New Canadian air rules risk higher costs, fares -airline group

MONTREAL (Reuters) - Canadian airlines face potentially higher costs as new rules that take effect on Thursday broaden passenger refund requirements to cases of cancelled or long-delayed flights outside of carriers' control, an industry group said.

Carriers across North America have cut thousands of flights to reduce disruptions this summer.

The Canadian Transportation Agency (CTA), a quasi-judicial tribunal responsible for enforcing the new rules, said in August it received record complaints from passengers after the easing of restrictions to curb the spread of coronavirus led to a jump in travel.

A group representing the country's largest carriers, including Air Canada and Onex Corp-backed WestJet Airlines, said the new rules might eventually impact fares, although it had no current cost estimates.

"Those additional costs will have to come from somewhere," said Jeff Morrison, President and CEO National Airlines Council of Canada (NACC).

The rules, which have been in the works since 2020, require airlines to give passengers either a refund or rebooking when there is a cancellation or lengthy delay due to a situation outside the airline's control that prevents travellers from flying within a reasonable time.

Until now, Canada's Air Passenger Protection Regulations required refunds to be provided for flight disruptions within the control of airlines, although consumer advocates argue existing rules aren't properly enforced.

Travel disruptions, while showing signs of improvement this fall, have triggered passenger anger.

Earlier this month the U.S. Transportation Department (USDOT) said major U.S. airlines had made "significant changes" to customer service plans for delays within their control.

NACC has asked Ottawa to create service standards for other parts of air travel and wanted the new rules to be delayed until all pandemic-related restrictions that have exacerbated congestion are removed.

The group argues it is unfair to target carriers when delays have been caused by a shortage of screeners or long lines at customs.

A spokesperson from the Office of Canada's Minister of Transport said the rules "are meant to protect passengers who enter into a commercial contract with airlines when they buy their tickets", but the government was open to working with other "industry partners" to improve the regulations.