that is approved by the minister, an appeal system will be available within the company.
So if the passenger is not satisfied with the initial decision issued by the third party, there will be an appeal system within it, and if the passenger is still not satisfied, they will still have the right to appeal to a small claims court.
Senator Aucoin: Regarding the question asked by Senator Cormier, if I understand correctly, the final reports from the private firm on complaints or backlogs will be public and in both official languages, and the private company responsible for these arbitrations will be able to open a service in both official languages?
You weren’t clear; you talked about the Commissioner of Official Languages or the Minister of Official Languages, but we’re talking about Transport Canada here, and these obligations cannot be delegated to another department.
Mr. Millette: As mentioned earlier, the third parties’ approval conditions will include clear rules requiring them to provide their service in both official languages and to make decisions in the official language chosen by the complainant. Any publication on their website will also have to be in both official languages.
Senator Aucoin: Finally, I am quite concerned about the fact that there was a budget of about $75 million over three years to address the backlogs, which have increased rather than decreased.
Have you estimated how much a contract with a private firm will cost to address these backlogs, in addition to continuing to process the complaints that will be filed from the moment the firm comes into play? I am concerned about what this new system will cost as they try to resolve the old and new complaints. Have you estimated the cost?
[English]
Ms. Little: Based on experience in other jurisdictions that we studied when we were developing these proposals, and based on preliminary conversations with firms that provide these services, our understanding is they can provide the processing much more quickly and less expensively than the agency.
The agency has received allocations for the next two years of $25 million to continue to clear the backlog, so that’s already on the books. Then the government would go out to tender to give the third party market an opportunity to demonstrate how they might be able to perform. So the open market would provide an answer.
Again, based on our assessment, our understanding and early conversations, both with our international colleagues and with firms that do this work, I think the rough estimate is it could be significantly cheaper. The agency went out and consulted on a cost-recovery fee that started off at $1,300; it went down to $750. So that’s what the agency assesses its costs to process a complaint. Based on our analysis, we would expect an ADR firm to process each claim at a cost of around half of that.
The Chair: Colleagues and witnesses, we have reached the end of our time for this panel. Thank you for appearing today. We appreciate your presence.
I would like to introduce our next panel of witnesses: from the National Airlines Council of Canada, Jeff Morrison, President and Chief Executive Officer; from the Air Transport Association of Canada, Julie Mailhot, President and Chief Executive Officer; and from the Canadian Airports Council, Geoff Turner, Vice‑President of Government Relations. Welcome to you all, and thank you for joining us today.
Witnesses will provide opening remarks of approximately five minutes, which will be followed by a question-and-answer session with senators.
I invite Mr. Morrison to give his opening remarks.
Jeff Morrison, President and Chief Executive Officer, National Airlines Council of Canada: Thank you, Mr. Chair, for inviting me back to this committee to discuss Bill C-31.
For those unfamiliar with the National Airlines Council of Canada, or NACC, it is the trade association representing Canada’s largest passenger airlines: Air Canada, Air Transat, Jazz Aviation LP and WestJet.
As you know, in its April 2026 Spring Economic Update, the government announced it would introduce changes to the APPR regime that would simplify the process and allow for an alternative dispute resolution, or ADR, framework to replace the current CTA appeals process. NACC welcomed these announcements, agreeing that they will lead to a more cost‑effective, simplified system.
[Translation]
That said, the National Airlines Council of Canada, or NACC, has raised several concerns within Division 17 of Bill C-31, which implements the commitments contained in the Spring Economic Statement. NACC has provided this committee with a brief containing a number of recommended amendments to Bill C-31. I hope you can have a look at that briefing note soon. Let me highlight a few of those recommendations.
[English]
Bill C-31 establishes the framework for an ADR process to replace the CTA appeals process. We welcome ADR as a viable alternative to the current CTA process, as experience in the European Union and the U.K. suggests that ADR is fairer, addresses claims more quickly and has lower costs.
However, Bill C-31 puts the full cost of ADR exclusively on carriers. Not only would this increase costs to passengers in a system that is already overburdened by excessive federal fees and taxes, but legally, it would depart from established adjudicative principles and from conventional commercial arbitration models, where models do not require one predetermined party to bear the entire cost of the arbitration irrespective of the merits or outcome of the dispute.
We recommend Bill C-31 be amended to better reflect judicial practice and to preserve flexibility for balancing future cost allocation, including the possibility of government funding of dispute resolution.
With respect to ADR providers and the process, the proposed legislation leaves many fundamental procedural elements to future implementation decisions by the minister and does not explicitly set standards or guidelines for service providers. In Europe, where ADR is used, the EU’s Alternative Dispute Resolution Directive clearly establishes requirements directed at such items as independence, impartiality, transparency, effectiveness and fairness.
NACC believes the proposed legislation should provide a stronger statutory foundation for how complaints will be managed and resolved, including clear procedural safeguards, consistent evidentiary standards, reasonable timelines and mechanisms to address complaints that are duplicative, repetitive, manifestly without merit or otherwise unsuitable for full adjudication.
We also believe the legislation should better protect the integrity of the APPR complaints process by preventing the assignment, commercialization and aggregation of passenger claims to third parties, known as claims farms in Europe, which are, frankly, quite pervasive.
[Translation]
Furthermore, any time a whole new process is put in place, airlines will require sufficient time to adjust to the new system. Therefore, NACC is recommending that the government incorporate the necessary flexibility into the transitional implementation plan, with phased implementation and clear milestones.
[English]
Lastly, Bill C-31 would raise the maximum administrative monetary penalty for certain air-passenger-related violations from $250,000 to $1,000,000, with the possibility these penalties could be applied per passenger rather than per event. Similar federal penalties are exclusively targeted at serious criminal conduct, systemic market harm or, for example, irreversible harm to people or the environment.
