Canada: The Constitution And Airline Fuel Surcharges

Last Updated: March 15 2012
Article by Jordan Milne

The classic tension between federally regulated undertakings and provincial legislation was recently reconsidered in Unlu v. Air Canada, 2012 BCSC 60, a decision of the British Columbia Supreme Court.

The Plaintiff, Bulent Unlu, purchased an airline ticket from Air Canada and Lufthansa (the "Airlines") that was subject to a fuel surcharge coded as "YQ" and recorded within the tax (or "XT") portion of his invoice. The Plaintiff did not take issue with the surcharge per se, but instead challenged the manner in which it was "falsely represented" as a tax levied by the government (as opposed to a surcharge collected by the Airlines for their own benefit). Such representations, he asserted, were a "deceptive act or practice", contrary to British Columbia's Business Practices and Consumer Protection Act, S.B.C. 2004, c.2 (the "BPCPA").

The Airlines argued that the BPCPA was constitutionally inapplicable to them and brought a summary trial for determination of the constitutional issue. The Airlines' argument focused on two constitutional doctrines:

  1. In the exercise of its exclusive power over aeronautics, Parliament has conferred final regulatory authority over all matters of airline tariffs, fares, charges and ticketing to the Canadian Transportation Agency (the "Agency") whose decisions are paramount to the BPCPA.
  2. Alternatively, matters of airline tariffs, fares, charges and ticketing lie within the "core" of the federal power over aeronautics and are insulated from the BPCPA under the doctrine of interjurisdictional immunity.

The Court dismissed both arguments, finding that the BPCPA is applicable to the fuel surcharge. The Court's reasons, and the implications thereof, are briefly reviewed below.


The paramountcy doctrine is engaged when federal and provincial legislation directly conflict, whether in actual operation or purpose: Québec v. Canadian Owners and Pilots Association, 2010 SCC 39 [COPA] at para. 64. In such circumstances, the federal legislation is paramount and the provincial legislation is rendered inoperative to the extent of the incompatibility.

The Court's analysis with respect to paramountcy turned on the mechanics of the main federal statute applicable to aeronautics, the Canada Transportation Act, S.C. 1996, c. 10 (the "Act"). The following features in the Act were found to be particularly germane:

  1. The Act pursues the broad, but vaguely-defined objective of "a competitive, economic and efficient national transportation system" (section 5).
  2. Toward the achievement of this objective, the Agency is entrusted with regulation-making powers respecting, inter alia, "traffic and tariffs, fares, rates, charges and terms and conditions" (Section 86) and "advertising" (Section 86.1).
  3. While the Air Transport Regulations touch upon some matters of "consumer protection", they do not address deceptive advertising.

The Court held that an operational conflict could only arise if the Agency passed a regulation which "accepted an act or practice that would be deceptive under the BPCPA" (para. 67). However, as no regulations had been made in respect of advertising, there was "nothing potentially in conflict" (para. 68). The mere fact that the Agency had the statutory power to enact such regulations was insufficient for the purpose of establishing an actual operational conflict.

It also could not be said that the BPCPA frustrated the purpose of the Act. Although the Act was couched in broad language and pursued an expansive purpose, it did not describe the Agency, or its regulation-making powers, as "exclusive". Moreover, the Act was "limited when it comes to consumer remedies", further proof that the Agency's work would not be frustrated by the BPCPA (para. 76).

Interjurisdictional Immunity:

The interjurisdictional immunity doctrine insulates the "basic, minimum and unassailable core" of a federal power from being "impaired" by provincial law: COPA at paras. 42-25.

The Court declined to apply the interjurisdictional immunity doctrine on the facts before it. Two lines of reasoning were provided in support of this decision:

  1. There was no precedent holding that the terms and conditions of carriage lie at the "core" of the federal power over aeronautics. Given that the Supreme Court of Canada previously held in Canadian Western Bank v. Alberta, 2007 SCC 22 [CWB] that the interjurisdictional immunity doctrine is now reserved for situations already covered by precedent, the absence of precedent in this case was fatal to the Airlines' argument.
  2. Alternatively, the impact of the BPCPA was not "sufficiently serious" as to constitute an "impairment". Simply put, provincial regulation of deceptive acts and practices did not trench on Parliament's power to regulate airline tariffs, tolls, terms and conditions of carriage or advertising.

The Court's analysis with respect to the interjurisdictional immunity doctrine is interesting on many levels. Critically, it demonstrates the continued hollowing of the interjurisdictional immunity doctrine, a process commenced in CWB and continued in subsequent cases. It is now clear that the doctrine is not an adjudicative tool of primary resort and will only apply in situations covered by precedent; new categories of interjurisdictional immunity will not be created.

Additionally, Unlu draws a jurisdictional line between consumer protection and the main area in which the interjurisdictional immunity doctrine has been applied to aeronautics (airport construction/placement): see COPA; Construction Montcalm Inc. v. Min. Wage Com., [1979] 1 S.C.R 754 (S.C.C.); Mississauga (City) v. Greater Toronto Airports Authority (2000), 50 O.R. (3d) 641 (ONCA).

For more information, visit FMC's Canadian Constitutional Law Blog at

About Fraser Milner Casgrain LLP (FMC)

FMC is one of Canada's leading business and litigation law firms with more than 500 lawyers in six full-service offices located in the country's key business centres. We focus on providing outstanding service and value to our clients, and we strive to excel as a workplace of choice for our people. Regardless of where you choose to do business in Canada, our strong team of professionals possess knowledge and expertise on regional, national and cross-border matters. FMC's well-earned reputation for consistently delivering the highest quality legal services and counsel to our clients is complemented by an ongoing commitment to diversity and inclusion to broaden our insight and perspective on our clients' needs. Visit:

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