on Brazilian Aviation and Consumer Protection Regulations WACRA Chicago September 16 th 2013 Marcio Souto Jessica Rossman Brazil facts The largest country in Latin ID: 760533
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Slide1
Surviving BrazilA primer on Brazilian Aviation and Consumer Protection Regulations
WACRA Chicago - September 16th, 2013Marcio Souto Jessica Rossman
Slide2Brazil facts
Slide3The largest country in Latin American The world's fifth largest country (geographical area and by population) Population: 198 million Official language: Portuguese 6th world economy 76 International Air Carriers are authorized to operate flights to Brazil Brazilian civil aircraft fleet: over 10,000 units in operations. Brazil has the world’s second largest executive helicopters fleet FIFA Soccer World Cup 2014 Olympic Games 2016
Slide4Brief history of Consumer Protection
1700 BC - The
earliest known statement of consumer rights
is the Hammurabi's Code , including
282 laws regulating
relationships
in
Mesopotamia. Merchants
and businessmen had to guarantee the quality of their goods and services
by correcting defects at
their own
expense. The penalty for non compliance would be their own life.
1962 -
President JFK (US) delivered
a speech to Congress in which he outlined four consumer rights: the right to
safety
, the right to be
informed,
the right to
choose
and the right
to be heard
.
Slide5In
1981, the United Nations Economic and Social Council
(ECOSOC) "
requested
the Secretary-General to continue consultations on consumer protection with a view to elaborating a
set of general guidelines for consumer protection
, taking particularly into account the needs of the developing countries
".
In 1983, draft guidelines for consumer protection were submitted to ECOSOC in response to its request. Following extensive discussions and negotiations, the Guidelines were adopted by consensus resolution of the United Nations General Assembly on
April 9
th
, 1985
. They have since been amended by the addition of a new section on
sustainable consumption
on
July 26
th
, 1999.
Slide6What is Consumer Protection?
Consumer protection is a group of laws and organizations designed to ensure the rights of consumers as well as fair trade competition and the free flow of truthful information in the marketplace
.
Slide7Brazilian Consumer Protection Legislation
The Federal Constitution states that the Government shall provide “
for the
defense
of the consumer
”.
In 1990 the
Consumer
Defense
Code
(CDC
) came into
force, recognizing the vulnerability of the consumer, seeking to restrict abusive practises and establishing general rules for any service and products offered in the Brazilian Market.
Slide8Since CDC came into effect, what happened in Brazil to justify a high increase of passenger claims?
Slide9Social pyramid becomes a diamond
Source: BGN
Cetelem
/BNP Paribas Group
Slide10Impact on Brazil’s domestic aviation market
2002: 33M air tickets sold
2012: 86M air tickets sold
Growing middle classes access to air travel
Traffic at largest 20 airports expected to
triple
by
2030
Slide11WHY BRAZIL AND DEVELOPING COUNTRIES ARE DRAWING ATTENTION?
Because they are in a position where a small increase
in
the gross domestic product per capita income can translate into a substantial increase in air travel per capita per year.
Slide12
Slide13Aviation claims and litigation increase
Many more Brazilians flying: 200M population over
¾ are
classed
ABC =
passengers
Airlines’ customer care remedies - limited/slow
Public awareness of generous court awards:
media, internet and Government incentive for consumer protection improvements
Easy access to justice: small claims courts (JECs) spread all over Brazil (JEC at
airports
)
Slide14Who is considered a consumer and a supplier under the Brazilian CDC?
Slide15Consumer is any person or corporate entity which acquires or use a product or service as a final user.
Supplier is any person or corporate entity involved in the activities available in the consumer market, including services and products.
Slide16Stated goals of CDC
Transparency
Protection against misleading or abusive advertisements
Contractual guarentees
Effective prevention and
reparation
for damages, including moral damage
Access to justice and administrative specialized entities
Quality public services
CDC
does not exclude
any rights given by international conventions
ratified by Brazil
Slide17Main aspects of the CDC
Supplier liability
regardless
of the existence of
guilt
Reversal of the burden of proof
Collective suppliers liability (all parties involved)
Right of regret within 7 days for sales made outside a physical location
Information shall be clear, direct, precise, comprehensive, and in the Portuguese language regarding the characteristics, qualities, quantity, price and others
Slide18CDC exceptions
Consumer’s fault
Third party fault
No exceptions for Act of God or Force Majeure
Slide19Legal Conflict – Montreal X CDC
Constitution - Article 178
.
