U.S. Department Of Transportation Proposes $25.5M Fine Against Air Canada Due To Delayed & Denied Refunds

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U.S. Department of Transportation today announced that it was seeking a fine of $25.5M from Air Canada that had delayed or refused refunds from more than 6,000 passengers that had filed complaints with the DOT.

Airlines are required to refund tickets, even non-refundable, for canceled or significantly changed flights to/from the United States. In be with the airline, the Canadian regulator approved that Air Canada could offer funny money (vouchers) for flights that the airline had canceled.

Announcement from the DOT:

U.S. Department of Transportation’s Office of Aviation Consumer Protection Initiates Enforcement Proceeding Seeking Approximately $25 million Against Air Canada for Extreme Delays in Providing Required Refunds

Tuesday, June 15, 2021
WASHINGTON – The U.S. Department of Transportation’s Office of Aviation Consumer Protection (OACP) today announced that it has filed a formal complaint against Air Canada with an Administrative Law Judge regarding the carrier’s failure to provide refunds in a timely manner to thousands of consumers who requested them for flights to or from the United States that the carrier canceled or significantly changed. The OACP is seeking a civil penalty of $25,550,000 for Air Canada’s extreme delays in providing the required refunds.

The civil penalty amount is based on a variety of factors, such as the consumer harm caused by the violations. The penalty is also intended to deter Air Canada and other carriers from committing similar violations in the future.

When a carrier cancels or significantly changes a flight to or from the United States, the airline is responsible for providing refunds, upon request, according to U.S. law. Airlines have seven days to refund passengers from the date of the request for flights purchased with a credit card and twenty days for flights purchased with cash.

Refund requests spiked during the COVID-19 pandemic. In May of 2020, OACP announced it would use its enforcement discretion to accommodate airlines that needed slightly longer than usual to process refunds given the high volume of requests, as long as airlines were making a good faith effort. Air Canada did not make such good faith efforts.  Instead, for almost one year after the announcement of the May 2020 enforcement notice, Air Canada continued its no-refund policy in violation of U.S. law.

From March 1, 2020 to the present, OACP received, through its complaint portal, over 6,000 complaints against Air Canada from consumers who describe having been denied refunds for flights that the carrier cancelled or significantly changed. OACP has also received 89 complaints on this issue through DOT’s docket at www.regulations.gov.  In the complaint filed with the ALJ, OACP asserts that Air Canada has committed a minimum of 5,110 violations and passengers waited anywhere from 5 months to 13 months to receive refunds.

OACP is also actively investigating the refund practices of other U.S. and foreign carriers flying to and from the United States.  Enforcement action will be taken in those cases as appropriate.

Air Canada is required to file, within 15 days, an answer to the complaint admitting or denying specifically and in detail each allegation of the complaint and responding to the proposed assessment of civil penalties.  OACP’s Notice of Enforcement Proceedings and other related materials can be found at www.regulations.gov, docket DOT-OST-2021-0073.

Here are the documents that DOT issued today:

Download (PDF, 301KB)

Download (PDF, 149KB)

Conclusion

Air Canada attempts to fight the fine after giving its managers and top management members millions in bonuses while claiming that it didn’t have money to pay out refunds.

The airline was also blackmailing the Canadian government by announcing that they would not provide cash refunds unless Ottawa agrees to bail out.

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