06/12/2013 01:04 EDT | Updated 08/12/2013 05:12 EDT

WestJet Passenger Payment: Compensation Ordered For Bumped Flyers

TORONTO, ON - AUGUST 28: A WestJet flight and an Air Canada flight cross paths on a runway at the Lester B. Pearson airport as photographed from an airplane on August 28, 2012 in Toronto, Canada. (Photo by Bruce Bennett/Getty Images)

CALGARY - The Canadian Transportation Agency says WestJet (TSX:WJA) must provide compensation to customers bumped on flights to and from Canada.

The agency was responding to a complaint alleging that WestJet's international tariff — a contract between a customer and the carrier — has several "unreasonable and conflicting" rules for customers unable to travel because a flight has been oversold.

The Calgary-based airline has been given until July 15 to revise its rules.

It's WestJet's policy not to oversell flights intentionally, but the CTA ruling said the airline must remove a provision that exempts it from liability in the event customers are bumped anyway — whether or not it happens for reasons outside WestJet's control or if the airline gives a passenger a travel credit or full refund.

Wednesday's ruling is separate from a CTA ruling last month that passengers on WestJet rival Air Canada (TSX:AC.B) were entitled to higher compensation if they're bumped from overbooked domestic flights.

It said Air Canada's existing practice of paying $100 in cash or a $200 travel voucher is unreasonable and it gave the airline 30 days to submit new compensation guidelines.

The agency sided with Gabor Lukacs, a former University of Manitoba math professor, who has challenged several airline industry practices. Lukacs also complained about WestJet's bumping practices.

Also Wednesday, Transportation Canada issued an air operator certificate for WestJet's new regional service, Encore, which launches in Western Canada on June 24.

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