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Jun 29, 2020

Air Canada has most refund complaints of all foreign airlines in U.S.

What the Canada-U.S. border closure extension means for airlines


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Air Canada has more customer complaints about refunds to the U.S. Department of Transportation than any non-U.S. airline.

The department says Air Canada received 969 refund complaints out of 7,568 in April, or 13 per cent, outpacing more than 80 carriers in the category.

The Montreal-based airline ranked third for refund complaints of any carrier, after United Airlines and American Airlines.

Air Canada and other Canadian airlines have refused to reimburse most customers whose flights were cancelled due to the COVID-19 pandemic.

The U.S., like the European Union, requires airlines to refund passengers. A complaint to the U.S. transportation department offers a potential path to reimbursement for some Air Canada customers who have been turned down north of the border.

Despite the high complaint numbers, Air Canada carries fewer passengers on flights with a U.S. segment than British Air and Lufthansa as well as four U.S. airlines, according to 2018 figures from the U.S. Bureau of Transportation Statistics.

WestJet Airlines Ltd. ranks right below Air Canada in cross-border passenger numbers, but garnered the 10th-most refund complaints at 217, tying with Air France. WestJet has said customers on U.S. or U.K. flights are entitled to refunds.

Air Canada did not immediately reply to questions Monday.

"The APPR (Canada's Air Passenger Protection Regulations) and CTA only require that airlines ensure passengers can complete their journeys," the airline said in a June 23 filing to the U.S. Department of Transportation. "In addition, CTA has approved the use of travel credits or vouchers during the COVID-19 epidemic."

Air Canada has returned about $1 billion to customers who bought more expensive refundable tickets, but still has some $2.6 billion from advance ticket sales, according to an Air Canada executive's testimony to the House of Commons health committee last week.

In place of refunds, Air Canada and other carriers have generally offered travel credits to customers with flights called off as a result of the coronavirus crisis, which has drastically shrunk their income amid broad border closures and low travel demand.

Air Canada, WestJet and Air Transat have said their stance on refunds aligns with federal regulations and guidance posted over the past three months by the Canadian Transportation Agency (CTA).

Contract law and legal precedent suggest that's not the case, says passenger rights advocate Gabor Lukacs.

"The law has been very clear in Canada for the past 16 years. It was reaffirmed on four different occasions by the Canadian Transportation Agency's legally binding decisions," Lukacs said.

"No one is suggesting the airline should be paying compensation on top of the refund. We are just talking about giving back to passengers the money that they paid but got no services for," he said.

"A refund is a universal principal across Canada...Our whole economy would fall apart if a merchant was allowed to not provide a refund."

The CTA's approval of airline travel credits -- cited by Air Canada in its complaint response -- was conditional on contracts of carriage and regulatory precedent, said CTA chairman Scott Streiner.

"It's not a binding order," he told The Canadian Press last week. The regulator's online posts offer "a general statement" or "guidance" rather than hard directives, he said.

In its complaint responses, Air Canada also argues that the U.S. transportation department's refund enforcement order contradicts case law and does not "have the force of law."

The position stands in contrast to that of WestJet, which changed its policy to reimburse customers on flights between the U.S. and Canada that were cancelled due to the pandemic after "carefully monitoring the regulatory frameworks" across jurisdictions. In 2018, the company flew 4.95 million passengers on cross-border routes.

Earlier this month, Air Canada quietly changed its refund policy earlier to allow some customers with cancelled flight tickets to recoup their cash -- but not passengers whose trips originated in Canada.

Travellers with flights originating in the European Union, Switzerland or Iceland are entitled to receive a refund, the airline said, but passengers who were slated to fly one-way or round-trip from Canada to Europe are not.