Company accused of breaching decades-long promise to provide free and reduced-rate passes to retirees
The Quebec Court of Appeal has partially allowed Air Canada's appeal in a class action involving about 30,000 retired employees, ruling that only a grievance arbitrator has jurisdiction over disputes involving former unionized workers.
Justice Sophie Lavallée penned the majority decision in Air Canada c. Davies, delivered Oct. 27, 2025, declaring that claims by retirees who were unionized during employment must proceed through arbitration, while non-unionized retirees can continue their lawsuit in Superior Court.
Carole Davies, who worked for Air Canada for over 29 years as a unionized employee, alleged the airline breached its decades-long promise to provide free and reduced-rate travel passes to retirees based on seniority. Davies claimed Air Canada issued tens of thousands of higher-priority passes to active employees, effectively rendering retirees' passes virtually useless.
Travel passes for employees
Air Canada maintained a practice since at least 1952 of issuing travel passes to employees with six months' seniority, continuing the benefit after retirement. Priority for using these passes was determined by length of service, with retired employees receiving C2 priority passes.
The airline provided retirement documents stating, “Travel privileges for employees and eligible family members will continue to apply into retirement in accordance with the company’s retirement regulations” and “You will have the same priority as in active service.”
Air Canada recently announced it is reducing its management workforce by roughly 400 positions, or about 1% of its total staff.
Were passes discretionary?
Davies alleged that Air Canada's unilateral decision to issue B1 and C1 passes to current employees violated the company's commitment to base priority on seniority. She argued the practice created implied contracts with each employee and that changing the system violated Air Canada's obligation to act reasonably and in good faith.
Air Canada consistently maintained the passes were discretionary and never subject to collective bargaining. Leslie-Ann Vezina, an Air Canada manager, stated in a sworn declaration: “Air Canada has always maintained that the number and nature of FRT Privileges for personal travel extended to any employee group or individual employee at any point in time is a matter that is entirely within Air Canada’s discretion which it can modify as it sees fit.”
Flight attendants at the airline have been in dispute over wages, leading to a recent strike that went to arbitration.
Collective agreement conundrum
The dispute centered on whether the travel passes fell under the collective agreement's management rights clause, which stated: “Subject to the provisions of this agreement, the control and direction of the employees, including the right to hire, to suspend or discharge for just and sufficient cause, to advance or step back in classification, to reassign, to transfer, to promote, to demote, to lay off because of lack of work or for other legitimate reasons, is vested solely in the company.”
Justice Lavallée determined that while the passes weren't explicitly mentioned in the collective agreement, the employer's practice of granting them “falls inferentially under Air Canada’s management rights over the working conditions and benefits of unionized employees.”
She wrote: “The monopoly on collective representation by a union is not limited to the context of the collective agreement but extends to all aspects of employee‑employer relations.”
Grievance arbitration
The court concluded: “Determining whether this management right was exercised reasonably and in good faith falls under the exclusive jurisdiction of the grievance arbitrator by virtue of the principle of the union’s monopoly on representation.”
But Justice Mark Schrager dissented, arguing the Superior Court had jurisdiction because Air Canada explicitly excluded the passes from collective bargaining and maintained they were purely discretionary.
The appeal was allowed in part, with no legal costs awarded given the particular context of the case.
