Canadian Airlines: No Refund = No Bailout

Canada will soon “bail out” the ailing airline industry in Canada. We are convinced that talks between the federal government and carriers such as Air Canada, WestJet, and possibly smaller carriers are well underway.  Recently, a loan package was announced in the United States for their air carriers measuring over US $25 billion with potential access to more.  Back in Canada, some assistance already has been provided to smaller airlines, however, there is, given the depth of the effect of COVID-19 on air travel, no guarantee that Canada’s air travel landscape will be at all similar post-epidemic.

But consumers have other problems: many thousands hastily booked and rebooked cancelled flights when the Prime Minister asked Canadians abroad to come home.  In the chaos of country-specific flight restrictions, airport and airspace closures, schedule disruptions, health screening measures and growing financial uncertainty, many airlines unilaterally delayed, rerouted, cancelled or changed consumers’ flights, sometimes for multiple flights. Thus, early priority was placed on repatriating Canadians stranded abroad.  There were notable failures and stranded passengers. Other Canadians have complained about high fares for the flights that they had to book to return from abroad. There continue to be many Canadians who cannot get home. The problem is so large that the Minister of External Affairs said he has become Canada’s “travel agent to the world”. We hope the government’s efforts can bring them home soon. Canadians abroad having issues should start by registering with Global Affairs Canada and using their emergency service to get help on their COVID-19 page.  They also should, to the extent they can, document their efforts to return home, so that they can have evidence for any future complaints to their airline or the Canadian Transportation Agency (CTA) – see more below.

Now attention is turning to those Canadians whose flights, including future flights, have been cancelled, delayed or rebooked at higher cost.  More seriously, perhaps, PIAC has received many complaints from consumers about future cancelled flights and the lack of refunds for these flights.

Unfortunately, the measures taken by the federal government and in particular the airline regulator (the CTA) have not provided adequate consumer protection.  The CTA, on Friday the 13th of March, on the application of the Canadian airlines, in paper hearings, without opposing parties, made sweeping (time-limited to 30 June 2020) suspensions of Canadians’ recently acquired rights to compensation for flight cancellations under the new Airline Passenger Protection Regulations. (Please see PIAC’s technical blog, with links, on these determinations). The CTA also stated that it considered that vouchers for future flights, provided they were generally usable for 24 months into the future, would be reasonable compensation for cancelled flights.

We disagree. Consumers deserve compensation for losses due to COVID-19 cancellations that were not their fault. Bailing out airlines without the condition that these customers’ losses be compensated is not acceptable.  When airlines take large sums from consumers for future flights, and do not segregate those funds in trust but instead use them as operating funds, they have effectively taken consumer money for nothing.  CTA also “got played” by the airline industry: they appear to have panicked and provided this extraordinary relief on the allegation of potential bankruptcy of the airlines without evidence (at least without public, transparent evidence) that the airlines truly needed to keep the money and avoid refunding cancelled and modified flights.

At best, shouldn’t CTA at the least have simply delayed such compensation until after we saw the terms of the bailout?  Also, consumers’ situations are also too varied to offer future flight vouchers as if it were fair compensation. Consider, for example, elderly Canadians caught visiting foreign relatives who are now (for health or financial reasons, or simply due to the uncertainty of future air travel) unlikely to use a voucher in the future.

Class actions already have been filed saying consumers deserve monetary compensation.  We urge Canadians to continue to demand refunds from their air carrier and to bring complaints to the CTA if their demands are not met – Canadians should know that the CTA continues to take consumers complaints during the suspension of the Air Passenger Protection Regulations.  That is, file your complaint now and don’t wait until 30 June 2020.

The basic unfairness of not compensating Canadians – who simply cannot afford the monetary losses – often in the thousands of dollars – while potentially providing billions of dollars in corporate financial relief, whether to save an essential industry or not, rightly will raise the ire of Canadians.  The federal government must ensure that cancelled flights and elevated fares for returning Canadians are compensated – or no bailout.  If not, the political effects will rightly fall at their feet.

UPDATE: Consumer group Option consommateurs in Montreal has started a Petition to the House of Commons demanding consumer refunds for canceled flights. Please consider signing their Petition, which is found at:

https://petitions.ourcommons.ca/en/Petition/Details?Petition=e-2604&fbclid=IwAR3d_vQLzK36qjkCawy9Uz-CR8yE4lv55eamdOld-Q8QBH3D8cZIxxYtHI0

One thought on “Canadian Airlines: No Refund = No Bailout

  1. Harry Gow says:

    Good work. Passengers are bing snookered by one of tghe most powerful lobbies in Ottawa.
    This is th eloby that has prevented High-speed railway lines from getting built and it has successfully blocked positive measures to redress consumer complaints. Behind a COVID
    smokescreen they have taken consumer money and flwn off.

Leave a Reply

Your email address will not be published. Required fields are marked *

Personal Information PIAC does not retain any of the information you enter here
Place enter a name
Place enter a valid email
Place enter a valid email