NACC submits that the proposed penalties are disproportionate to the nature and seriousness of APPR obligations, which are about service standards rather than serious breaches of public trust. NACC therefore recommends that proposed APPR penalties be reassessed to a level more consistent with comparable federal regulatory regimes, especially when understanding that excessive punitive penalties will ultimately be required to be passed on to the passenger.
[Translation]
In conclusion, NACC supports the overall direction and vision for APPR reform. Our recommendations are offered in a constructive spirit and are intended to support a framework that is fair, effective, consistent with legal principles and affordable for Canadian travellers.
[English]
Thank you. We would be happy to discuss further through any questions.
The Chair: Thank you, Mr. Morrison.
[Translation]
Julie Mailhot, President and Chief Executive Officer, Air Transport Association of Canada: Mr. Chair and honourable senators, thank you for the opportunity to appear before you today on behalf of the Air Transport Association of Canada, or ATAC. ATAC represents national and regional air carriers, including many operators that serve Canada’s remote and northern communities.
[English]
ATAC supports a passenger rights framework that is fair, transparent and effective. Canadians deserve confidence that when travel disruptions occur, they are treated fairly and receive timely recourse. However, we are concerned that the amendments proposed in Division 17 of Bill C-31 do not fully reflect the operational realities of Canada’s aviation sector and may create unintended consequences for both carriers and passengers.
Canada presents one of the most challenging aviation environments in the world. Airlines operate across vast distances and routinely contend with severe weather, wildfires, airport capacity constraints, infrastructure limitations, air traffic restrictions and significant geographic challenges. These factors can disrupt operations despite the best efforts of carriers.
These realities affect operators of all sizes. National and regional carriers rely on tightly coordinated aircraft, crew and maintenance schedules. When disruptions occur, the impacts often extend beyond a single flight and across an operator’s network. Recovery can be complex and, in some cases, can take several days.
It is also important to recognize that regulatory frameworks can create unintended consequences. Sometimes, the airline may face incentives to cancel a flight rather than continue absorbing mounting delay-related obligations. For passengers travelling on routes with limited frequency, however, the next available flight might not be for days. Passenger protection policies should encourage recovery whenever possible rather than unintentionally favour cancellation.
For operators serving remote and northern communities, these challenges can be even more significant. Limited infrastructure, smaller fleets and reduced operational flexibility can make recovery particularly difficult.
ATAC is also concerned about the growing strain on the passenger complaints process. While passengers should have access to a fair and accessible system, the current framework allows complaints that clearly fall outside the scope of the APPR, and this contributes to the growing backlog and longer wait times.
To improve efficiency while preserving access to justice, ATAC recommends consideration of a modest administrative filing fee, refundable when a complaint is successful and accompanied by accommodations for those facing financial hardship. This would help focus resources on legitimate disputes while maintaining accessibility.
More broadly, ATAC believes that a one-size-fits-all solution does not reflect the diversity of Canada’s aviation sector. Requirements that might be manageable for large organizations can create significant burdens for smaller carriers that provide essential connectivity to rural, northern and remote communities.
[Translation]
ATAC respectfully asks the senators to ensure that Division 17 strikes the right balance between protecting passengers and recognizing the operational realities the airline industry is facing. A regulatory framework that recognizes the complexity of air operations, promotes effective dispute resolution and preserves essential air services will lead to better outcomes for passengers, carriers and the communities they serve.
I thank you for your attention and look forward to your questions.
[English]
The Chair: Thank you, Ms. Mailhot. I note to colleagues that Ms. Mailhot has provided her full remarks to the committee. Mr. Turner.
Geoff Turner, Vice-President, Government Relations, Canadian Airports Council: Thank you, chair and honourable senators, for the invitation. We are here representing the Canadian Airports Council, or CAC. As many of you may know, CAC represents 100 airports across the country, from our largest international hubs to our small community and regional hub airports.
We want to begin by noting, of course, that airports are not specifically captured by the APPR, which is an appropriate response. So we have no specific comments to the legislation before us, but certainly airports play an important role, as you know, in the overall air ecosystem, and we work closely with our partners in those endeavours.
We can certainly say that the government’s intention to reduce the complaint backlog and improve the regulations is an important and positive step in the right direction. Travellers deserve resolution, and carriers deserve certainty. You will hear that from my colleagues from their perspective.
Working with industry to close the gaps will reduce those unintended effects, especially in maintaining cost-effective regional and remote connectivity at small- and medium-sized airports. This, in particular, is a point of friction, especially where there is a challenge in maintaining service and routes into some of our smaller and community airports and where this regime sometimes causes undue friction relative to those remote destinations.
We really want to focus in the rest of our remarks on the viability and the reliability of regional routes, which are, of course, shaped in part by the infrastructure at airports of every size, especially at our small- and medium-sized airports serving regional hub cities; provincial cities and towns; and essential links to the North, Arctic and remote communities.
To that end, last year the Government of Canada collected about $556 million in Crown rent from the 26 airports of the National Airports System. About one tenth of that returns to the sector in direct federal investment, primarily through cost sharing only and safety upgrades at our smallest airports outside of that national network.
Canada has invested, as senators know, for generations in every other mode of transportation in Canada: VIA Rail, our new Alto rail project, ferries, bridges, transit and roads. Since devolving the government-operated and taxpayer-supported airports to independent non-share capital local authorities in the 1990s, those airports have reinvested $30 billion of travellers’ money into infrastructure and modernization projects, while contributing $8.4 billion into the federal treasury directly.
It’s past time for government to properly recycle these and future proceeds back into investments that support a full range of Canadian airports. Small- and medium-sized airports have a shovel-ready and long-term capital agenda of at least $19 billion to be invested over the next decade. This includes terminal, runway extension, airfield and technology projects, but also new economic growth opportunities developed in partnerships with regional and economic leaders and businesses.
