A ruling that orders Air Canada to better compensate passengers bumped off flights has been lauded by consumer advocates, but also called one small step in the battle to protect air passengers' rights in Canada.

"These changes are relatively minor in the overall problem of passenger rights. We actually don't have many, or any," said Consumers' Association of Canada president Bruce Cran. "We certainly don't have as many or as good of protection as the United States gives their people and certainly nothing like Europe at the moment." 

The Canadian Transportation Agency ruled on Tuesday that Air Canada's compensation for passengers who are bumped off flights due to overbooking is unreasonably small. Canada's largest airline offers $100 cash or a $200 voucher for future travel within North America.

The agency recommended starting compensation at $200, then increasing the amount depending on the length of delay, similar to the U.S. model. Air Canada has 30 days to respond to the decision.

In the U.S., passengers involuntarily bumped from a flight are compensated twice the amount of the one-way fare, up to $650, when their arrival at their destination is delayed by an hour or two. That increases to four times the price of the fare, up to $1,300, for more than a two-hour delay domestically and four hours internationally.

Compensation in Europe is calculated based on the length of the passenger's journey and the delay in reaching the final destination, ranging from €125 to €600 or about $170 to $800. That's on top of the ticket refund or alternative flight the airline must give the passenger.

Canadian airlines set their own rules

In Canada, airlines are regulated by their own rules, called tariffs, that they set out. The transportation agency regulates whether those terms and conditions are reasonable and just.

Over the past five years, there have been at least two attempts to introduce a Canadian passenger bill of rights to legislate how airline passengers are treated.

A 2009 private member's bill, which failed after the second reading, would have ensured that bumped passengers were compensated from $500 to $1,200, depending on the distance of the flight.

"This compensation is nowhere near as comprehensive as that bill would have made it," said Cran.

Quebec MP José Nunez-Melo resurrected the idea of a passenger bill of rights earlier this year, questioning why Canada is the last country to "say yes to legislation."

The push for passenger rights was renewed when a Sunwing Airlines flight was grounded during a snowstorm at Toronto's Pearson International Airport on Feb. 8, leaving 200 passengers trapped on the plane for more than 13 hours.

Passenger bill of rights stalled

Efforts to institute European-style rules in Canada have failed. In 2009, then NDP MP Jim Maloway introduced a passenger bill of rights that sought to compensate passengers when flights were delayed or cancelled, even due to poor weather, or when they were bumped from a flight.

Maloway said the 2009 passenger rights bill secured significant support across three parties, but failed due to "unprecedented lobbying on the part of the airline industry." 

"You've got a Mike Duffy-style airline here who believe they are entitled," said Maloway about Air Canada. "This airline has taken advantage of the public at every opportunity, and they continue to do so because they are a very overpowering presence on the Canadian landscape."

According to statistics provided by Air Canada to the Canadian Transportation Agency, fewer than 0.1 per cent of passengers — or about one out of every 1,000 passengers  —  are bumped on domestic flights either voluntarily or involuntarily. The airline did not publicly reveal how frequently it overbooks flights.

The airline argued that overbooking balances out the losses it expects from no-shows. It pointed out that WestJet doesn't overbook, but its fares are non-refundable, while Air Canada offers flexible, fully refundable tickets.

While the transportation agency took no issue with the common airline practice of overbooking, it deemed the amount of compensation for bumped passengers too small.

It also found it unreasonable that Air Canada's own rules allow it not to compensate passengers if the planned aircraft is substituted for a smaller one for safety or operational reasons, forcing it to bump passengers.

Win for a stubborn activist

Gabor Lukacs, the passenger and passenger rights activist who fought Air Canada on the overbooking issue, says that the key win was that Air Canada is required to compensate based on the amount of time a passenger is delayed, creating an incentive for the airline to quickly reroute passengers.

"In the current state, you get the same compensation whether you have a half an hour delay or are delayed by a whole day," said Lukacs. "That makes no sense."

Consumers' Association of Canada president Cran said airline passengers across the country should thank Lukacs, who has vigorously fought airlines to ensure consumer protection and has even been dubbed as the "Phantom of the Airline Industry."

"Mr. Lukacs has been like a little terrier dog with a bone," said Cran. "And I'm full of admiration for what he's achieved."

Earlier this year, the Halifax mathematician forced Porter Airlines to rewrite its policies on lost baggage. Last year, he also secured new rules giving passengers a free return trip home and refund of their ticket if they had to cancel their trip or miss a connecting flight because of overbooking.

But Cran said that while the step-by-step approach that activists such as Lukacs are forced to take is a great help, the country is still in dire need of a legislated approach to consumer protection, such as the legislation in the U.S. or Europe.

"Having something like that in place is the only way to change the culture of how the airlines deal with passengers in Canada," he said.