Air Canada, US DOT reach $4.5mn refund settlement

Air Canada (AC, Montréal Trudeau) has agreed on a USD4.5 million settlement for failing to refund thousands of passengers for more than a year for flights cancelled or changed between Canada and the United States during the COVID-19 pandemic.

The agreement with the US Department of Transportation’s Office of Aviation Consumer Protection (OACP) is pending approval by the Administrative Law Judge presiding over the case, the DOT said in a statement.

The deal represents slightly less than 20% of the USD25.5 million penalty initially sought by the OACP, but still, “marks the highest amount OACP has ever assessed against an airline,” the regulator said.

In addition to the USD4.5 million settlement, Air Canada would in future agree to refund passengers who purchased non-refundable tickets to or from the US and whose flights were cancelled or significantly changed by the carrier.

Of the settlement, USD2.5 million will be credited to Air Canada for refunding passengers who purchased non-refundable tickets to/from the US that they ultimately decided not to take. Only the remaining USD2 million will be a fine to be paid to the US Department of the Treasury.

“OACP believes that this settlement is in the public interest, and that it serves to deter Air Canada and other carriers from committing similar violations in the future,” it stated.

The OACP had filed a complaint against Air Canada on June 15, 2021, based on more than 6,000 complaints from passengers received since March 1, 2020. In addition, almost 90 consumers had filed formal complaints with the department after Air Canada failed to refund them. The OACP conservatively estimated the minimum number of violations to be 5,110, but the airline had refused to change its policy until April 2021.

“Today, the US Department of Transportation’s OACP is holding airlines accountable by ensuring that they treat passengers fairly when flights are significantly changed or cancelled,” commented Transportation Deputy Secretary Polly Trottenberg. “The Department is committed to protecting airline consumers and ensuring that all passengers receive the timely refunds to which they are entitled.”

It noted that airlines and other sellers of airline tickets had a legal obligation to refund consumers if an airline cancelled or significantly changed a flight. Current DOT regulations do not mandate refunds when passengers no longer wish to travel due to COVID-19, however, the department said it planned to issue a rulemaking soon to protect consumers who were unable to travel due to government restrictions.

“The Department calls on airlines to voluntarily make refunds or offer vouchers that are valid indefinitely for flights not taken on account of the COVID-19 pandemic.”

The OACP said it was also investigating refund practices of other US and foreign carriers serving the US and action would be taken in appropriate cases.