An infrastructure and economic development program of at least $200 million would provide the best tool for government to make strategic investments in the broader network and to accelerate that build and generate new momentum to grow even more.
Safety must remain its own priority. The ACATS program has been systematically underfunded for 30 years and will require at least $150 million a year to meet the true need for essential projects addressing safety updates in smaller communities with the most challenging economics. As a reminder, our system operates on user pay. Local passengers pay for the upgrades at their local airports, and that is why government support for some of those more strategic investments in our rural, regional and small hubs is really important.
Right now, as many of you know, we are facing a much bigger generational reform. If the government proceeds with monetizing value from Canada’s largest airport hubs, they have said that one-time proceeds and rent modernization will be reinvested substantially in the airport system and the services that connect our community. We are looking forward to hearing a lot more about that during the fall season because our interest at the CAC is the entire aviation network and the communities it serves.
We need globally competitive hubs to grow our visitor economy and our trade. We need the growth cycle ahead, with passenger volumes expected to double in the next 20 years, to ensure there is ample room for investment in these strategic national assets in every corner of our country.
The CAC and our member airports have put forward a bold agenda to add value and speed construction across the national system, and we look forward to Budget 2026 as the key opportunity to bring that level of investment to the full Canadian network and address priorities like regional connectivity and the resilience of our national air system, along with our colleagues.
I thank you for your time.
The Chair: Thank you, Mr. Turner. I want to let colleagues know that we have Mr. Turner’s full remarks on our record as well.
Senator Simons: I have a quick question for Mr. Morrison. One of the things this amendment does is preclude customers from being able to take their fight to different arenas. If they are taking this path, they cannot go to court and they cannot make a human rights complaint. I want to talk about appeals. Because what is your understanding of what happens if you get an adjudication that you don’t like or they don’t like? Is there still an opportunity to have that reviewed by a court? Once this process is done, is that it and there is no recourse for you or the complainant?
Mr. Morrison: Thank you for the question. What we have recommended, and I mentioned it in my remarks, is a framework that establishes that process and that provides clarity in terms of the rules of that process and how that process would work, which would include whether the finding of an ADR process is binding or not. We would certainly be open to that discussion. I believe the other thing we are looking for within the system is to not have the type of system in the European Union, which is dominated by things like claim forms. We don’t want to have as litigious a system as is currently the case. Although we are certainly open to that, we believe that the ADR system, if structured correctly, should provide for a right of final appeal to both passenger and airline.
Senator Simons: I have many more questions, but I pass the baton.
[Translation]
Senator Miville-Dechêne: You still have the power to choose the companies that will mediate. That gives you an advantage, right?
[English]
Mr. Morrison: Under the system that Transport Canada described in the earlier session, it will be Transport Canada that decides on the ADR provider using various criteria they have established. Whether it will be airlines or Transport Canada that determines it in the third phase of that is to be determined.
One of the recommendations we have given is that the onus should not solely be on airlines to pay the cost. The reason for that is we want a system that is independent and is not perceived as being paid for by the airlines.
[Translation]
Senator Miville-Dechêne: I was just getting to that. How do you justify asking for half the costs to be covered? And by whom, by the way?
Will the complainant have to pay for their own mediation? Do you think that the government, which has a lot to do, should pay for the mediation of complaints involving private companies? That seems rather difficult to me. I understand that mediation costs are generally borne by both parties, but we’re talking about a truly unique case.
So who is going to pay? Is it the government?
Mr. Morrison: Thank you for the question.
[English]
Under the current system, of course, under the CTA appeals process, it is government that pays for that at present. That is a model that is reflective in many judicial and quasi-judicial processes. We are calling for government to continue that process. However, we have also suggested that if a passenger were to file an appeal with an ADR provider, that there perhaps be a small deposit, if you will, that the passenger would put up strictly for the purpose of reducing the number of meritless claims that, frankly, are only being pursued because the passenger feels that they have nothing to lose. We would assume that deposit would be fully refundable if the passenger were to be proven successful.
We believe that putting the onus strictly on one party diminishes the independence of the process, as Senator Simons indicated in the first round. We fully agree with that. Therefore, we think a system that is more balanced in terms of division of costs would ultimately be better overall.
[Translation]
Senator Miville-Dechêne: You cite the directive in effect in Europe in saying that you would like the same kind of directive so that offices that do mediation know where to go. That will probably be part of the regulations.
However, you know that all the regulations are reviewed and that legislation generally doesn’t go into that kind of detail. Are you not moving a little quickly by saying that you want this directive? After all, in Europe, it is a directive, not a piece of legislation. It’s different.
Isn’t some patience required to see what will be included in the regulations?
Mr. Morrison: Thank you for the question.
[English]
First, with more structure and more transparency — which we are calling for — the system would be better understood and there would be less ambiguity. Frankly, as was indicated in the first round, one of the problems we have with the current CTA system is that it is open to a great deal of interpretation. We believe that if the legislation can contain the framework for greater transparency, predictability and so forth, it could be up to the regulatory process that would follow to define what those rules would be. That would allow for consultation with passengers, with industry and with other key stakeholders to ensure the right framework is put in place.
[Translation]
Senator Miville-Dechêne: Thank you.
Senator Cormier: My questions are for Ms. Mailhot. Welcome back to the committee, Ms. Mailhot.
We are aware of the profitability challenges for airlines that provide services in remote regions. We know about the challenges involved in maintaining those services.
Keeping in mind these small companies that serve remote regions, how can we ensure that the new obligations set out in the bill do not place a disproportionate burden on them, given the financial contributions required to resolve these disputes?
How can we ensure that we don’t lose services and that these companies are able to continue providing them, when they are already facing challenges in maintaining the services in the regions?
