VANCOUVER — Cathay Pacific has joined the ranks of Air Canada, Lufthansa, and British Airways as airlines taken to court by North Vancouver class-action law firm Poyner Baxter LLP, which is alleging the airlines deceived consumers over taxes on airline tickets when these funds were diverted to the airline.

“The thrust of the suit is that the airlines are indicating on the invoice to consumers these are taxes and putting that figure in the tax box (designation either YQ or YR on tickets) when this large amount of money actually goes back to the airline and is not a tax,” said lawyer Ken Baxter, who with partner Jim Poyner, is pursuing action against the four airlines.

The legal firm now has applications in place before the courts to have a Supreme Court of B.C. justice certify the suits against the four airlines as class actions.

“There is a substantial amount of money involved,” said Baxter, explaining that the range of class action suits is six years. If successful, an airline like Cathay Pacific would have to refund not just the individual bringing forward the suit but all passengers and travel agent clients who had booked tickets out of Vancouver over that period.

The issue also raises the question of whether airlines should have been paying commission on this portion of a fare to travel agents. In Australia, in 2006, Flight Centre filed a claim (in a class action against Qantas) that it was short-changed up to $60 million a year by airlines not including commissions on such surcharges. In the same year, law firm Slater & Gordon filed a statement of claim in the Federal Court saying Qantas, Air New Zealand, Singapore Airlines, British Airways, Cathay Pacific and Malaysia Airlines owed 1,450 travel agents $80 million in unpaid commissions dating back to May 2004. That claim alleged that the airlines had breached the Trade Practices Act by requiring agents to book fuel surcharges in the commission-free ‘taxes, fees and charges’ section of an air ticket.

Baxter said not all airlines pass off fuel surcharges as taxes. “KLM doesn’t do this,” he said, adding that such charges passed off as taxes were common mainly on international flights and unseen on U.S. and domestic travel.

The statement of claim filed in court regarding Cathay Pacific states that North Vancouver businessman Ahmet Kodioglu purchased a ticket on July 27 at Flight Centre for a week’s travel in October and paid $809 for the fare but another $409.87 in taxes. Of the taxes, the invoice noted that $275.20 was a YR TAX. Kodioglu’s statement of claim alleges misrepresentation.

“By indicating the $275.20 ‘YR TAX’ item within the tax portion of the cost of the airplane ticket, the defendant (Cathay Pacific) knowingly and willingly represented the ‘YR TAX’ as a tax charge to and collected from the plaintiff (Kodioglu) on behalf of a third party government agency or body. Contrary to the representation, the $275.20 ‘YR TAX’ item was not a third party tax at all. Rather, the defendant retained and diverted the monies paid by the plaintiff for the ‘YR TAX’ item to its own use.”

Baxter said Air Canada has responded to the suits filed by going before the B.C. Supreme Court in May and asking for relief from the suit.

“The preliminary motion by Air Canada argued that the case should be dismissed as it claims that this provision of the B.C. Business Practices and Consumer Protection Act does not apply to airlines because they are federally regulated,” said Baxter. “This is really about whether the B.C. act is valid to the airlines and are they bound by B.C. law?”

The Supreme Court of B.C has not yet issued the decision on the preliminary hearing.

“A fuel surcharge is really a cost of doing business and you can put that figure in the fare box and not the tax box,” he said. He likened the situation to a lawyer who charges a $100 fee and then under taxes puts down an amount that goes to his office rent and a ‘lawyer retirement’ tax. He said that consumers should be clear on what they are receiving for the dollars spent.

Senkal Ozturkler of Richmond, B.C., is the complainant in the British Airways case launched in May. She bought a return ticket to Istanbul, Turkey, via London for $969.93. She was advised that her fare, after taxes, was $1,420. Only a small portion of the additional charges constituted tax or third-party charges of any description - $326 went straight to the airline, her lawyers claim.

Said lawyer Jim Poyner: “There is a full page of codes within the International Air Transport Association’s (IATA) guidebook for travel agents, citing taxes and charges for many different items. The sum of these taxes is coded on the traveller’s invoice as ‘XT’ – meaning ‘total taxes’ – but included within ‘XT’ are charges coded YQ (YR by Cathay Pacific), defined by IATA as ‘airline own use only’.”

Poyner said that these deceitful charges have provoked controversies worldwide. He cited a 2009 case brought in the Federal Court of Australia in which a major travel agency, Leonie’s Travel, sued the national carrier, Qantas. Leonie’s Travel maintained that Qantas had engaged in misleading and deceptive conduct in contravention of the Trade Practices Act in requiring travel agents to include the ‘fuel surcharge’ in the ‘tax/fee/charge’ box on all paper tickets and in the ‘taxes/charges’ field on receipts through electronic tickets. The justice sitting on the case ruled that since the government had not approved the fuel increase or ordered it, Qantas had no right to pass it off as a tax.

Qantas had engaged in “misleading and deceptive conduct” as it is likely that some members of the travelling public would have laboured under the erroneous assumption that all amounts shown were paid to a government authority or other third party but not to Qantas, the justice found. Cathay Pacific has issued a statement saying that it is reviewing the claim and that the airline attempts to abide by all laws.

Information on claims is available on Poyner Baxter’s website under airline surcharge class actions.