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Case Comment: Point Beyond Ticketing
Published in the July 2009 issue of Transportation Notes - View Article
There have been, in the last month, no Canadian transportation related decisions which meet our criteria for inclusion in this location—no cases which are certainly, or at least very probably, the last word in a particular substantial dispute. Accordingly, we will review a trial decision which does mark the end of the line for at least a tactical move in a dispute between a rather shadowy travel intermediary and Expedia.
Pacific Express is not an IATA accredited travel agency and is not authorized to issue tickets on behalf of any airline. It does hold itself out as a travel intermediary and accepts bookings on behalf of its clients. It then uses the services of authorized agents to secure the issuance of tickets.
The principal of Pacific Express got the idea that he could make bookings through the Expedia web engine. This was clearly a breach of the Expedia terms and conditions and, when confronted with the fact of this breach, Pacific Express meekly agreed not to offend further. However, by that time it had arranged for the issuance of some 500 tickets.
It would likely have been easy enough to unravel the problems caused by this unauthorized use of the Expedia service, but Pacific Express had also engaged in the prohibited practice of “point beyond” ticketing to improperly secure a lower fare than that which was offered in accordance with the applicable terms and conditions.
“Point beyond” ticketing is defined by IATA as “the practice of selling a ticket with a fictitious point of origin or destination in order to undercut the applicable fare”. In this case, Pacific Express typically would book a Toronto-Beijing-Toronto itinerary and add on a fictitious Miami-San Juan segment with a departure date several weeks after the return from Beijing. As a result, Pacific Express was able to avoid the fuel surcharge applicable to the Toronto-Beijing journey, that surcharge being approximately $360.
This practice first came to light in December 2008, when Air Canada forwarded a debit memo to Expedia’s travel agency, demanding payment of a fuel surcharge which had thus been improperly avoided. Expedia investigated and determined that it was potentially “on the hook” for approximately $190,000 in fuel surcharges due to the activities of Pacific Express which it characterized as fraudulent. However, it took Expedia approximately 3 months to state its position clearly to Pacific Express.
Expedia then threatened to cancel reservations which were outstanding. There were discussions between Pacific Express and Expedia, but these did not result in a resolution of the problem. In order to prevent Expedia from cancelling the reservations, Pacific Express sought an injunction. A hearing took place on June 23, 2009 and a decision refusing the injunction was issued on July 24, 2009.
The principal of Pacific Express maintained that he did not know that “point beyond” ticketing was prohibited. This was hardly a credible assertion and the court refused to accept it. It seems to us that the application for an injunction might well have failed at this point. The first hurdle to be passed by Pacific Express was the showing of a “serious issue to be tried”. However, the motions judge noted that the threshold for meeting this test is low and found that there was some possibility that Expedia might be found complicit in the improper issuance of the tickets. On this basis he found there was a serious issue to be tried. However, Pacific Express failed on the following two requirements for the granting of an injunction. It would not suffer irreparable harm if the injunction should be denied and it failed to establish that the balance of convenience was in its favour.
Perhaps the most interesting aspect of the case lies in the implications for the individuals who had purchased tickets through Pacific Express. The motions judge made it clear that he was not satisfied that either Expedia or Pacific Express had taken reasonable steps to protect the interests of these consumers. It was these customers who faced the prospect of prejudice if the tickets should be cancelled. Accordingly the question which arose was whether the court could issue an injunction to prevent those cancellations on the basis of harm to the consumers who were of course not parties to the dispute.
The motions judge reviewed the case law and properly concluded that he could not grant the injunction to prevent harm to the non-party consumers. The injunction was refused. However, both parties were scolded for their disregard of the needs of their customers and warned that they “stand to be exposed to a far greater liability than the $360 fuel surcharge should the tickets be cancelled”. No costs were awarded.
Pacific Express Travel Ltd. v. Expedia Canada Corp., 2009 CanLII 39493 (ON S.C.)2