Ms. Mailhot: That’s a great question. I don’t have the answer, but what I do know is that regulations can’t be one size fits all, or else routes will disappear. As you said, many of these routes are not profitable, and the impact is immense. Let’s consider a flight that is cancelled owing to weather. In this particular case, that flight does not fall under the current compensation rules, so the only cost is related to the crew. But the impact of that cancellation can last for days. Perhaps the plane had to go to Iqaluit or elsewhere for maintenance; the parts had already been sent and the expert technicians were on site. If the plane can’t get there, it ends up grounded in Edmonton . . . . The burden is immense. And for the next flight, if it is indicated that it is cancelled because of maintenance, passengers will have to be compensated. However, the real cause was not maintenance, but rather the weather two days earlier that prevented the plane from landing in Iqaluit. It’s extremely complex. I don’t have the answer, but we’ll have to find it.
Senator Cormier: You say that we can’t have a one-size-fits-all model. What do you recommend having in these regulations to take these differences into account? Do you have any specific recommendations?
Ms. Mailhot: I don’t have specific recommendations, but I would like us to be included when work is done with Transport Canada, or when the regulations are developed. We’d like to see what is and isn’t possible, and perhaps do a study of other markets to see how it works. I don’t have the answer, but I would like us to be part of the solution.
Senator Cormier: Is the amount of the penalties — since there is an increase in these amounts — realistic for airlines that provide services in the regions?
Ms. Mailhot: No. An event could end everything . . . . The small airline would declare bankruptcy instead of paying $1 million. It’s impossible.
Senator Cormier: The goal is to improve passenger service, but it might unintentionally end up penalizing them. Do you have any comments on this, Mr. Morrison or Mr. Turner?
[English]
Mr. Morrison: Thank you for the question. On the question of administration penalties, I mentioned in my remarks that a fourfold increase in the maximum penalty is quite significant.
Ultimately, that could potentially be passed on to the passenger if that level of penalty were to be assigned on a basis. It also allows for the possibility of pursuing on a per-passenger basis rather than a per-event basis. That suddenly multiplies those types of penalties significantly. As I mentioned in my remarks, it is not consistent with general judicial practice whereby the penalty is supposed to equate with the seriousness of the aggravation. As you talked about in the first session, often the cause of an APPR penalty may not have anything to do with the airline whatsoever. It could be another entity. NAV CANADA, for example, could be the source of a disruption; yet an airline could suddenly be having to pay a penalty that would greatly exceed what is reasonable. That’s why we have called for a review of that penalty to better reflect the judicial comparison.
The Chair: Thank you.
Senator Mohamed: Mr. Morrison, correct me if I’m wrong, but did you say that you thought it was important the government cost share in terms of the costs of the system? If that is the case, then it is actually the taxpayer who would be on the hook for that. Does that happen in any other industry where the government cost shares that for a private sector business?
Mr. Morrison: That is the system we currently have. The Canadian Transportation Agency, or CTA, appeals process is funded by the government. In that sense, there would be no change. Judicial and quasi-judicial processes are generally funded by the government. Frankly, I don’t know of any other example whereby one party in a mediation dispute is required to pay up front for the cost of that process — and to have to pay it regardless of the outcome, whether they were at fault or not. This is why we have suggested that the current practice of the government funding the appeals process would be beneficial. It also reduces the perception of the process as being biased in favour of the airlines.
Ultimately, as Ms. Little mentioned in her opening statement, the ADR process that has been looked at — especially in the EU and the U.K. — is significantly cheaper than what the CTA has suggested. The CTA has suggested that their cost of processing one claim is somewhere in the neighbourhood of $1,200. The ADR process in Europe and the U.K. is significantly cheaper. So ultimately, the government would still achieve their goal of saving funds.
Senator Mohamed: Thank you.
The Chair: Witnesses, I appreciate your efficiency in responding, so we actually have a bit more time.
Senator Simons: Mr. Morrison, how much are airlines now paying out in fines and penalties? How often does it happen, if you are unhappy with this maximum, which I suspect is just there to be a bogeyman to keep everyone honest? I don’t think you will be paying out $1 million. Could you give us some sense of what the impact is on the industry regarding settlement costs now?
Mr. Morrison: Thank you for the question. Unfortunately, I don’t have the number in terms of fines or penalties that airlines are having to pay out when an issue is found.
Senator Simons: We shouldn’t call them fines. This is compensation.
Mr. Morrison: Earlier this year, we issued a report in which we looked at the overall cost of administering and operating under the APPR regime for Canada’s airlines. This was in February 2026. The report is on our website. At the time, we estimated that the cost was somewhere around $675 million, which, as you can imagine, is quite significant.
Senator Simons: How much of that is administrative costs versus money returned to passengers who feel they have suffered a loss?
Mr. Morrison: That number was inclusive of the entire amount. That would include costs of compliance, administrative costs, et cetera. We also looked at what the costs would be if the regulations that were introduced in December 2024 went ahead, and that number more than doubled. This is why we have been calling for reform to the current regulatory regime. It is because, at the end of the day, what we — and I believe the government — would want is a more balanced system whereby, yes, the interests of passengers are protected but the costs are not so exorbitant that the affordability of air traffic also suffers, which, as you know, is a significant issue for most Canadians.
Senator Simons: I dare say, as someone who travels a lot and, therefore, has had many touch points with the system, what air passengers want is not for you to pay an administrative burden. What they want is their money back.
Mr. Morrison: I would argue that passengers want to get from point A to point B safely and effectively with as little disruption as possible. That’s why my colleague Mr. Turner talked about the need for reinvesting in airport infrastructure as an example. The best passenger protection regime is one that is never used because passengers are able to get where they need to go safely and efficiently. This is why we have called for improvements to the overall air travel system, including airport infrastructure, so that disruptions are minimized in the first place.
