Airlines and Disabled Passengers
Air Canada, WestJet Ordered to Provide Free Extra Seats
The fight over whether Air Canada and WestJet should have to provide free seats to disabled passengers' attendants pits shareholders against disabled persons.
Air Canada, Air Canada Jazz, and WestJet have all been told they may not charge extra fares for the attendants of certain disabled airline passengers, and they may not charge extra for passengers who, because of disability, require additional seating space, according to a January 10, 2008, decision of the Canadian Transportation Agency.
This ruling establishes what is referred to as the one-person-one-fare policy ("1P1F").
Why Did the Airlines Oppose Providing Extra Seats at No Extra Charge?
The ruling came out five years after the initial complaint was filed in 2002. The proceedings have been long, complicated, and no doubt expensive for all concerned.
A major argument put forward by the airlines was that implementing the one-person-one-fare policy (called "1P1F" in the Agency's decision) would be too costly. There is a major discrepancy between what each airline said the 1P1F policy would cost them, versus what the Agency concluded the actual cost would be.
Air Canada said it would lose between $49.6 and $59.1 million (all figures in Canadian dollars) annually, while WestJet's number was between $12.9 and $21.7 million. The Agency said the cost would be $7.1 million for Air Canada and $1.5 million for WestJet. The Agency's explanation for the difference, and its conclusions, could very well form the basis for an appeal of this decision, given the vast spread in the numbers.
To answer the question, "Why did the airlines oppose making extra seats available at no cost?", it must have been to protect themselves from losing value. This is a bit simplistic, but the airlines' arguments overall were mainly about the negative economic impact they would suffer.
Shareholder Interests Versus Public Interest
Accepting that the airlines presented their best estimates of the expected added costs and lost profits, then their opposition to the 1P1F policy is clearly based in a concern for shareholder value - the cornerstone of the free enterprise system. How could management recommend to a board of directors that their company accept an annual loss of tens of millions of dollars without a fight?
WestJet and Air Canada both have philanthropic initiatives through which they support public and charitable causes. Air Canada went through significant financial hardship during the five years since the initial complaint was launched, and was reorganized in the process. As with other businesses, the airlines have the right to choose their charities while conducting business in accordance with the law. By opposing 1P1F they were saying that they must put shareholder interests first. Corporate law requires prudent stewardship.
The regulator has a different job. It must make sure that the regulated airlines are following the relevant legislation. The cost of doing so has to be borne by the airlines, who in turn will pass the cost along to their customers, the flying public.
According to the Agency, it will cost Air Canada's customers an extra $0.77 per ticket, and WestJet's $0.44 once the one person, one fare policy is implemented. That is the cost of serving the public interest. Of course, the airlines are probably not convinced that the Agency has done its math correctly.
There are many open questions left to consider. One of them is, would the airlines disagree with 1P1F regardless of the cost, or is there some number at which they would - and could - stop fighting?
More information about the Canadian Transportation Agency's one person, one fare ruling:
- One Person, One Fare Policy - what the new policy may mean to disabled travellers
- Obese Air Passengers Win - how the ruling applies to severely obese airline passengers
- One Person, One Fare - some of the questions of interpretation the 1P1F policy raises.
This article is copyright Jill Browne. If you wish to bookmark it or to recommend it to others, there are links to a number of social networking and bookmarking sites at the bottom right.
