MONTREAL — Air Canada has been ordered to boost the compensation paid to passengers it bumps from overbooked domestic flights.
The Canadian Transportation Agency ruled that the existing practice of paying $100 cash or $200 travel voucher is unreasonable in cases that are not due to operational and safety reasons.
It has given the airline 30 days to submit new compensation guidelines.
The agency sided with Gabor Lukacs, a former University of Manitoba math professor, who has challenged several airline industry practices.
He suggested that passengers be compensated between $200 and $800 depending on the length of delay.
The agency said the airline must choose between this model and the one used in the United States, which pays up to US$1,300 under certain circumstances.
It ruled that Air Canada’s 12-year-old bumping payout rate doesn’t reflect the current price of airline tickets, accommodation and other incidental expenses.
The ruling doesn’t affect WestJet Airlines (TSX:WJA) because it doesn’t overbook flights.
Air Canada (TSX:AC.B) declined comment because it say it is “currently in consultation” on this topic.