Senator Quinn: I thought Senator Simons’s question was a good one, but I didn’t hear the answer. How much of the $625 million is paid to passengers?
Mr. Morrison: I would have to get back to you on the division of the $625 million in terms of the split, but that was inclusive of all.
The Chair: Thank you, panel, for being efficient. We have reached the end of our time for this panel. If there is anything else, you may provide a written submission.
Colleagues, for our next panel of witnesses, we welcome Paul Daly, Chair in Administrative Law and Governance, University of Ottawa; Vincent Correia, Professor of Law and Co-Director of the Institute of Air and Space Law at McGill University; and, via video conference, John Gradek, Faculty Lecturer, Supply Chain and Aviation Management at McGill University. Welcome to all of you.
You each have five minutes for your presentations. Mr. Daly will be first.
[Translation]
Paul Daly, Chair in Administrative Law and Governance, University of Ottawa, as an individual: Good morning, everyone. Thank you for the invitation. My name is Paul Daly, from the University of Ottawa, and I am speaking as an individual.
[English]
The regulation of air travel compensation in Canada is terrain that is well travelled but that has proven difficult for Parliament to navigate. In the last legislative foray into this area, Parliament was warned by me and others that the measures it was putting in place were of dubious constitutional validity. Earlier this year, consistent with those warnings, the Ontario Superior Court of Justice read down a provision of the Canada Transportation Act as an unjustifiable infringement of freedom of expression.
The most recent venture in Division 17 of Bill C-31 does not raise the same sorts of constitutional concerns, but, as drafted, it makes institutional design choices that deviate from the norm and are not in the interests of Canadians.
The first set of amendments removes the complaints resolution process from the Canadian Transportation Agency, an independent, arm’s-length regulator, and transfers it to the Minister of Transport. There might be valid operational reasons for this; we all know the agency has been struggling to keep up with the volume of complaints. There is nothing untoward, in principle, about decisions being made in government departments rather than in independent agencies.
However, the amendments give the minister the authority to establish a regime of fees and charges, which was previously the preserve of the agency. Now that the minister is responsible for the complaints resolution process and not the agency, this makes some sense. However, given that airlines are to shoulder the cost burden, some independent scrutiny of the minister’s decision making in this regard would be appropriate in order to avoid a scenario in which airlines are not paying their fair share.
The bill requires the fees and charges to be published on a website, but, frankly, this is the illusion of transparency, as the raw numbers have little or no explanatory value on their own. Additionally, there is no provision for publication of input received in the mandatory consultation process. Parliament should require the tabling of both the proposed schedule of fees and charges and a consultation report with a view to debate.
The second set of amendments empowers the minister to permit designated persons to exercise statutory functions. A list of designated persons is to be published. All air carriers must enter into an agreement with a designated person of their choosing to resolve air travel complaints as a condition of offering services in Canada. Decisions made by a designated person will be binding.
The intention is to outsource the exercise of public powers to private parties. Around the common-law world, the delegation of binding authority to private parties is generally viewed with suspicion. In some areas of Canadian law, notably labour relations, arbitrators chosen by the parties do have binding dispute resolution authority, but this is exceptional, not the norm. Moreover, when it happens, it is embedded in a procedural superstructure that ensures transparency and the rigorous development and application of legal norms.
That is also the case in the European models.
Bill C-31 has none of that. There are no legislated standards against which designated persons are to be identified. Airlines will be able to hand-pick the designated person responsible for resolving complaints about their own services. The minister may request the provision of information from designated persons, but no provision is made for parliamentary oversight. What decisions will be published and which will have precedential value are unclear. The avenue for court oversight of binding decisions, I think — contrary to some suggestions you heard earlier — would be judicial review in Federal Court, and that is at a time when the Federal Court is more burdened than ever. Channelling another body of work its way risks replacing one unacceptable bottleneck with another.
Amendments are needed.
Parliament should, first, provide guidance to the minister in the form of criteria for identifying a designated person; second, give the minister, not the airlines, the power to determine which designated person is responsible for which airline; third, require publication of the agreement between the designated person and the airline; fourth, require an annual report from each designated person to be submitted to the competent parliamentary committee; and, fifth, provide for a form of appeal to the agency with onward review in the Federal Court of Appeal, as has long been the case, rather than in Federal Court.
In short, any move to private adjudication should be accompanied by an appropriately rigorous regime of public safeguards, which, unfortunately, are lacking in the bill as drafted.
Thank you.
The Chair: Thank you very much, Mr. Daly.
We will now go to Mr. Gradek. You have the floor, sir.
John Gradek, Faculty Lecturer, Supply Chain, and Aviation Management, McGill University, as an individual: Mr. Chair and honourable senators, thank you for the invitation to appear before you.
I teach aviation management at McGill University. Before that, I spent 18 years inside Air Canada in operations, pricing and as the customer service manager at Toronto Pearson International Airport. My team members at Pearson were at the counter at 11 at night, explaining to 200 people why their flight wasn’t leaving. I want to speak for that counter because I think it is the one place that hasn’t been heard from during this debate.
Division 17 asks three questions: Who decides a complaint, how fast and how publicly? Let me take them in turn, and then I will tell you what I think the bill leaves out.
On speed and transparency, the bill is definitely a step forward. I would ask you to keep three things in it: a 90-day clock that starts when the complaint is filed, not when mediation begins; payment within 30 days of an order; and publication of orders with the flight number attached. That last provision is the most important sentence in the division, and it might be the least noticed. An airline whose seven o’clock Toronto-Halifax flight keeps appearing in published orders will fix that seven o’clock Toronto-Halifax flight. That is the only part of this bill that changes what happens at the counter before anyone files anything.
