The Canadian Transportation Agency (CTA) has ruled that Air Canada is liable for the maximum payment for luggage lost on international flights under rules established in an agreement called the Montreal Convention.

That figure, expressed in an international monetary unit called "special drawing rights," is worth about $1,650 today.

While the agency called its ruling "precedent setting," the passenger who launched the complaint against Air Canada will only get a tiny fraction of the loss she claimed.

Kelly McCabe flew from Thunder Bay, Ont., to Toronto to New York in May 2006 to attend a conference for metalCORP, a junior mining exploration company. She said Air Canada lost her Pelican bag, and claimed $52,699.32, based on the loss of:

• Two metalCORP drill cores, valued at $40,000.
• The Pelican bag holding the cores, $655.50.
• Other items in the bag, $1,328.
• Expenses of $10,715.82 for attending the conference.
• Reimbursement of legal costs (no precise figure claimed).

While the agency concluded that Air Canada was liable for the loss of her bag, it was responsible only "up to the limits provided for in the convention," which is 1,000 special drawing rights, worth $1,646.83 on April 29.

It also rejected McCabe's claim for legal costs.

The CTA said its ruling only related to an Air Canada international flight, but It "intends to send out letters to all air carriers offering services within, to or from Canada to make them aware of this precedent-setting decision."

As for travellers, it suggested they declare high-value checked baggage, buy extra insurance for valuables, and carry valuables in the cabin.

When she checked in, McCabe did not declare the value of her baggage and did not pay extra for loss insurance, the agency said.