“
Transportation
by air, water and surface shall be regulated by law and the Treaties signed by the Government shall be observed with respect to international transportation, subject to
reciprocity
”
CDC does not allow any clauses that remove, exonerate, or diminish the supplier’s liability for defects of any nature in the products or services delivered.
The rights set forth in CDC do not exclude any others that may come as a result of international treaties or conventions ratified by Brazil.
Slide20How Courts address the conflict on passenger litigation?
Courts have ruled that the CDC trumps the limitation of liability governing international treaties;
Courts acknowledge conflict among the CDC, International treaties and the Federal Constitution;
Courts have ruled that Montreal is in force but the limitations are incompatible with the constitution and the CDC prevails as general law.
Slide21Samples of excessive damages that have been granted by Brazilian Courts. Source IATA based on two US major carriers
Type of Claim
Actual Damages Per PassengerMoral Damages Per PassengerSeat ProblemsNone Awarded$630.00 Baggage Delay; Flight Cancellation$370.00 $5,750.00 Flight Delay/Lack of Assistance$2,040.00 $2,020.00 Flight DelayNone Awarded$12,500.00 Cancelled Flight Due to Air Traffic Controller Strike $150.00$5,500.00 Flight Cancellation due to weather$520.00 $5,500.00 Luggage arrival delayed 5 days$716.00 $5,500.00
Samples of excessive damages that have been granted by Brazilian Courts. Source IATA based on two US major carriers
Slide22Samples of Irrational Decisions ruled by the CDC
Husband and wife on the same flight, but filed separately. LAX to DTW flight diverted
due to a medical emergency on board.
It was a delay of 50 minutes, sufficient to misconnect DTW-GRU. Ticket Price:
BRL 2.050
Award -
BRL14.170,00 per
pax
.
Claimant scheduled an appointment in ARN at 9:00AM. His ATL-AMS (DL174) flight was scheduled to arrive at 5:55; he would connect AMS-ARN at 6:50. DL174 arrived with an hour delay. Was protected on a flight departing at 10:15 AM. Ticket Price:
US$1,490
Award
BRL 49.840,00
for moral and material damages.
Claimant is a public prosecutor.
Flight cancellation due to mechanical (GRU-ATL); hotel accommodation provided was far from the airport; unable to extend their trip by one day because there were no seats available on return flight, instead they decided to stay on two days but had to pay expenses out of pocket.
Ticket Price: BRL 1.345 Award: BRL 18.187,87 per
pax
.
Slide23Why large awards in Brazil for small claims?
Lower court judges unfamiliar with aviation legislation - accustomed to application of consumer law
CDC has no limitation and reverses burden of proof
Desire to compensate aggrieved consumers (and punish poor
service
providers
)
Quantification of moral damages - discretion of Judge
No
binding
guidelines
/regs
on
quantum
damages
Slide24Regulatory
The National Civil Aviation
Agency (ANAC)
is the Brazilian civil aviation authority, created in
2006, part
of the Brazilian Secretariat of Civil
Aviation. ANAC is
responsible for regulating
safety
and security matters related to civil aircraft and its components, personnel licensing,
operations
and aerodromes
.
Any draft of new regulation is subject to a Public Hearing, opportunity that
any individual may contribute.
Slide25Most relevant ANAC directives in force that impact passenger transportation in the Brazilian Market
138 – Sales and Ticketing
141 – Delays, Cancellation and Involuntary Denied Boarding
196 – Service in person, by telephone and web
218 – Notice of flight delay and cancellation percentage
280 -
P
assengers
with special needs to air transportation
services (in force since 2014)
Slide26ANAC Resolution 138 keys:
Stated goal of
Resolution: Transparency during the sales process.
The fare
quote shall match the fare
display
No additional separate charges (including
YQ and Q
) for Brazil POO
Additional restrictions on ancillary charges and taxes
Requirements for the ticket receipt
Slide27ANAC Resolution 141 (BR EU261)
Stated goal of
Resolution: Passenger care during:
Flight delay
Cancellation
Involuntary Denied Boarding (IDB)
Passengers are
entitled to
gradually receive care by airlines including meals, communications, accommodation and new flight.
Slide28Mandatory Care under Resolution 141
one hour: communications (Internet, phone calls
, etc.);
two
hours:
meals
(voucher, snacks, water, etc
.);
four
hours: accommodation or lodging (if
applicable
) and
transportation;
If
you are in your domicile, the airline may only
offer transportation
to
your
residence and from there
to the
airport again
.