As to who decides, I would ask you to be careful. Today, a passenger has only one door, which is the agency. Under this bill, there could be four: the minister’s officials, the agency acting on the minister’s direction, a private adjudicator chosen and paid for by the airline for categories the cabinet designates and a separate contractor for the backlog. Each would have its own intake, its own rules and its own 90 days. A passenger with a cancelled flight will have to work out which door is theirs, and the answer will depend upon an order-in-council they have never read and upon which firm their airline signed with.
My colleagues on this panel will tell you what the courts might make of a minister who both writes the rules and decides the cases. I will only say this: From the operations side, a rule made by a minister changes with the minister, and airlines plan fleets and crews on five-year horizons. Stability in the regulator is something the passenger and the airline both need.
Now, I will speak to what the bill leaves out, which I think is the actual problem.
There are 97,000 complaints in the backlog. They are not there because the agency is slow but because this regime generates a dispute at the point of every disruption.
The airline decides on the spot whether the cause was within its control. The passenger disagrees. There is no shared record to settle it. The crew log, maintenance entry and air traffic notice all sit with the carrier. A passenger has a boarding pass 97,000 times.
Moving the referee does not change the number of fouls. This bill makes the queue move faster. It does nothing to make the line shorter. Two things would.
First is a duty on the carrier to produce the disruption record within a fixed period of time, the same record it already keeps for Transport Canada and the Transportation Safety Board. Europe just rebuilt its passenger rights regime around exactly that principle: a claim linked within 48 hours and the airline must answer within 30 days. Any 90-day clock is only as good as a carrier’s obligation to hand over the file and this bill is silent on it.
Second is automatic compensation for clear-cut cases — the crew that timed out, the aircraft that wasn’t there — so they never become complaints at all. In 2023, this Parliament put the onus on the carrier to prove a disruption was outside its control. That was the right instinct at the time. This bill, however, does not build on it.
Let me end where I started. When a flight cancels, the passenger’s experience is decided in the first 90 minutes by station staff working with the information in front of them. Nothing in this division reaches that moment except a flight number on a published order. If the committee keeps that, strengthens the carriers’ duty to produce its records and resists the temptation to multiply the doors, you will have done more for the passenger than any change of adjudicator can.
Thank you, and I look forward to your questions.
The Chair: Thank you, Mr. Gradek.
Mr. Correia, the floor is yours.
Vincent Correia, Professor of Law and co-director, Institute of Air and Space Law, McGill University, as an individual: Thank you, chair and senators. Good morning, and thank you for the opportunity to appear before you today.
With the adoption of the Air Passenger Protection Regulations, Canada joined a growing number of countries that have chosen to better protect passenger rights.
In doing so, however, it faces the exact same challenges as other regulators around the world. Some of my comments will be derived from my experience with the European Union since it has been mentioned several times this morning.
First, it is difficult to anticipate every disruption or problem that may arise. Canadian Level I air carriers transported 87.1 million passengers in 2025. At that scale, problems and disruptions are statistically inevitable and the legislator cannot foresee them all.
Second, the number of claims is growing. I am not talking only about Canada here. It is caused by several factors, including rising passenger awareness regarding their rights, which is a good thing. But it’s also growing due to the actions of some companies that collect claims for profits, and these were mentioned before: the so-called claim farms.
Third — and this is important and has not been mentioned this morning — is the fact that passenger rights regulations have a structural imbalance. On the one hand, it is quite straightforward and easy to file a complaint. However, responding to it on the airline side, or verifying the facts, requires working through technical and sometimes lengthy operational documents.
With nearly 98,000 complaints in the backlog and the number continuing to rise, solutions are needed. We can only support and welcome the Canadian legislator’s efforts.
Several of the core changes are genuine improvements. The most important is the one regarding transparency. I will shorten my initial opening statement in this respect because I totally agree with what has been mentioned by my colleagues here.
I want to stress the fact that transparency of outcomes, such as reports, is not the same as consistency of the law. As drafted, similar facts could be decided by different bodies, designated persons, contractors engaged to clear the backlogs, ministerial personnel and, for all the files, a complaint resolutions officer from the Canadian Transportation Agency.
It has been mentioned in the response earlier that the current text does not preclude other avenues, such as courts or class actions, which could add a further layer of fragmentation.
The bill also repeals the agency’s power to issue guidelines. My colleague John Gradek mentioned experience in the European Union. In the European Union, they would love to be able to make more guidelines. The European Commission would love to have this power because this is something that can streamline the process.
Without shared standards and a common body of decisions, and with multiple actors potentially involved in the complaint resolutions, two passengers with the same facts could get different answers; that could hurt the passengers who cannot predict the outcome, and that would also hurt the airlines who cannot plan their compliance. It also leaves judicial review to unify the law, which could shift pressure onto the courts and ultimately still onto the taxpayers, as happened within the European Union.
I would also like to raise another concept about the independence of the designated person. Any suspicion would inevitably erode public confidence and lead to more requests for judicial review.
The statute should establish clear criteria, require independence from carriers, include conflict of interest rules and ensure that funding does not depend on outcomes.
Finally, the experience of other jurisdictions — and I’m coming back here most notably to the European Union — should be considered to avoid any kind of measures that would foster the proliferation of those commercial entities that profit from passengers’ rights.
Compensation payable under the APPR should be paid in full and directly to the passengers, not to claim intermediaries, because the passenger’s legitimate interest should not become a source of profit for third parties.
In conclusion, the objective of division 17 is laudable, but legal certainty, consistency and public trust in the system should not be sacrificed in the name of efficiency alone.
I thank you for your attention and look forward to your questions.
Senator Simons: Thank you. This was an excellent panel.
Professor Daly, in late July, the Supreme Court of Canada in Democracy Watch v. Canada (Attorney General) made what they call a landmark decision about the out of privative clauses that said, basically, you can’t strip away access to judicial review of an administrative tribunal. I have been trying to figure out how that decision might have an impact on this regime, Bill C-31 obviously having been tabled before that decision.
