There is a requirement under contract law to provide the services agreed to in the contract. That another airline has decided to carry the load of Air Canada who does not fly between San Francisco and Korea is a distinction without merit. When the passenger booked the flight they agreed that they would be entitled to free checked bags, the airline needs to provide the services agreed to and failing that, provide reimbursement to make the consumer whole for out of pocket expenses. Also, the Montreal Convention applies to this travel since it is an international itinerary. The Montreal Convention states that you can collect reimbursement for out of pocket expenses like this.

This notion that the onus is on the customer to chase the new airline operating the flight and determine whether they would be provided with baggage, and then run back to Air Canada when that doesn't work for them doesn't make any sense. Like if it doesn't work for them then what? Look for another rebooking option with the airline and repeat the process? At the end of the day if we as consumers are expected to honour the terms of the contract, the seller must also honour its commitments under the contract. Otherwise, we get the mess we have in Australia where Qantas claims customers aren't sold specific flights but bundles of rights. And once you enter that territory all bets are off. I can now book a non-refundable flight on Air Canada then call the credit card company to chargeback the flight later when I decided not to travel. After all, the flight no longer works for me, and if the airline wanted to, they could have asked me before I was to cancel the flight (and before I booked the non-refundable ticket) whether I was intending to cancel the flight and determine whether to sell the ticket accordingly.

-RooFLyer88