Regulator orders WestJet to boost lost luggage compensation
To get an edge on its rivals, managers at WestJet Airlines Ltd rigorously monitor a range of critical data, including travel patterns, buy converse uk ing habits, meal preferences and, apparently, the price of underwear.
According to WestJet’s internal calculations, a typical passenger packs $25 worth of underpants. He or she also takes $10 worth of socks, $75 in sh converse uk oes, $100 worth of pants, $75 in shirts, $150 in jackets, $25 in toiletries and $90 in other items. The passenger puts all that into a bag worth $200, the airline estimates.
That’s not all. The Calgary based airline is convinced that at least some passengers on its main competitor, Air Canada, carry more expensive clothing. That’s because Air Canada has business class, and business travellers, in WestJet’s estimation, “often have luggage content that tends to be a higher monetary value.”
WestJet filed the estimates with the Canadian Transportation Agency (CTA) as part of a prolonged battle about the airline’s liability for damaged or lost luggage.
The CTA hasn’t bought the airline’s estimates and in a ruling this week it has ordered the company to increase its compensation for damaged and lost luggage by more than $1,500.
Last year, the CTA ruled WestJet’s current compensation level $250 was too low and it gave the carrier more than a year to come up with a new amount. WestJet proposed $1,000 still $500 less than Air Canada and $800 lower than an international airline agreement known as the Montreal Convention.
In a filing with the CTA, Lorne Mackenzie, WestJet’s director of regulatory and government affairs, justified the $1,000 proposed amount by arguing that the airline’s passengers carry less expensive stuff. According to his calculations, a typical WestJet passenger packs for a trip of five days or less and takes $750 worth of items, consisting of luggage, shoes, socks, underwear, pants, shirts, jackets, toiletries and “other” things. “Expenses similar to these numbers would support even a maximum liability of $750,” he said.
Mr. Mackenzie added that WestJet pays more than $250 in some cases but the vast majority of claims are settled for less than $1,000. Of the airline’s 2,304 compensation payments between January of 2009 and July, 2010, 91 per cent were for less than $1,000 and 61 per cent were less than $250, he added.
Those arguments didn’t sit well with Gabor Lukacs, an assistant professor of mathematics at the University of Manitoba who launched the complaint with the CTA last year. In an interview, he called Mr. Mackenzie’s $750 clothing estimate an insult. “It conveys to people that your property is not worth [very much]” he said from Winnipeg.
In his filings with the CTA, Dr. Lukacs picked apart Mr. Mackenzie’s calculations, using mathematical equations to back up some of his arguments. For example, Dr. Lukacs said a shirt can easily cost between $40 to $70 before tax. Mr. Mackenzie’s $75 estimate presumes WestJet passengers pack just one shirt for five days, Dr. Lukacs argued. He added that most people “change their shirts, socks, and underwear daily” making the other estimates “detached from the reality of a hypothetical passenger.”
Dr. Lukacs also shot down Mr. Mackenzie’s arguments about the amount paid out in claims, noting that the airline’s $2 converse uk 50 limit would discourage most passengers from making larger claims. Dr. Lukacs argued WestJet should follow the Montreal Convention of $1,800. He added someone could also challenge Air Canada’s limit of $1,500.
The CTA a converse uk lso took a dim view of Mr. Mackenzie’s arguments. In a ruling posted Wednesday, the CTA said Mr. Mackenzie’s $750 estimate was “speculative, and is not substantiated by evidence.” The agency also noted that although WestJet does not have a business class, some of its passengers may travel for business purposes and carry more expensive clothing.
The CTA also said Mr. Mackenzie’s contention that WestJet almost always pays out claims for less than $1,000, means it can easily afford to boost its limit to $1,800. The agency has given the airline 10 day to increase its limit to that amount.
A spokesman for WestJet said the airline is reviewing the decision.
Dr. Lukacs said he is happy with the ruling and started the case only because a friend had a damaged bag. “This is what I think people really should take away from all this,” he said. “You shouldn’t feel embarrassed or ashamed to tell an airline, pay up. It’s your property.”
When asked if he travels on WestJet, Dr. Lukacs didn’t hesitate: “Of course. In terms of the atmosphere on the flights, I find WestJet flights far more personal, far nicer as an experience than Air Canada flights.”