If
a flight delay exceeds 4 hours (or if the
airline is
already aware that the flight will be delayed for
more
than 4 hours) or in cases
of cancellation
or
denied
boarding,
the
airline must also offer the passenger
other alternatives, such as:
Slide29Delays over 4 hours – Passenger options:
A
irport
of
origin
Full
refund, including airport
tax. Additional Care not required. .
New flight
to any
date, at no
cost.
Care may be suspended.
Board on
the next
flight
offered by the same
airline (
reaccomodation
on OA
is not mandatory
) to
the
same destination
,
subject to availability. Additional Care requirements apply.
S
topover
or connection
airports
Full
refund and
return to
the airport of origin
at no cost
. Additional Care requirements apply.
Stay
at the location where the interruption occurred
and refund the ticket
unused portion. Additional Care not required.
Board
on the next flight, offered by the same
or other
airline,
to the same destination
,
subject to
availability. Additional
Care requirements apply.
Conclude the
travel by other means of
transportation. Additional Care
requirements
apply.
New
flight at no cost for date and time of
passenger convenience. Additional
Care not required
Slide30Flight Cancellation and Passenger Denied Boarding – Passenger options:
Airport of origin
Full refund, including airport tax
.
Additional Care not required
New flight
to any date,
at no cost. Care may
be suspend.
Board
on the next flight, offered by the same or other airline, to the same destination, subject to availability. Additional Care requirements apply.
Conclude the travel by other means of transportation. Additional Care requirements apply.
Stopover
or connection airports
Full
refund and
return to
the airport of origin
at no
cost. Additional Care requirements
apply.
Stay
at the location where the interruption occurred and
refund
of the unused portion. Assistance may be suspended.
Board
on the next flight, offered by the
same or other airline,
to the same destination,
subject to availability. Additional
Care requirements apply.
Conclude the travel by other means of transportation. Additional Care requirements apply.
New flight at no cost for date and time of passenger convenience. Additional Care not
required.
Slide31Involuntary Denied Boarding
In event an involuntary denied boarding is unavoidable carrier must ask for
volunteers who would agree to
board at
another flight, by offering compensation (money,
credits, miles or others).
If a customer accepts the
compensation, the airline may require
to
sign a receipt stating that
the settlement was reached and, legally, will not be considered an overbooking or an involuntary denied boarding.
Slide32Other specific rules under 141:
Passenger may ask the
airline
for a written information
about the flight
delay, cancellation or IDB.
Information requirements
(delay
cause, reschedule or cancellation and updated departure time).
Care, rerouting and refund mandatory in event of weather or ATC.
For multiple carriers and flights issued
on a single ticket, the
airline
operator that caused the misconnection is liable to accommodate the passenger
on another flight and
offer care.
Any refund request must be processed immediately upon pax request.
Notices are required to be posted by carrier at airport.
Slide33Resolution 196 – Service in person, by telephone and by the internet
Stated goal of
Resolution: Enable free
and continuous access
to service channels intended
to receive and process
customer complaints
Service
in
person. Valid for carriers transporting over 500K passenger traffic per year at the same airport
Electronic Complaints
24/7 toll free telephone number for complaints (Reinforced by a Federal Contact Center Decree). Calls must be recorded.
Resolve customer complaints within 5 business days
Notices are required to be posted at the website and ticket receipts.
Slide34Slide35Resolution 218
Stated goal of Resolution: Publication and information of flight delay and cancellation percentages of regular flights. All flights to, from and within BrazilDelays of 30 and 60 minutes or moreOffered personally or by telephone, upon passenger requestMandatory at web upon availability request Mandatory notice
35
Slide36Slide37Resolution 280 (coming into effect JAN/14)
Stated goal of
Resolution - Procedures
relating to the accessibility of passengers requiring special assistance (PNAE
).
PNAE means PAX
with
disabilities,
+ 60 years, pregnant, nursing mothers, PAX travelling with lap child, handicapped and PAX with limitation in its autonomy.
Unlimited PNAEs
per
flight
The carrier must
provide
a PNAE escort free of charge or offer 80% discount to a travel companion in case of PNAE’s traveling
on a
stretcher/incubator, mental
or intellectual
impairment, cannot meet the flight
safety
instruction or cannot
meet
physiological
needs without assistance.
Full assistance
to
PNAE starting at Check-in to the airport public area upon arrival, including assistance with carry on, transfer between flights, transport to toilets, checked baggage handling and others
PNAE advance notice of 72 hrs for escorts and 48 hrs for special assistance
Other requeriments
Slide38Questions?
38
Slide39THANK YOU