Can you talk about whether you think, at the end of this process of having a third party who is not necessarily a mediator or arbitrator come to this decision, there is still a right to judicial review? Is your argument that it should go right to the Federal Court of Appeal rather than the Federal Court itself?
Mr. Daly: First, I am happy to speak at great length about the Democracy Watch v. Canada (Attorney General) decision, having successfully represented the appellant in that case.
Senator Simons: I had forgotten that.
Mr. Daly: That’s okay. I tell everybody.
The keyword for me in the bill is “binding.” The bill says that, when a dispute is resolved by the designated person, it is binding; that means it is a determination which is conclusive.
With a binding determination by this designated person, the designated person would be acting under an act of Parliament. They are, therefore, what we call a federal board commission or other tribunal within the meaning of the Federal Courts Act and, therefore, would be subject to judicial review in Federal Court. That’s what I understand from the legislation.
I heard earlier from Transport Canada officials a reference to the possibility of an appeal being provided for within the designated person. There is no mention of that in the legislation.
Senator Simons: Yes. I was going to ask you about that.
Mr. Daly: I do not understand that.
Moreover, the idea that someone could go to small claims court when the law says that the decision of the designated person is binding strikes me as, with respect, rather implausible. If it says it’s binding, then your mode of review is in Federal Court.
Now, let me try to be constructive and build on that critique. What do we do, then, at the end of the process? Let’s say we have this contract with the designated person. There is a concern here for consistency, as Professor Correia and Professor Gradek have underscored. One way of keeping things out of Federal Court and ensuring some measure of consistency would be to provide for a form of appeal to the agency, where the agency would be sitting in appeal of decisions of the minister or decisions of the designated person. It wouldn’t necessarily be every file, but you could scope it so that the agency gets involved where there is an issue of precedential value at stake. Then you would have an onward appeal to the Federal Court of Appeal or a petition to cabinet, but that’s a structure that makes a lot more sense in terms of ensuring consistency rather than having a hodgepodge of different decision makers coming to their own conclusions.
In conclusion, if the legislation says it’s binding, any decision, presumptively, is going to go to Federal Court. I think the better route would be to create a right of appeal to the agency with onward review in the Federal Court of Appeal so you won’t get a bottleneck in the Federal Court.
Senator Simons: Thank you. That is a terrific answer.
Senator Quinn: My question will be short. First off, thank you. I agree with my colleague: This is an excellent panel. Thank you to all three of you.
Unfortunately, the reality of our situation as a committee is that this is an element in the budget implementation act, or BIA, which means we’re not going to get the opportunity to have a more complete discussion, which this topic really deserves. It affects so many Canadians and companies and whatnot.
My question is this: I’m not a lawyer, but it seems as if we’re creating a litigious environment through this bill. Am I getting that right? Because of the conflicts of interest that you each have outlined, with designating a person that is chosen by the airlines and other things you mentioned, we are building legal issues downstream. Why would we do that in legislation?
Mr. Daly: The priority in this area should be clarity, not confusion. Unfortunately, I think this legislation is likely to produce some —
Senator Quinn: It would be better served to take this out of the BIA and deal with it separately.
Mr. Daly: Absolutely. Omnibus legislation is a bad place for this.
Senator Quinn: Okay. Thanks.
[Translation]
Senator Aucoin: Thank you for joining us.
If I understand correctly, you’re saying there will be four possible avenues for passengers to file a complaint under the new system. Mr. Daly says that if the arbitration decision is final, the complaint will be referred to the Federal Court of Appeal. You’re saying this service should be offered by the office, as it would be easier and would avoid overburdening the Federal Court of Appeal.
I have a two-part question. What are we suggesting to the government? Should we try to limit the number of avenues for filing a complaint to four, two or even just one? If it’s an arbitration process, should we recommend the service be provided by the office rather than having to go to Federal Court if the decision is final?
Mr. Correia: That is indeed an excellent question, and it is a matter of structure. Given the sheer volume of complaints, it is important to make sure that the same facts, in the same circumstances, are handled the same way. It is a matter of fairness for passengers, but it is also about the system’s efficiency. Regardless of who the designated person is, whether it is a contractor or the office, they should know in advance what the general trend is and what action to take.
I think my colleague’s proposal is excellent, given that the office has years of experience and practice. I talked about the importance of interpretive guidelines because they help with predictability. After all, we are always trying to ensure legal certainty.
As I was saying, since this system could involve various stakeholders, I don’t think it’s the best solution. I believe outsourcing a judicial or quasi-judicial function to private companies — and I’m not just talking about the common law system, but also civil law, especially when it comes to foreign companies — would raise many issues. Despite all of this, if we choose to go that way, I think it would be a good idea to add an intermediate step toward unification with some form of appeal process at the office. However, this would not prevent cases from going through a judicial appeal process, since publishing decisions will allow other passengers to see that complaints are not treated equally depending on the avenue they choose. Some entities’ commercial or non-commercial interests lie in encouraging passengers to file complaints. We’ve seen this in the European Union, and I have to say I was quite surprised to hear that the European system works very well. To give you an idea, the European system is also overburdened all the way up to the Court of Justice of the European Union, which is like a supreme court for the EU. However, this court has been forced to refer cases to the Court of First Instance because, in the EU, the regulation on passenger rights is the one that leads to the most disputes and preliminary rulings. It is really incredible when you consider all the regulations the EU has adopted on passenger rights.
As an example, and I’ll end with this, what kind of event is considered beyond an airline’s control? Case law says that a bird strike falls outside that scope of liability. However, if you look at case law in other countries, it is part of an airline’s professional obligations to ensure bird strikes do not occur. Airlines will argue it is the airports’ responsibility, and they will be told they are in a professional relationship with the airports, meaning it is the responsibility of the airports with which they have a contract, and so on. This is but one of hundreds of thousands of different examples of cases where problems will arise. I’ll conclude here.
