Consumer Protection Workshop Brasilia, 25 August 2016
The situation today Over 60 national regimes ICAO policy guidance IATA core principles Formal regime Informal regime Regime undefined
The situation today Over 60 national regimes ICAO policy guidance IATA core principles Formal regime Informal regime Regime undefined
Australia Case Study Economy-wide protection: the Australian Consumer Law No untruthful conduct No false or misleading advertising Prevents unfair consumer contracts Provides for remedies in case of service failure
Australia Case Study Aviation specific protection: Montreal Convention 1999 Consumer education: Airline Customer Code of Conduct Complaint handling: Airline Customer Advocate
Australia Case Study The Results: 2004-2014: 37% decrease in domestic fares Cancellation rate: 1.3% On time performance: 83.6% for departures; 82.1% for arrivals
Australia vis-à-vis Brazil: key issues Issue Right of repentance None Current: Consumer Defense Code (CDC) - 7 days after purchase Proposed (ANAC): 24 hours/ 7 days before dep Mandatory baggage allowance Compensation for flight delays None Montreal Convention 1999 in force Current: 2 piece int l checked baggage allowance Proposed: None Current: moral damages and supplier liability (CDC) Proposed: liability + care and assistance (ANAC) Ticket Transferability Not permitted According to airline rules (proposed) Airline no-show policies Permitted Not permitted if pax notifies 2 hours in advance (proposed)
China Case Study Aviation-specific passenger rights regulation will take effect January 2017 Scope: Applies on departure only for foreign carriers Delays and cancellation policies: Refers to airline conditions of carriage Massive disruptions: requires contingency plans, coordination by multiple stakeholders (e.g. airports, airlines, police, ANSPs)
China Case Study Care and assistance obligations: arranging versus provision, depending on carrier control Delay management: Obligation to inform passengers of changes in flight status Tarmac delay provisions preventing delays over 3 hours Complaint handling procedures Unruly passengers Forbids passengers from damaging equipment and disturbing operations
China vis-à-vis Brazil: key issues Issue Right of repentance None Current: Consumer Defense Code (CDC) - 7 days after purchase Proposed (ANAC): 24 hours/ 7 days before dep Mandatory baggage allowance Compensation for flight delays None As per MC 99 and the airline s conditions of carriage Current: 2 piece int l checked baggage allowance Proposed: None Current: moral damages and supplier liability (CDC) Proposed: liability + care and assistance (ANAC) Ticket Transferability Not permitted According to airline rules (proposed) Airline no-show policies Permitted Not permitted if pax notifies 2 hours in advance (proposed)
European Union Case Study EU Regulation 261/2004 entered into force in 2005 Scope: All passengers departing from an EU airport All passengers travelling on EU carriers (unless they receive compensation or benefits and assistance) Denied Boarding: Volunteers: airline agreement + reimbursement/rerouting Involuntary: compensation, reimbursement/rerourting, care and assistance
European Union Case Study Cancellations: Care and assistance Rerouting/reimbursement Compensation (unless extraordinary circumstances or if passengers were informed in advance) Delays: Care and assistance Reimbursement, if greater than five hours Compensation, if greater than three hours (unless extraordinary circumstances)
European Union Case Study Compensation for denied boarding Compensation for commercial cancellations Information to passengers Level of compensation Unclear definition of extraordinary circumstances Care & assistance Always indefinite Enforcement not harmonised
EU vis-à-vis Brazil: key issues Issue Right of repentance None Current: Consumer Defense Code (CDC) - 7 days after purchase Proposed (ANAC): 24 hours/ 7 days before dep Mandatory baggage allowance Compensation for flight delays None Yes, if over three hours and in the absence of extraordinary circumstances Current: 2 piece int l checked baggage allowance Proposed: None Current: moral damages and supplier liability (CDC) Proposed: liability + care and assistance (ANAC) Ticket Transferability Not permitted According to airline rules (proposed) Airline no-show policies Permitted Not permitted if pax notifies 2 hours in advance (proposed)
South Africa Case Study Airline industry code in draft, in alignment with the South African Consumer Protection Act (CPA) Aims: Regulate the minimum rights and remedies Promote fair business practices Provide effective dispute resolution Reduce legal uncertainty
South Africa Case Study Denied boarding Voluntary versus involuntary Involuntary right to care and assistance, rerouting/reimbursement, compensation Cancellation Care and assistance Choice between reimbursement or re-booking Compensation, unless it is an extraordinary circumstance or pax received prior notification
South Africa Case Study Consumer Cancellations Airlines to determine reasonable cancellation fee May be full value of the ticket, if that is communicated in advance No fee for death or hospitalization of the passenger Delay Care and assistance, for reasons within the airlines control
South Africa vis-à-vis Brazil: key issues Issue Right of repentance Mandatory baggage allowance Compensation for flight delays Right to cancel recognized, up to airlines to determine fee None None Current: Consumer Defense Code (CDC) - 7 days after purchase Proposed (ANAC): 24 hours/ 7 days before dep Current: 2 piece int l checked baggage allowance Proposed: None Current: moral damages and supplier liability (CDC) Proposed: liability + care and assistance (ANAC) Ticket Transferability Not permitted According to airline rules (proposed) Airline no-show policies Permitted Not permitted if pax notifies 2 hours in advance (proposed)
ICAO & IATA Principles ICAO Policy Guidance Published July 2015 IATA Core Principles Adopted June 2013
ICAO & IATA Principles Key areas of convergence: Safety first Consistency with MC 99 Recognizing the principle of proportionality Common objective: establishing a balance between passenger protection and industry competitiveness
ICAO & IATA Principles Key areas of convergence: Recognizing the power of market forces Transparency: clear access for passengers to their rights price and operational transparency Passengers with reduced mobility Clearly communicated and efficient complaint handling procedures
ICAO & IATA Principles ICAO: Massive disruptions (interruptions) IATA: Extraterritoriality Comparable rights across transport modes
ICAO/IATA vis-à-vis Brazil: key issues Issue Right of repentance Mandatory baggage allowance Compensation for flight delays Ticket Transferability Airline no-show policies None envisioned None envisioned Compensation an option, but not specific to delays None envisioned None envisioned None envisioned None envisioned None envisioned Current: Consumer Defense Code (CDC) - 7 days after purchase Proposed (ANAC): 24 hours/ 7 days before dep Current: 2 piece int l checked baggage allowance Proposed: None Current: moral damages and supplier liability (CDC) Proposed: liability + care and assistance (ANAC) According to airline rules (proposed) Not addressed Not addressed Not permitted if pax notifies 2 hours in advance (proposed)
Lessons learned Beware of unintended consequences! Right of repentance More overbooking Higher fares Mandatory baggage allowance Less choice Interfering with the market
Lessons learned Compensation for flight delays Doesn t solve the underlying issue Consequences: Can result in higher fares May lead to more cancellations Ticket transferability Security issues Secondary market
Lessons learned Removal of no-show policies Lower connectivity Higher fares More overbooking Example: BOS GIG = more demand in December/January to visit Rio than Boston: the price of the ticket for this destination is higher GIG BOS = less demand in December/January to visit Boston than Rio: the price of the ticket for this destination is lower BOS GIG BOS GIG BOS GIG = more demand in December/January to visit Rio than Boston: the price of this return journey is higher = less demand in December/January to visit Boston than Rio: the price of this return journey is lower (may be lower than one way BOS-GIG) 26
Thank you