Senator Cormier: I’ll continue with Mr. Correia. We are comparing the European system with what is being proposed for Canada. Could you clarify essentially which elements of the European system — which also seems quite problematic in some respects — the proposed Canadian system incorporates? What does it incorporate, and what does it leave out that could benefit Canadian legislation?
Mr. Correia: The issue with the European system is that it is not really a unified jurisdictional system, because it includes 27 member states. It is fragmented. What the Canadian model incorporates is fragmentation, which is not necessarily a good thing. In Europe, passengers have a number of avenues they can use to file a complaint. If they are not happy with the decision, the national enforcement authorities can turn to the jurisdictions. They sometimes do that when a case is still pending before national enforcement authorities.
Sometimes, they also transfer their rights to these private companies I was talking about earlier, which leads to a problem with double payments, the airlines, based on timelines. More often than not, the cases are referred to the jurisdictions and they have to deal with technical documentation they don’t understand, whether it’s the trial judge or the equivalent of the small claims court. They refer the matter to the Court of Justice of the European Union, which has a processing time of two to three years.
Senator Cormier: Then why are we using the European system as a comparison? It seems very different from what is being proposed here.
Mr. Correia: I too was surprised when I heard that comparison. I think what we have been presented with is the U.K. model — which is no longer the European model — and to be perfectly honest, I’m not sure it is that effective.
[English]
Senator Cormier: Thank you.
I have a brief question for you, Mr. Daly. You spoke about the need for criteria to determine a designated person. Can you talk to us about that a bit more? What would those criteria be? What do you think we should add?
Mr. Daly: I think you want to know who these people are. There have to be qualifications. Do they have expertise in dispute resolution? How will they conduct dispute resolution? You want to ensure they have processes in place for being fair and impartial. You want to make sure that privacy is protected.
It’s staggering to me that we’re considering setting up this system, potentially with overseas designated persons — American or English or other firms — who would be receiving personal data from Canadians, which would then be put into a system overseas.
I think the minister would need to demonstrate satisfaction of the expertise, independence, impartiality, privacy, safeguards and service standards that are being put in place. Things like that would reassure me that designated persons are being designated appropriately.
Senator Cormier: Thank you.
[Translation]
Senator Miville-Dechêne: I wanted to go over a few comparisons with you that have been made with Europe. It has been said that the option of mediation comes from Europe. Who pays for mediation in Europe? Is it the airlines or the government?
Mr. Correia: Thank you very much. As I said, it depends on the jurisdictions. If we look at France, Italy or Belgium, for example, as far as I know, the basic model, and what was suggested or mentioned earlier, is one in which passengers have to contribute a small amount to avoid abusive complaints. Since this can also happen in a system where it is very easy for passengers to show their flight has been delayed or cancelled, the idea is to avoid abusive complaints.
In the French system introduced in the mid-2010s, which includes tourism and travel mediation, airlines and governments contribute to the mediation model, but it’s not mandatory. It was a way of taking the pressure off jurisdictions.
Senator Miville-Dechêne: Here, mediation would be mandatory. Knowing how mediation processes work, I think, with the same starting points, mediation or settlement proposals could be completely different. Am I wrong?
Mr. Correia: I totally agree.
Senator Miville-Dechêne: Then, what do we do with that? What do they do in Europe when there is this kind of problem?
Mr. Correia: Looking at the Belgian and French models, the ones I’m most familiar with, mediation proceedings satisfaction rates are quite high for a very simple reason: They tend to split the difference. The passenger applies for €600 compensation, the airline indicates there were extraordinary circumstances. A technical debate ensues, and in the context of the mediation procedure, €300 compensation is negotiated with the passenger; everyone is relatively happy, and some complaints end there.
However, it does not prevent cases being referred to jurisdictions if passengers are not satisfied. This is a question I had as well when I read the proposal: If only mediation is to be outsourced, which is currently the case, I don’t think it would fundamentally change the length and the satisfaction rate.
If we give mediation a little more flexibility in what can be offered to passengers and companies, perhaps we can have something equivalent to what they have in Europe, where, sometimes, in very complicated cases, we give a little, but less than what was set out in the regulations.
To be perfectly honest, I would say that good mediation is mediation in which no one is entirely satisfied. As such, the French mediation process is great because, generally, no one is entirely satisfied.
Senator Miville-Dechêne: Thank you.
[English]
Senator Mohamed: My question was answered, but I’m going to ask a question on behalf of my colleague Senator Arnold.
You all made very good points — in particular, Professor Gradek, speaking on behalf of the people at the counters on the front line. We wonder if any of you were consulted on this piece of legislation.
Mr. Gradek: No.
Mr. Correia: No.
Mr. Daly: No.
Mr. Correia: If I may, I was consulted by the Attorney General of Canada during the litigation against the International Air Transport Association and all the airlines by the Canadian government after the adoption of the Air Passenger Protection Regulations.
This raises a good question, if we return to the initial question about transparency and conflicts of interest: Would I be considered independent because, in the past, I was consulted by the Canadian government on behalf of passengers, their rights and so on?
I will just give a personal example; she will hate me for it because she blames me for always talking about her, but I will talk about my wife. She works at Air Canada in complaints — and she is my wife, so we basically spend 80% of our time disagreeing — so would I be considered independent and impartial? I don’t know, and I think these are the kinds of questions that we must answer because public confidence is important here.
My apologies for the long answer, but it raised follow-up thoughts. Thank you.
The Chair: Thank you, colleagues and witnesses. We’re at the end of the agenda for this panel.
(The committee adjourned.)